EXHIBIT 10.03
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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JANUARY 16, 2004
BY AND AMONG
PORTOLA PACKAGING, INC.
AS BORROWER
GENERAL ELECTRIC CAPITAL CORPORATION
AS AGENT
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
AS LENDERS
AND
GECC CAPITAL MARKETS GROUP, INC.
AS SYNDICATION AGENT
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TABLE OF CONTENTS
PAGE
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SECTION 1. AMOUNTS AND TERMS OF LOANS............................................................ 1
1.1 LOANS.......................................................................................... 1
1.2 INTEREST AND RELATED FEES...................................................................... 5
1.3 OTHER FEES AND EXPENSES........................................................................ 9
1.4 PAYMENTS....................................................................................... 10
1.5 PREPAYMENTS.................................................................................... 11
1.6 MATURITY....................................................................................... 12
1.7 LOAN ACCOUNTS.................................................................................. 12
1.8 YIELD PROTECTION............................................................................... 12
1.9 TAXES.......................................................................................... 13
1.10 OPTIONAL PREPAYMENT/REPLACEMENT OF LENDERS..................................................... 14
1.11 LIABILITY UNCONDITIONAL........................................................................ 15
SECTION 2. AFFIRMATIVE COVENANTS................................................................. 16
2.1 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS............................................... 16
2.2 MAINTENANCE OF PROPERTIES; INSURANCE........................................................... 17
2.3 INSPECTION; LENDER MEETING..................................................................... 18
2.4 ORGANIZATIONAL EXISTENCE....................................................................... 18
2.5 FURTHER ASSURANCES............................................................................. 18
2.6 HOLDING COMPANY................................................................................ 19
2.7 ENVIRONMENTAL MATTERS.......................................................................... 19
2.8 DISSOLUTION OF CERTAIN SUBSIDIARIES............................................................ 20
SECTION 3. NEGATIVE COVENANTS.................................................................... 20
3.1 INDEBTEDNESS................................................................................... 20
3.2 LIENS AND RELATED MATTERS...................................................................... 21
3.3 INVESTMENTS.................................................................................... 23
3.4 CONTINGENT OBLIGATIONS......................................................................... 25
3.5 RESTRICTED JUNIOR PAYMENTS..................................................................... 27
3.6 RESTRICTION ON FUNDAMENTAL CHANGES............................................................. 28
3.7 DISPOSAL OF ASSETS OR SUBSIDIARY STOCK......................................................... 29
3.8 TRANSACTIONS WITH AFFILIATES................................................................... 30
3.9 CONDUCT OF BUSINESS............................................................................ 30
3.10 CHANGES RELATING TO INDEBTEDNESS............................................................... 30
3.11 FISCAL YEAR.................................................................................... 30
3.12 PRESS RELEASE; PUBLIC OFFERING MATERIALS....................................................... 30
3.13 SUBSIDIARIES................................................................................... 31
3.14 BANK ACCOUNTS.................................................................................. 31
3.15 APPLICATIONS UNDER CCAA........................................................................ 31
3.16 INACTIVE SUBSIDIARIES.......................................................................... 31
3.17 PRESS RELEASE; PUBLIC OFFERING MATERIALS....................................................... 31
3.18 HAZARDOUS MATERIALS............................................................................ 32
SECTION 4. FINANCIAL COVENANTS/REPORTING......................................................... 32
4.1 LEASE LIMITS................................................................................... 32
4.2 FIXED CHARGE COVERAGE.......................................................................... 32
4.3 [INTENTIONALLY OMITTED]........................................................................ 32
4.4 MAINTENANCE OF MINIMUM AVAILABILITY............................................................ 32
4.5 FINANCIAL STATEMENTS AND OTHER REPORTS......................................................... 32
4.6 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER AGREEMENT............. 36
SECTION 5. REPRESENTATIONS AND WARRANTIES........................................................ 37
5.1 DISCLOSURE..................................................................................... 37
5.2 NO MATERIAL ADVERSE EFFECT..................................................................... 37
5.3 NO CONFLICT.................................................................................... 37
5.4 ORGANIZATION, POWERS, CAPITALIZATION AND GOOD STANDING......................................... 38
5.5 FINANCIAL STATEMENTS AND PROJECTIONS........................................................... 38
5.6 TITLE TO PROPERTIES, ETC....................................................................... 39
5.7 INTELLECTUAL PROPERTY.......................................................................... 39
5.8 INVESTIGATIONS, AUDITS, ETC.................................................................... 39
5.9 EMPLOYEE MATTERS............................................................................... 39
5.10 SOLVENCY....................................................................................... 40
5.11 [INTENTIONALLY OMITTED]........................................................................ 40
5.12 USE OF PROCEEDS; MARGIN REGULATIONS............................................................ 40
SECTION 6. DEFAULT, RIGHTS AND REMEDIES.......................................................... 40
6.1 EVENT OF DEFAULT............................................................................... 40
6.2 SUSPENSION OR TERMINATION OF REVOLVING LOAN COMMITMENT......................................... 44
6.3 ACCELERATION AND OTHER REMEDIES................................................................ 44
6.4 PERFORMANCE BY AGENT........................................................................... 45
6.5 APPOINTMENT OF RECEIVER........................................................................ 45
SECTION 7. CONDITIONS TO LOANS................................................................... 45
7.1 CONDITIONS TO INITIAL LOANS.................................................................... 46
7.2 CONDITIONS TO ALL LOANS........................................................................ 46
SECTION 8. ASSIGNMENT; PARTICIPATION; AGENT; ETC................................................. 46
8.1 ASSIGNMENTS AND PARTICIPATIONS................................................................. 46
8.2 AGENT.......................................................................................... 48
8.3 AMENDMENTS, CONSENTS AND WAIVERS............................................................... 53
8.4 SET OFF AND SHARING OF PAYMENTS................................................................ 53
8.5 DISBURSEMENT OF FUNDS.......................................................................... 54
8.6 DISBURSEMENTS OF ADVANCES; PAYMENT............................................................. 54
SECTION 9. MISCELLANEOUS......................................................................... 57
9.1 INDEMNITIES.................................................................................... 57
9.2 AMENDMENTS AND WAIVERS......................................................................... 57
9.3 NOTICES........................................................................................ 58
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9.4 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.......................................... 59
9.5 MARSHALLING; PAYMENTS SET ASIDE................................................................ 59
9.6 SEVERABILITY................................................................................... 59
9.7 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS............................ 59
9.8 HEADINGS....................................................................................... 60
9.9 APPLICABLE LAW................................................................................. 60
9.10 SUCCESSORS AND ASSIGNS......................................................................... 60
9.11 NO FIDUCIARY RELATIONSHIP; LIMITED LIABILITY................................................... 60
9.12 CONSTRUCTION................................................................................... 60
9.13 CONFIDENTIALITY................................................................................ 60
9.14 CONSENT TO JURISDICTION........................................................................ 61
9.15 WAIVER OF JURY TRIAL........................................................................... 62
9.16 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.................................................. 62
9.17 ENTIRE AGREEMENT............................................................................... 62
9.18 COUNTERPARTS; EFFECTIVENESS.................................................................... 62
9.19 JUDGMENT CURRENCY.............................................................................. 62
SECTION 10. DEFINITIONS........................................................................ 63
10.1 CERTAIN DEFINED TERMS.......................................................................... 63
10.2 OTHER DEFINITIONAL PROVISIONS.................................................................. 79
SECTION 11................................................................................................. 79
11.1 TRANSACTIONS ON THE CLOSING DATE............................................................... 79
iii
DEFINED TERMS
PAGE
Accounting Changes.........................................................................................
Accounts...................................................................................................
Adjustment Date............................................................................................
Affected Lender............................................................................................
Affiliate..................................................................................................
Agency Assignment Agreement ...............................................................................
Agreed Currency............................................................................................
Agreement..................................................................................................
Applicable Commitment Fee Percentage.......................................................................
Asset Disposition..........................................................................................
Assignment and Acceptance Agreement........................................................................
Availability...............................................................................................
Bank Line Issuer...........................................................................................
Bankruptcy Law.............................................................................................
Borrowers..................................................................................................
Borrowing Base.............................................................................................
Borrowing Base Availability................................................................................
Borrowing Base Certificate.................................................................................
Breakage Fee...............................................................................................
Business Day...............................................................................................
Calculation Period.........................................................................................
Canadian Dollars...........................................................................................
Canadian Pension Plan......................................................................................
Canadian Restricted Subsidiary.............................................................................
Canadian Security Documents................................................................................
Capital Expenditures.......................................................................................
Capital Stock..............................................................................................
Cash Equivalents...........................................................................................
Cash Management Obligations................................................................................
CCAA.......................................................................................................
CCAA Plan..................................................................................................
Certificate of Exemption...................................................................................
Change of Control..........................................................................................
Chase Warrant..............................................................................................
Chino Property.............................................................................................
Closing Date...............................................................................................
Collateral.................................................................................................
Commitment Termination Date................................................................................
Consolidated...............................................................................................
Consolidated Restricted Subsidiary.........................................................................
Consolidated Subsidiary....................................................................................
Contingent Obligation......................................................................................
Contractual Obligations....................................................................................
Daily Interest Amount......................................................................................
Daily Interest Rate........................................................................................
Daily Loan Balance.........................................................................................
Default....................................................................................................
Defaulting Lender..........................................................................................
Disqualified Stock.........................................................................................
Domestic Borrower..........................................................................................
Domestic Lenders...........................................................................................
EBITDA.....................................................................................................
Environmental Claims.......................................................................................
Environmental Laws.........................................................................................
Environmental Liabilities..................................................................................
Environmental Permits......................................................................................
Equipment..................................................................................................
Equity Interests...........................................................................................
ERISA......................................................................................................
Eurocurrency Liabilities...................................................................................
Event of Default...........................................................................................
Existing Agent.............................................................................................
Existing Credit Agreement..................................................................................
Existing Lender............................................................................................
Existing Obligations.......................................................................................
Existing Revolving Loan Commitment.........................................................................
▇▇▇▇▇▇▇▇▇ Property.........................................................................................
Federal Funds Effective Rate...............................................................................
Fee Letter.................................................................................................
Fixed Asset Availability Date..............................................................................
Fixed Charge Coverage......................................................................................
Fixed Charges..............................................................................................
Foreign Lender.............................................................................................
Funding Date...............................................................................................
GAAP.......................................................................................................
GE Capital ................................................................................................
Hazardous Material.........................................................................................
▇▇▇▇▇▇.....................................................................................................
▇▇▇▇▇▇ Warrant.............................................................................................
Holding Company............................................................................................
Inactive Subsidiaries......................................................................................
Indebtedness...............................................................................................
Indemnitees................................................................................................
Index Rate.................................................................................................
Index Rate Loan............................................................................................
Index Rate Margin..........................................................................................
Intellectual Property......................................................................................
Interest Period............................................................................................
Interest Rate Agreement....................................................................................
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Interest Ratio.............................................................................................
Interest Settlement Date...................................................................................
Inventory..................................................................................................
Investment.................................................................................................
IRC........................................................................................................
L/C Issuer.................................................................................................
Lender.....................................................................................................
Lender Assignment Agreement ...............................................................................
Letter of Credit Liability.................................................................................
Letter of Non-Exemption....................................................................................
Letters of Credit..........................................................................................
LIBOR......................................................................................................
LIBOR Loan.................................................................................................
LIBOR Margin...............................................................................................
Lien.......................................................................................................
Loan.......................................................................................................
Loan Documents.............................................................................................
Loan Party.................................................................................................
Loans......................................................................................................
Master Documentary Agreement ..............................................................................
Master Standby Agreement...................................................................................
Material Adverse Effect....................................................................................
Maximum Revolving Loan Balance.............................................................................
Mexican Restricted Subsidiary..............................................................................
Mexican Security Documents.................................................................................
Mortgage...................................................................................................
Mortgaged Property.........................................................................................
Negative Pledge Agreements.................................................................................
Net Proceeds...............................................................................................
Note.......................................................................................................
Notes......................................................................................................
notice of default..........................................................................................
Obligations................................................................................................
Operating Cash Flow........................................................................................
Other Capitalized Costs....................................................................................
Other Currency.............................................................................................
Permitted Encumbrances.....................................................................................
Permitted Investors........................................................................................
Person.....................................................................................................
Personal Property Security Legislation.....................................................................
Pounds Sterling............................................................................................
PPE........................................................................................................
PPSA.......................................................................................................
Priority Payable Reserve...................................................................................
Pro Forma..................................................................................................
Pro Rata Share.............................................................................................
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Proceeds...................................................................................................
Projections................................................................................................
Public Equity Offering.....................................................................................
Real Estate................................................................................................
Receiver...................................................................................................
Register...................................................................................................
Related Fund...............................................................................................
Related Party..............................................................................................
Related Transactions.......................................................................................
Related Transactions Documents.............................................................................
Release....................................................................................................
Replacement Lender.........................................................................................
Requisite Lenders..........................................................................................
Restricted Junior Payment..................................................................................
Restricted Subsidiary......................................................................................
Revolving Credit Exposure..................................................................................
Revolving Loan Commitment..................................................................................
Revolving Loans............................................................................................
Second Amended Credit Agreement............................................................................
Security Agreement.........................................................................................
Security Documents.........................................................................................
Selected Interest Rates....................................................................................
Senior Note Documents......................................................................................
Senior Note Indenture......................................................................................
Senior Notes...............................................................................................
Settlement Date............................................................................................
Statement..................................................................................................
Subordinated Indebtedness..................................................................................
Subsidiary.................................................................................................
Sumter Properties..........................................................................................
Tech Industries............................................................................................
Total Indebtedness.........................................................................................
UK Restricted Subsidiary...................................................................................
UK Security Documents......................................................................................
Unfinanced Capital Expenditures............................................................................
Unqualified................................................................................................
Unrestricted Subsidiary....................................................................................
US Dollars.................................................................................................
US Security Documents......................................................................................
Year 2000 Complaint........................................................................................
iv
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement") is dated as of January 16, 2004, and entered into by and among
Portola Packaging, Inc., a Delaware corporation ("Borrower"), the financial
institutions who are or hereafter become parties to this Agreement as "Lenders",
(as such term is defined in subsection 10.1 hereof), and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE
Capital"), as the initial "L/C Issuer" of Letters of Credit (defined below) and
as "Agent" (as such term is defined in subsection 10.1 hereof).
R E C I T A L S:
WHEREAS, Borrower and ▇▇▇▇▇▇ Financial, Inc., a Delaware
corporation ("▇▇▇▇▇▇"), as Agent ("Existing Agent") and Lender ("Existing
Lender") are parties to that certain Third Amended and Restated Credit Agreement
dated as of September 29, 2000, as amended (the "Existing Credit Agreement"),
pursuant to which ▇▇▇▇▇▇ has extended to Borrower a $54,000,000 revolving loan
commitment (the "Existing Revolving Loan Commitment"); and
WHEREAS, immediately prior to the effectiveness of this
Agreement, Existing Agent will assign to Agent all of its, rights, duties and
obligations as agent under the Existing Credit Agreement and the other Loan
Documents pursuant to that certain Agency Assignment Agreement of even date
herewith between Existing Agent and Agent (the "Agency Assignment Agreement")
and Existing Lender will assign to GE Capital all of its rights, duties and
obligations as a lender under the Existing Credit Agreement and the other Loan
Documents pursuant to that certain Assignment and Acceptance Agreement of even
date herewith between Existing Lender and GE Capital (the "Lender Assignment
Agreement"); and
WHEREAS, GE Capital, as Agent and sole Lender as of the date
hereof, has agreed to reduce the aggregate amount of the Revolving Loan
Commitment and to make certain other modifications to the terms of the Existing
Credit Agreement as provided in this Agreement. In connection therewith, the
parties wish to amend and restate the Existing Credit Agreement to read in its
entirety as set forth below.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower, Lenders and
Agent agree as follows:
SECTION 1.
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrower contained
herein:
(A) Revolving Loans. Each Lender agrees, severally and
not jointly, to lend to Borrower from the Closing Date to January 23, 2009 (the
"Commitment Termination Date"), its
Pro Rata Share of the Revolving Loans requested by Borrower to be made by
Lenders under this subsection 1.1(A), up to an aggregate maximum for all Lenders
of Fifty Million Dollars ($50,000,000) (as the same may be reduced from time to
time hereunder, the "Revolving Loan Commitment"). Advances or amounts
outstanding under the Revolving Loan Commitment will be called "Revolving
Loans". Revolving Loans may be repaid and reborrowed. All Revolving Loans shall
be repaid in full on the Commitment Termination Date. If at any time the
outstanding Revolving Loans exceed the Maximum Revolving Loan Balance, Lenders
shall not be obligated to make Revolving Loans, no additional Letters of Credit
shall be issued and Revolving Loans must be repaid immediately in an amount
sufficient to eliminate any excess. Revolving Loans may be requested in any
amount with one (1) Business Day's prior written or telephonic notice required
for amounts equal to or greater than $5,000,000. For amounts less than
$5,000,000, written or telephonic notice must be provided by noon (Chicago,
Illinois time) on the day on which the Revolving Loan is to be made. All
Revolving Loans to be made as LIBOR Loans require three (3) Business Days' prior
written notice. All Revolving Loans requested telephonically must be confirmed
in writing within twenty-four (24) hours. Written notices for funding requests
shall be in the form attached as Exhibit 1.1(A). Neither Agent nor any Lender
shall incur any liability to Borrower for acting upon any telephonic notice that
Agent believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow on behalf of Borrower. The "Maximum Revolving
Loan Balance" will be the lesser of (a) the "Borrowing Base" (as calculated on
Exhibit 4.5(F), the "Borrowing Base Certificate") less outstanding Letter of
Credit Liability ("Borrowing Base Availability") or (b) the Revolving Loan
Commitment less outstanding Letter of Credit Liability.
(B) Letters of Credit. The Revolving Loan Commitment may,
in addition to advances under Revolving Loans, be utilized, upon the request of
Borrower, for the issuance of Letters of Credit; provided, however, that Letters
of Credit shall be payable in US Dollars, or in other currencies upon the
written consent of the Agent, exercised in its sole discretion, and shall only
be issued or guaranteed by an L/C Issuer for the account of Borrower.
Immediately upon the issuance by an L/C Issuer of a Letter of Credit, and
without further action on the part of Agent or any of the Lenders, each Lender
shall be deemed to have purchased from such L/C Issuer a participation in such
Letter of Credit (or in its obligation under a risk participation agreement with
respect thereto) equal to such Lender's Pro Rata Share of the aggregate amount
available to be drawn under such Letter of Credit.
(1) Maximum Amount. The aggregate amount of
Letter of Credit Liability with respect to all Letters of Credit outstanding at
any time shall not exceed Five Million Dollars ($5,000,000).
(2) Reimbursement. Borrower shall be irrevocably
and unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse any L/C Issuer on demand in
immediately available funds for any amounts paid by such L/C Issuer with respect
to a Letter of Credit issued for the account of Borrower, including all
reimbursement payments, fees, charges, costs and expenses paid by such L/C
Issuer. Borrower hereby authorizes and directs Agent, at Agent's option, to
debit Borrower's account (by increasing the outstanding principal balance of the
Revolving Loan) in the amount of any payment made by an L/C Issuer with respect
to any Letter of Credit issued for the account of Borrower. All amounts paid by
an L/C Issuer with respect to any Letter of Credit
2
that are not immediately repaid by Borrower shall bear interest at the Index
Rate. Each Lender agrees to fund its Pro Rata Share of any Revolving Loan made
pursuant to this subsection 1.1(B)(2). In the event Agent elects not to debit
Borrower's account and Borrower fails to reimburse an L/C Issuer in full on the
date of any payment in respect of a Letter of Credit issued for the account of
Borrower, Agent shall promptly notify each Lender the amount of such
unreimbursed payment and the accrued interest thereon and each such Lender, on
the next Business Day, shall deliver to Agent an amount equal to its Pro Rata
Share thereof in same day funds. Each Lender hereby absolutely and
unconditionally agrees to pay to each L/C Issuer upon demand by such L/C Issuer
such Lender's Pro Rata Share of each payment made by such L/C Issuer in respect
of a Letter of Credit and not immediately reimbursed by Borrower. Each Lender
acknowledges and agrees that its obligations to acquire participations pursuant
to this subsection 1.1(B)(2) in respect of Letters of Credit and to make the
payments to each L/C Issuer required by the preceding sentence are absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default or
any failure by Borrower to satisfy any of the conditions set forth in subsection
7.2. If any Lender fails to make available to an L/C Issuer the amount of such
Lender's Pro Rata Share of any payments made by such L/C Issuer in respect of a
Letter of Credit as provided in this subsection 1.1(B)(2), such L/C Issuer shall
be entitled to recover such amount on demand from such Lender together with
interest at the Index Rate.
(3) Request for Letters of Credit. Borrower
shall give Agent at least three (3) Business Days' prior written notice
specifying the date a Letter of Credit is requested to be issued, the currency
in which such Letter of Credit is payable, the amount and the name and address
of the beneficiary and a description of the transactions proposed to be
supported thereby. If Agent informs Borrower that an L/C Issuer cannot issue the
requested Letter of Credit directly, Borrower may request that L/C Issuer
arrange for the issuance of the requested Letter of Credit under a risk
participation agreement with another financial institution reasonably acceptable
to Agent, L/C Issuer and Borrower. The issuance of any Letter of Credit under
this Agreement shall be subject to the conditions that the Letter of Credit (i)
supports a transaction entered into in the ordinary course of business of
Borrower or its Subsidiaries and (ii) is in a form, is for an amount and
contains such terms and conditions as are reasonably satisfactory to the L/C
Issuer and, in the case of standby letters of credit, Agent. Any notice
requesting the issuance of a Letter of Credit shall be accompanied by the form
of the Letter of Credit and the Master Standby Agreement or Master Documentary
Agreement, as applicable, and an application for a Letter of Credit, if any,
then required by the L/C Issuer completed in a manner satisfactory to such L/C
Issuer. If any provision of any application or reimbursement agreement is
inconsistent with the terms of this Agreement, then the provisions of this
Agreement, to the extent of such inconsistency, shall control.
(4) Expiration Dates of Letters of Credit. The
expiration date of each Letter of Credit shall be on a date which is not later
than the earlier of (a) one year from its date of issuance or (b) the thirtieth
(30th) day prior to the Commitment Termination Date. Notwithstanding the
foregoing, a Letter of Credit may provide for automatic extensions of its
expiration date for one or more successive one year periods, provided that the
L/C Issuer has the right to terminate such Letter of Credit on each such annual
expiration date and no renewal term may extend the term of the Letter of Credit
to a date that is later than the thirtieth (30th) day prior to the Commitment
Termination Date. An L/C Issuer may elect not to renew any such Letter of
3
Credit and, upon direction by Agent or any Lender, shall not renew any such
Letter of Credit at any time during the continuance of an Event of Default,
provided that, in the case of a direction by Agent or a Lender, such L/C Issuer
receives such directions prior to the date notice of non-renewal is required to
be given by such L/C Issuer and such L/C Issuer has had a reasonable period of
time to act on such notice.
(5) Obligations Absolute. The obligation of
Borrower to reimburse an L/C Issuer, Agent and Lender for payments made in
respect of such Letter of Credit shall be unconditional and irrevocable and
shall be paid under all circumstances strictly in accordance with the terms of
this Agreement including, without limitation, the following circumstances: (a)
any lack of validity or enforceability of any Letter of Credit; (b) any
amendment or waiver of or any consent or departure from all or any of the
provisions of any Letter of Credit or any Loan Document; (c) the existence of
any claim, set-off, defense or other right which Borrower, any Subsidiary of
Borrower, any Affiliates or any other Person may at any time have against any
beneficiary of any Letter of Credit, Agent, any L/C Issuer, any Lender or any
other Person, whether in connection with this Agreement, any other Loan Document
or any other related or unrelated agreements or transactions; (d) any draft or
other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (e) payment under any Letter of
Credit against presentation of a draft or other document that does not
substantially comply with the terms of such Letter of Credit; or (f) any other
act or omission to act or delay of any kind of any L/C Issuer, Agent, any Lender
or any other Person or any other event or circumstance whatsoever that might,
but for the provisions of this subsection 1.1(B)(5), constitute a legal or
equitable discharge of Borrower's obligations hereunder.
(6) Obligations of L/C Issuers. Each L/C Issuer
(other than GE Capital) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided Agent with written notice specifying the amount
and intended issuance date of such Letter of Credit and Agent has returned a
written acknowledgment of such notice to L/C Issuer. Each L/C Issuer (other than
GE Capital) further agrees to provide to Agent: (a) a copy of each Letter of
Credit issued by such L/C Issuer promptly after its issuance; (ii) a weekly
report summarizing available amounts under Letters of Credit issued by such L/C
Issuer, the dates and amounts of any draws under such Letters of Credit, the
effective date of any increase or decrease in the face amount of any Letters of
Credit during such week and the amount of any unreimbursed draws under such
Letters of Credit; and (iii) such additional information reasonably requested by
Agent from time to time with respect to the Letters of Credit issued by such L/C
Issuer. Without limiting the generality of the foregoing, it is expressly
understood and agreed by Borrower that the absolute and unconditional obligation
of Borrower to reimburse payments made under a Letter of Credit will not be
excused by the gross negligence or willful misconduct of the L/C Issuer.
However, the foregoing shall not be construed to excuse an L/C Issuer from
liability to Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by Borrower
to the extent permitted by applicable law) suffered by Borrower that are subject
to indemnification under the Master Standby Agreement or the Master Documentary
Agreement.
(C) Notes. Borrower shall execute and deliver to each
Lender a Note to evidence the Revolving Loans, such Note to be in the principal
amount of such Lender's Pro
4
Rata Share of the Revolving Loan Commitment. In the event of an assignment under
subsection 8.1, Borrower shall, upon surrender of the assigning Lender's Notes,
issue new Notes to reflect the interests of the assigning Lender and the Person
to which interests are to be assigned.
(D) Funding Authorization. The proceeds of all Loans made
pursuant to this Agreement subsequent to the Closing Date are to be funded by
Agent by wire transfer to the account designated by Borrower below:
Bank: Union Bank of California.
ABA No.: 122 000 496
Bank Address: ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Account No.: ▇▇▇▇-▇-▇▇▇▇▇
Reference: Portola Packaging, Inc.
Borrower shall provide Agent with written notice of any change in the foregoing
instructions at least three (3) Business Days before the desired effective date
of such change.
1.2 Interest and Related Fees.
(A) Interest. From the date the Loans are made and the
date the other Obligations become due, the Loans and the other Obligations shall
bear interest, depending upon Borrower's election from time to time, as
permitted herein, to have portions of the Loans accrue interest determined by
reference to the Index Rate or LIBOR at the applicable rates set forth below.
(1) The Revolving Loans and all other
Obligations shall bear interest as follows:
(a) If a Revolving Loan bearing
interest by reference to the Index Rate, then at the sum of the Index Rate plus
the Index Rate Margin.
(b) If a Revolving Loan bearing
interest by reference to LIBOR, then at the sum of LIBOR plus the LIBOR Margin.
"Index Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Margin" means (i) as of the Closing Date, 1.00%
per annum, and (ii) thereafter, as of the first day of each month (each, an
"Adjustment Date"), commencing on April 1, 2004, the Index Rate Margin shall be
adjusted, if necessary, to the applicable percent per annum set forth in the
pricing table set forth on Schedule 1.2 hereto corresponding to the average
5
daily Availability for the trailing three month period ending on the last day of
the most recently completed month prior to the applicable Adjustment Date (each
such period, a "Calculation Period") as calculated in the manner set forth on
Exhibit 4.5(F).
"LIBOR" means the greater of (a) 2.00% per annum or (b) for
each Interest Period, a rate per annum determined by Agent equal to:
(a) the offered rate for deposits in US Dollars for the
applicable Interest Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on the day which is two (2) Business Days prior to the first day
of the relevant Interest Period; divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate to be rounded upward
to the next whole multiple of one-sixteenth of one percent (.0625%).
If such interest rates shall cease to be available from
Telerate News Service, LIBOR shall be determined from such financial reporting
services or other information as shall be available to Agent.
"LIBOR Margin" means (i) as of the Closing Date, 2.50% per
annum, and (ii) thereafter, as of each Adjustment Date, commencing on April 1,
2004, the LIBOR Margin shall be adjusted, if necessary, to the applicable
percent per annum set forth in the pricing table set forth on Schedule 1.2
hereto corresponding to the average daily Availability for the applicable
Calculation Period as calculated in the manner set forth on Exhibit 4.5(F).
If an Event of Default has occurred and is continuing on an
Adjustment Date, no reduction in the Index Rate Margin or LIBOR Margin shall
occur on such Adjustment Date.
If Borrower shall fail to deliver a Borrowing Base Certificate
by the date required pursuant to subsection 4.5(F), effective as of the tenth
Business Day following the date on which such Borrowing Base Certificate was
due, each applicable Index Rate Margin and each applicable LIBOR Margin shall be
conclusively presumed to equal the highest applicable Index Rate Margin and the
highest applicable LIBOR Margin specified in the pricing table set forth on
Schedule 1.2 hereto until the date of delivery of the Borrowing Base
Certificate.
Subject to paragraph (H) below, each LIBOR Loan may be
obtained for a one, two, three or six month period (each such LIBOR Loan period
being an "Interest Period"). With respect to all LIBOR Loans: (a) the Interest
Period will commence on the date that the LIBOR Loan is made or the date on
which a Index Rate Loan is converted into a LIBOR Loan, as applicable, or in the
case of immediately successive Interest Periods, each successive Interest Period
shall commence on the day on which the next preceding Interest Period expires,
(b) if the Interest Period expires on a day that is not a Business Day, then it
will expire on the next
6
Business Day (unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day), (c) any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar month,
and (d) no Interest Period for Revolving Loans shall extend beyond the date two
(2) Business Days prior to the Commitment Termination Date. There may be no more
than five (5) LIBOR Loans outstanding at any one time under the Revolving Loan
Commitment.
(B) Commitment Fees. From the Closing Date, Borrower
shall pay Agent, for the benefit of all Lenders committed to make Revolving
Loans (based upon their respective Pro Rata Shares), in arrears, on the first
day of each month and on the date the Revolving Loan Commitment is terminated, a
fee payable in US Dollars in an amount equal to (1) (a) the Revolving Loan
Commitment less (b) the sum of (I) the average daily balance of the Revolving
Loans plus (II) the average daily aggregate amount of outstanding Letter of
Credit Liability, in each case during the preceding month, multiplied by (2) the
Applicable Commitment Fee Percentage.
"Applicable Commitment Fee Percentage" means (i) as of the
Closing Date, one-half of one percent (0.50%) per annum and (ii) thereafter,
commencing with the month ending January 31, 2004, (a) in respect of any month
for which the sum of the average daily balance of the Revolving Loans plus the
average daily aggregate amount of outstanding Letter of Credit Liability exceeds
fifty percent (50%) of the amount of the Revolving Loan Commitment,
three-eighths as of one percent (0.375%) per annum and (b) in respect of any
month for which the sum of the average daily balance of the Revolving Loans plus
the average daily aggregate amount of outstanding Letter of Credit Liability is
less than or equal to fifty percent (50%) of the amount of the Revolving Loan
Commitment, one-half of one percent (0.50%) per annum.
(C) Letter of Credit Fee. From the Closing Date, Borrower
shall pay Agent a fee in US Dollars for each Letter of Credit from the date of
issuance to the date of termination equal to the average daily aggregate amount
of outstanding Letter of Credit Liability during the preceding month multiplied
by two and one-half percent (2.50%) per annum. Such fee shall be payable to
Agent for the benefit of all Lenders committed to make Revolving Loans (based
upon their respective Pro Rata Shares). Such fees are to be paid monthly in
arrears on the first day of each month. In addition, Borrower shall pay to any
L/C Issuer, on demand, such fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
(D) Computation of Interest and Related Fees. Interest on
the Loans and other Obligations, including any fees set forth in this subsection
1.2, shall be calculated daily on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed in the period during which it
accrues. The date of funding a Index Rate Loan and the first day of an Interest
Period with respect to a LIBOR Loan shall be included in the calculation of
interest. The date of payment of a Index Rate Loan and the last day of an
Interest Period with respect to a LIBOR Loan shall be excluded from the
calculation of interest. If a Loan is repaid on the same day that
7
it is made, one (1) day's interest shall be charged. Interest on all Index Rate
Loans is payable in arrears on the first day of each month and on the maturity
of such Loans, whether by acceleration or otherwise. Interest on LIBOR Loans
shall be payable on the last day of the applicable Interest Period, unless the
Interest Period is greater than three (3) months, in which case interest will be
payable on the last day of each three (3) month interval. In addition, interest
on LIBOR Loans is due on the maturity of such Loans, whether by acceleration or
otherwise.
(E) Default Rate of Interest. At the election of Agent or
Requisite Lenders, after the occurrence of an Event of Default and for so long
as it continues, to the extent permitted by applicable law, the Loans and other
Obligations shall bear interest at a rate that is two percent (2.0%) in excess
of the rates otherwise payable under this Agreement. Furthermore, at the
election of Agent or Requisite Lenders during any period in which any Event of
Default is continuing (1) as the Interest Periods for LIBOR Loans then in effect
expire, such Loans shall be converted into Index Rate Loans and (2) the LIBOR
election will not be available to Borrower.
(F) Excess Interest. (a) Notwithstanding any provision to
the contrary contained in this Agreement or the other Loan Documents, Borrower
shall not be required to pay, and neither Agent nor any Lender shall be
permitted to collect, any amount of interest in excess of the maximum amount of
interest permitted by law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any of the other Loan Documents, then in
such event: (1) the provisions of this subsection 1.2(F) shall govern and
control; (2) Borrower shall not be obligated to pay any Excess Interest; (3) any
Excess Interest that Agent or any Lender may have received hereunder shall be,
at Agent's option, (a) applied as a credit against the outstanding principal
balance of the Obligations or accrued and unpaid interest (not to exceed the
maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any
combination of the foregoing; (4) the interest rate(s) provided for herein shall
be automatically reduced to the maximum lawful rate allowed from time to time
under applicable law (the "Maximum Rate"), and this Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such reduction; and (5) Borrower shall not have any action against Agent
or any Lender for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on any Obligation is calculated at the Maximum Rate rather than the
applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligation shall remain at the Maximum Rate until each Lender shall have
received the amount of interest that such Lender would have received during such
period on such Obligation had the rate of interest not been limited to the
Maximum Rate during such period.
(G) LIBOR Election. Borrower may request that Revolving
Loans be made as LIBOR Loans, that outstanding portions of Revolving Loans be
converted to LIBOR Loans and that all or any portion of a LIBOR Loan be
continued as a LIBOR Loan upon expiration of the applicable Interest Period. Any
such request will be made by submitting a written notice to Agent in the form of
Exhibit 1.1(A). Once given, and except as provided in subsection 1.2(H), a LIBOR
Loan request shall be irrevocable and Borrower shall be bound thereby. Upon the
expiration of an Interest Period, in the absence of a new LIBOR Loan request
submitted to Agent not less than three (3) Business Days prior to the end of
such Interest Period, the LIBOR Loan then maturing shall be automatically
converted to a Index Rate Loan. Loans which are not the
8
subject of a LIBOR Loan request shall be Index Rate Loans. Agent will notify
Lenders, by telephonic or facsimile notice, of each LIBOR Loan request received
by Agent not less than two (2) Business Days prior to the first day of the
Interest Period of the LIBOR Loan requested thereby.
(H) Inability to Determine LIBOR. (1) In the event, prior
to commencement of any Interest Period relating to a Revolving Loan bearing
interest by reference to LIBOR, Agent shall determine or be notified in writing
by Requisite Lenders that adequate and reasonable methods do not exist for
ascertaining LIBOR, Agent shall use best efforts to provide within one Business
Day of such determination, and in any event shall promptly provide, notice of
such determination to Borrower and Lenders (which shall be conclusive and
binding on Borrower and Lenders). In such event (a) any request for a LIBOR Loan
or for a conversion to a LIBOR Loan or continuation of a LIBOR Loan shall be
automatically withdrawn and shall be deemed a request for a Index Rate Loan, (b)
each LIBOR Loan will automatically, on the last day of the then current Interest
Period relating thereto, become a Index Rate Loan and (c) the obligations of
Lenders to make LIBOR Loans shall be suspended until Agent or Requisite Lenders
determine that the circumstances giving rise to such suspension no longer exist,
in which event Agent, upon the instructions of Requisite Lenders, shall so
notify Borrower and Lenders.
(I) Illegality. (1) Notwithstanding any other provisions
hereof, if any law, rule, regulation, treaty or directive or interpretation or
application thereof shall make it unlawful for any Lender to make, fund or
maintain LIBOR Loans, such Lender shall promptly give notice of such
circumstances to Agent, Borrower and the other Lenders. In such an event, (1)
the commitment of such Lender to make LIBOR Loans or convert Index Rate Loans to
LIBOR Loans shall be immediately suspended and (2) such Lender's outstanding
LIBOR Loans shall be converted automatically to Index Rate Loans on the last day
of the Interest Period thereof or at such earlier time as may be required by
law.
1.3 Other Fees and Expenses.
(A) Certain Fees. Borrower shall pay to GE Capital,
individually, the fees specified in that certain letter agreement dated the date
hereof (the "Fee Letter"), between Borrower and GE Capital in the amounts and at
the times specified therein.
(B) Audit Fees. Borrower shall pay to Agent an audit fee
equal to $750 per in-house auditor per day or any portion thereof, together with
out-of-pocket expenses, or out-of-pocket costs (including fees and expenses)
paid to third party auditors. Following the Closing Date and prior to a Default
or an Event of Default, however, Agent shall be limited to one (1) such audit
per country per fiscal year at Borrower's expense.
(C) Breakage Fees. Upon (i) any default by Borrower in
making any borrowing of, conversion into or continuation of any LIBOR Loan
following Borrower's delivery to Agent of any LIBOR Loan request in respect
thereof or (ii) any payment of a LIBOR Loan on any day that is not the last day
of the Interest Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise), the Borrower
shall pay Agent, for the benefit of all Lenders that funded or were prepared to
fund any such
9
LIBOR Loan, an amount (the "Breakage Fee") equal to the amount of any losses,
expenses and liabilities (including, without limitation, any loss (including
interest paid) in connection with the re-employment of such funds) that any
Lender may sustain as a result of such default or such payment. For purposes of
calculating amounts payable to a Lender under this subsection 1.3(C), each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at LIBOR or through the purchase of
bankers acceptances, as applicable, in an amount equal to the amount of that
LIBOR Loan, as applicable, and having a maturity and repricing characteristics
comparable to the relevant Interest Period; provided, however, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
this subsection 1.3(C).
(D) Expenses, Legal and Attorneys Fees. Borrower agrees
to promptly pay all fees, costs and expenses (including reasonable legal and
attorneys' fees and expenses and appraisal fees and expenses) incurred by Agent
in connection with any matters contemplated by or arising out of the Loan
Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Borrower agrees to promptly pay all fees, costs and
expenses (including attorneys' fees and expenses) incurred by Agent or any
Lender in connection with any action to enforce any Loan Document or to collect
any payments due from Borrower or any other Loan Party. All fees, costs and
expenses for which Borrower is responsible under this subsection 1.3(D) shall be
deemed part of the Obligations when incurred, payable in accordance with the
final two sentences of subsection 1.4 and secured by the Collateral.
1.4 Payments. All payments by Borrower of the Obligations shall be
made in US Dollars, in same day funds and delivered to Agent, for the benefit of
Agent and Lenders, as applicable, by wire transfer to the following account or
such other place within the United States as Agent may from time to time
designate in writing:
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Number ▇▇▇-▇▇▇-▇▇
Bankers Trust Company
New York, New York
ACCOUNT NAME: GECC/CAF DEPOSITORY
Reference: GE Capital re Portola
Borrower shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m.(Chicago, Illinois time). In the absence of timely receipt, such
funds shall be deemed to have been paid on the next Business Day. Whenever any
payment to be made hereunder shall be stated to be due on a day that is not a
Business Day, the payment may be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the amount of
interest and fees due hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans on
the basis of their Pro Rata Shares, for the payment of interest, commitment
fees, Letter of Credit fees,
10
Breakage Fees, Letter of Credit reimbursement obligations and any amounts
required to be deposited with respect to outstanding Letter of Credit Liability
pursuant to subsections 1.5(C) or 6.3. Prior to an Event of Default, other fees,
costs and expenses (including legal fees and expenses) reimbursable to Agent
pursuant to subsections 1.3(A) and (D) or elsewhere in any Loan Document may be
debited to the Revolving Loan in such manner as Agent elects after fifteen (15)
days' notice. After the occurrence of an Event of Default, no notice will be
required.
1.5 Prepayments.
(A) Voluntary Prepayments of Loans. At any time, Borrower
may prepay the Loans, in whole or in part, without premium or penalty subject to
the payment of Breakage Fees, if applicable. The payments shall be applied in
accordance with subsection 1.5(D) or as otherwise may be agreed by Requisite
Lenders.
(B) Prepayments from Asset Disposition. Immediately upon
receipt of any Net Proceeds in excess of $250,000 for any single transaction or
series of related transactions, Borrower shall repay the Loans by an amount
equal to the amount of such Net Proceeds. The payments shall be applied in
accordance with subsection 1.5(D) or as otherwise may be agreed by Requisite
Lenders.
(C) Prepayments from Issuance of Securities. Immediately
upon the receipt by Borrower or any of its Restricted Subsidiaries of the
proceeds of the issuance of capital stock or other equity securities (other than
(1) proceeds of the issuance of capital stock or other equity securities by
Borrower received on or before the Closing Date, (2) proceeds from the issuance
of capital stock or other equity securities by Borrower to employees and
directors of Borrower and (3) proceeds of the issuance of capital stock or other
equity securities of Borrower which are contemporaneously applied to repurchase
capital stock or other equity securities of Borrower from existing holder(s)
thereof or which are held by Borrower in accordance with Section 3.3(I) for the
purpose of making Investments permitted under Section 3.3(I)), Borrower shall
repay the Loans in an amount equal to such proceeds, net of underwriting
discounts and commissions and other reasonable costs associated therewith. The
payments shall be applied in accordance with Section 1.5(D).
(D) Application of Proceeds. With respect to the
prepayments described in subsections 1.5(A), (B) and (C), such prepayments shall
be applied to reduce the outstanding principal balance of the Revolving Loans
but not as a permanent reduction of the Revolving Loan Commitment. Any such
prepayment of Revolving Loans shall be applied first to Index Rate Loans of the
type required to be prepaid before application to LIBOR Loans of the type
required to be prepaid, in each case in a manner which minimizes any resulting
Breakage Fee.
(E) Letter of Credit Liability. In the event any Letters
of Credit are outstanding at the time that Borrower prepays the Obligations or
terminates the Revolving Loan Commitment, then (a) with respect to each such
Letter of Credit, Borrower shall deliver to Agent for the benefit of all Lenders
with a Revolving Loan Commitment a letter of credit in the same currency that
such Letter of Credit is payable, with a term that extends 60 days beyond the
expiration date of such Letter of Credit, issued by a bank satisfactory to Agent
and in an amount equal to one hundred and five percent (105%) of the aggregate
outstanding Letter of Credit
11
Liability with respect to such Letter of Credit, which letter of credit shall be
drawable by Agent to reimburse payments of drafts drawn under such Letter of
Credit and to pay any fees and expenses related thereto, and (b) Borrower shall
prepay the fee payable under subsection 1.2(C) with respect to all such Letters
of Credit for the full remaining terms of such Letters of Credit. Upon
termination of any such Letter of Credit, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrower.
1.6 Maturity. All of the Obligations shall become due and payable
as otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon termination of the Credit Agreement. Until all
Obligations have been fully paid and satisfied, the Revolving Loan Commitment
has been terminated and all Letters of Credit have been terminated, Agent shall
be entitled to retain the Liens in the Collateral granted under the Security
Documents and the ability to exercise all rights and remedies available to them
under the Loan Documents and applicable laws.
1.7 Loan Accounts. Agent will maintain separate loan account
records for all Revolving Loans, and all interest charges and payments thereof,
(b) all Letter of Credit Liability, (c) the charging and payment of all fees,
costs and expenses relating to Revolving Loans and (d) all other debits and
credits pursuant to this Agreement. The balance in the loan accounts shall be
presumptive evidence of the amounts due and owing to Lenders, provided that any
failure by Agent to so record shall not limit or affect Borrower's obligation to
pay. Within five (5) Business Days of the first of each month, Agent shall
provide a statement for each loan account setting forth the principal of each
account and interest due thereon. Borrower must deliver a written objection
within sixty (60) days after receipt of the statement or the statement will be
presumptive evidence of the Obligations absent manifest error. During the
continuance of an Event of Default, Borrower irrevocably waives the right to
direct the application of any and all payments and Borrower hereby irrevocably
agrees that Agent and each Lender shall have the continuing exclusive right to
thereafter apply payments in any manner it deems appropriate.
1.8 Yield Protection.
(A) Capital Adequacy and Other Adjustments. In the event
that any Lender shall have determined that the adoption after the date hereof of
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by such Lender or any corporation controlling such Lender and
thereby reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder, then Borrower shall from
time to time within fifteen (15) days after notice and demand from such Lender
(together with the certificate referred to in the next sentence and with a copy
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of such cost and showing the basis of the computation of such cost
12
submitted by such Lender to Borrower and Agent shall, absent manifest error, be
final, conclusive and binding for all purposes.
(B) Increased Funding Costs. If, after the date hereof,
the introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrower shall from time
to time within fifteen (15) days after notice and demand from Agent (together
with the certificate referred to in the next sentence) pay to Agent, for the
account of all such affected Lenders, additional amounts sufficient to
compensate such Lenders for such increased cost. A certificate as to the amount
of such cost and showing the basis of the computation of such cost submitted by
Agent on behalf of all such affected Lenders to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.
1.9 Taxes.
(A) No Deductions. Any and all payments or reimbursements
made hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever
imposed by any taxing authority, excluding such taxes to the extent imposed on
Agent's or a Lender's net income by the jurisdiction in which Agent or such
Lender is organized, resident or carrying on business. If Borrower shall be
required by law to deduct any such amounts from or in respect of any sum payable
hereunder or under any Loan Document to any Lender or Agent, then (i) the sum
payable hereunder or under any Loan Document shall be increased as may be
necessary so that, after making all required withholdings and deductions
(including withholdings and deductions applicable to additional sums payable
under this Section 1.9), Agent or Lender receives an amount equal to the sum it
would have received had no such withholdings or deductions been made, (ii)
Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law.
(B) Changes in Tax Laws. In the event that, subsequent to
the Closing Date, (1) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (2) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (3) compliance by Agent or any Lender with any request or directive
(whether or not having the force of law) from any governmental authority, agency
or instrumentality:
(a) does or shall subject Agent or any Lender to
any tax of any kind whatsoever or causes the withdrawal or
termination of a previously granted tax exemption with respect
to this Agreement, the other Loan Documents or any Loans made
or Letters of Credit issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal,
fees, interest or any other amount payable hereunder (except
for net income taxes or capital taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by
federal, state, provincial or local taxing authorities with
respect to interest or commitment fees or other fees
13
payable hereunder or changes in the rate of tax on the overall
net income of Agent or Lender); or
(b) does or shall impose on Agent or any Lender
any other condition or increased cost in connection with the
transactions contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or
Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or Lender, upon its
demand, any additional amounts necessary to compensate Agent or Lender, on an
after-tax basis, for such additional cost or reduced amount receivable, as
determined by Agent or Lender with respect to this Agreement or the other Loan
Documents. If Agent or Lender becomes entitled to claim any additional amounts
pursuant to this subsection 1.9(B), it shall promptly notify Borrower of the
event by reason of which Agent or Lender has become so entitled. A certificate
as to any additional amounts payable pursuant to the foregoing sentence
submitted by Agent or Lender to Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes.
(C) Withholding.
(i) Lenders. Each Lender organized
under the laws of a jurisdiction outside the United States (a "Foreign Lender")
as to which payments to be made in US Dollars under this Agreement or under the
Notes are exempt from United States withholding tax or are subject to United
States withholding tax at a reduced rate under an applicable statute or tax
treaty shall provide to Borrower and Agent (1) a properly completed and executed
Internal Revenue Service Form W-8BEN or Form W-8ECI or other applicable form,
certificate or document prescribed by the Internal Revenue Service of the United
States certifying as to such Foreign Lender's entitlement to such exemption or
reduced rate of withholding with respect to payments to be made to such Foreign
Lender under this Agreement and under the Notes (a "Certificate of Exemption")
or (2) a letter from any such Foreign Lender stating that it is not entitled to
any such exemption or reduced rate of withholding (a "Letter of Non-Exemption").
Prior to becoming a Lender under this Agreement and within fifteen (15) days
after a reasonable written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption or a Letter of Non-Exemption to Borrower and
Agent. If a Foreign Lender is entitled to an exemption with respect to US Dollar
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding, provided that all such withholding shall cease
upon delivery by such Foreign Lender of a Certificate of Exemption to Borrower
and Agent.
1.10 Optional Prepayment/Replacement of Lenders. Within fifteen
(15) days after receipt by Borrower of written notice and demand from any Lender
for payment pursuant to subsection 1.8 or 1.9 or, as provided in subsection
8.3(C), in the case of certain refusals by any
14
Lender to consent to certain proposed amendments, modifications, terminations or
waivers with respect to this Agreement that have been approved by Requisite
Lenders (any such Lender demanding such payment or refusing to so consent being
referred to herein as an "Affected Lender"), Borrower may, at its option, notify
Agent and such Affected Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for such Affected Lender, which
Replacement Lender shall be reasonably satisfactory to Agent. In the event
Borrower obtains a Replacement Lender that will purchase all outstanding
Obligations owed to such Affected Lender and assume its commitments hereunder
within ninety (90) days following notice of Borrower's intention to do so, the
Affected Lender shall sell and assign all of its rights and delegate all of its
obligations under this Agreement to such Replacement Lender in accordance with
the provisions of subsection 8.1, provided that Borrower has reimbursed such
Affected Lender for any administrative fee payable pursuant to subsection 8.1
and, in any case where such replacement occurs as the result of a demand for
payment pursuant to subsection 1.8 or 1.9, paid all amounts required to be paid
to such Affected Lender pursuant to subsection 1.8 or 1.9 through the date of
such sale and assignment; or
(B) Borrower may prepay in full all outstanding
Obligations owed to such Affected Lender and terminate such Affected Lender's
Pro Rata Share of the Revolving Loan Commitment, in which case the Revolving
Loan Commitment will be reduced by the amount of such Pro Rata Share. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such prepayment occurs as the result of a demand
for payment for increased costs, such Affected Lender's increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such prepayment), and terminate such Affected Lender's obligations under the
Revolving Loan Commitment.
1.11 Liability Unconditional.
Borrower hereby agrees that it is jointly and severally liable
for the full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to the
Agent, L/C Issuer and the Lenders by Borrower. Borrower agrees that its
liability shall be absolute and unconditional, irrespective of, and unaffected
by,
(A) the genuineness, validity, regularity, enforceability
or any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which Borrower is or
may become a party;
(B) the absence of any action to enforce this Agreement
or any other Loan Document or the waiver or consent by the Agent or the Lenders
with respect to any of the provisions thereof;
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(C) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by the Agent or any Lender in respect thereof (including
the release of any such security);
(D) the insolvency of Borrower; or
(E) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor,
it being agreed by Borrower that its obligations as confirmed under this
subsection 1.11 shall not be discharged until the payment and performance, in
full, of the Obligations has occurred. Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or any Lender to marshal assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
party or against any security for the payment and performance of the Obligations
before proceeding against, or as a condition to proceeding against, Borrower. It
is agreed among Borrower, Agent, the L/C Issuer and the Lenders that the
foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
subsection 1.11 and such waivers, each Lender would decline to enter into this
Agreement.
SECTION 2.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full of all Obligations and
termination of the obligations of Lenders with respect to all Letters of Credit,
Borrower shall perform and comply with, and shall cause each of the other Loan
Parties to perform and comply with, all covenants in this Section 2 applicable
to such Person.
2.1 Compliance With Laws and Contractual Obligations. Borrower
will (a) comply with and will cause each of its Restricted Subsidiaries to
comply with (i) the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including, without limitation, laws,
rules, regulations and orders relating to taxes, employer and employee
contributions, securities, employee retirement and welfare benefits,
environmental protection matters and employee health and safety) as now in
effect and which may be imposed in the future in all jurisdictions in which
Borrower or its Restricted Subsidiaries are now doing business or may hereafter
be doing business and (ii) the obligations, covenants and conditions contained
in all Contractual Obligations of Borrower or such Restricted Subsidiary, as
applicable, other than those laws, rules, regulations, orders and provisions of
such Contractual Obligations the noncompliance with which could not be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect, and (b) maintain or obtain and will cause each of its
Subsidiaries to maintain or obtain, all licenses, qualifications and permits now
held or hereafter required to be held by Borrower and its Subsidiaries, for
which the loss, suspension, revocation or failure to obtain or renew, could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. This subsection 2.1 shall not preclude Borrower or any
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Restricted Subsidiary from contesting any taxes or other payments, if they are
being diligently contested in good faith in a manner which stays enforcement
thereof and if appropriate expense provisions have been recorded in conformity
with GAAP. Borrower represents and warrants that it (i) is in compliance and
each of its Restricted Subsidiaries is in compliance with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
as now in effect other than those laws, rules, regulations, orders and
provisions of such Contractual Obligations the noncompliance with which could
not be reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect and (ii) maintains and each of its Subsidiaries
maintains all licenses, qualifications and permits referred to above.
"Contractual Obligations," as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject
including, without limitation, the Related Transactions Documents.
2.2 Maintenance of Properties; Insurance. Borrower will maintain
or cause to be maintained in good repair, working order and condition all
material properties used in the business of Borrower and its Restricted
Subsidiaries and will make or cause to be made all appropriate repairs, renewals
and replacements thereof. Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, (a) public liability and property
damage insurance with respect to its business and properties and the business
and properties of its Restricted Subsidiaries against loss or damage of the
kinds customarily carried or maintained by corporations of established
reputation engaged in similar businesses and (b) flood hazard insurance on each
Mortgaged Property that is located in a "special flood hazard area" (as defined
in 12 CFR Section 22.2(k)), in each case in amounts acceptable to Agent and will
deliver evidence thereof to Agent. Borrower will maintain business interruption
insurance providing coverage for a period of at least six months and in an
amount not less than $30,000,000. Borrower shall cause Agent, pursuant to
endorsements and/or assignments in form and substance reasonably satisfactory to
Agent, to be named as lender's loss payee in the case of casualty insurance,
additional insured in the case of all liability insurance and assignee in the
case of all business interruption insurance, in each case for the benefit of
Agent and Lenders, but without liability for any premiums. All insurance
policies shall provide for at least thirty (30) days' prior written notice to
Agent of any cancellations or reduction of coverage and that Agent may act as
attorney for Borrower and Borrower's Restricted Subsidiaries in obtaining, and
at any time an Event of Default has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrower represents and
warrants that it and each of its Restricted Subsidiaries currently maintains all
material properties as set forth above and maintains all insurance described
above. In the event Borrower fails to provide Agent with evidence of the
insurance coverage required by this Agreement, Agent may purchase insurance at
Borrower's expense to protect Agent's interests in the Collateral. This
insurance may, but need not, protect Borrower's and its Restricted Subsidiaries'
interests. The coverage purchased by Agent may not pay any claim made by
Borrower or its Restricted Subsidiaries or any claim that is made against
Borrower or its Restricted Subsidiaries in connection with the Collateral.
Borrower may later cancel any insurance purchased by Agent, but only after
providing Agent with evidence that Borrower has obtained insurance as required
by this Agreement. If Agent purchases insurance for the Collateral, Borrower
will be responsible for the costs of that insurance, including interest and
other charges imposed by Agent in connection with the placement of the
insurance, until the
17
effective date of the cancellation or expiration of the insurance. The cost of
the insurance may be added to the Obligations. The costs of the insurance may be
more than the cost of insurance Borrower is able to obtain on its own.
2.3 Inspection; Lender Meeting. Borrower shall permit any
authorized representatives of Agent to visit and inspect any of the properties
of Borrower or any of its Restricted Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and business with its
and their officers and certified public or chartered accountants, as applicable,
at such reasonable times during normal business hours and as often as may be
reasonably requested. Representatives of each Lender will be permitted to
accompany representatives of Agent during each visit, inspection and discussion
referred to in the immediately preceding sentence. Without in any way limiting
the foregoing, Borrower will participate and will cause its key management
personnel to participate in a meeting with Agent and Lenders at least once
during each year, which meeting shall be held at such time and such place as may
be reasonably requested by Agent.
2.4 Organizational Existence. Except as otherwise permitted by
subsection 3.6, Borrower will, and will cause each of its Restricted
Subsidiaries to, at all times preserve and keep in full force and effect its
organizational existence and all rights and franchises material to its business.
2.5 Further Assurances.
(A) Borrower shall and shall cause each Loan Party to,
from time to time, execute such guaranties, financing statements, documents,
security agreements and reports as Agent or Requisite Lenders at any time may
reasonably request to evidence, perfect or otherwise implement the guaranties
and security for repayment of the Obligations contemplated by the Loan
Documents.
(B) In the event any Loan Party acquires an interest in
real property after the Closing Date, Borrower shall and shall cause each Loan
Party to deliver to Agent a fully executed mortgage, deed of trust or hypothec,
as applicable, over such real property in form and substance satisfactory to
Agent, together with such title insurance policies, surveys, appraisals,
evidence of insurance, legal opinions, environmental assessments and other
documents and certificates as shall be required by Agent and are consistent with
requirements imposed with respect to real property interests of such Loan
Parties at the Closing Date.
(C) Borrower shall cause each Person, upon its becoming a
Restricted Subsidiary of Borrower, promptly to guaranty the Obligations and to
grant to Agent, for the benefit of Agent and Lenders, a Lien in the real,
personal and mixed property of such Person to secure the Obligations. In
addition, all of the capital stock of such Restricted Subsidiary shall be
pledged to Agent, for the benefit of Agent and Lenders. The documentation for
such guaranty and security shall be substantially similar to the Loan Documents
executed concurrently herewith with such modifications as are reasonably
requested by Agent.
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2.6 Holding Company. In the event that a majority of Borrower's
outstanding capital stock shall at any time be owned by a corporation or other
entity (other than an individual) (a "Holding Company"), Borrower shall cause
such Holding Company to guaranty the Obligations, to pledge to the Agent, for
the benefit of Lenders, all of the capital stock of Borrower owned by such
Holding Company, and to grant to Agent, for the benefit of Lenders, a Lien in
all of such Holding Company's assets. In addition, if any holding company is
formed or acquired for the purpose of owning the stock of Borrower's Restricted
Subsidiaries, Borrower shall cause such holding company to guaranty the
Obligations and to pledge to the Agent, for the benefit of Lenders, all of the
capital stock of such Restricted Subsidiaries.
2.7 Environmental Matters. Borrower shall and shall cause each of
its Subsidiaries to: (a) conduct its operations and keep and maintain its Real
Estate in compliance with all Environmental Laws and Environmental Permits other
than noncompliance that could not reasonably be expected to have a Material
Adverse Effect; (b) implement any and all investigation, remediation, removal
and response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws
and Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after Borrower, any of its Subsidiaries or any other Person within its
control becomes aware of any violation of Environmental Laws or Environmental
Permits or any Release on, at, in, under, above, to, from or about any Real
Estate that is reasonably likely to result in Environmental Liabilities to
Borrower or its Subsidiaries in excess of $50,000; and (d) promptly forward to
Agent a copy of any order, notice, request for information or any communication
or report received by Borrower, any of its Subsidiaries or any Person within its
control in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$50,000, in each case whether or not the Environmental Protection Agency or any
governmental authority has taken or threatened any action in connection with any
such violation, Release or other matter. If Agent at any time has a reasonable
basis to believe that there may be a violation of any Environmental Laws or
Environmental Permits by Borrower or any of its Subsidiaries or any other Person
under the control of Borrower or any of its Subsidiaries or any Environmental
Liability arising thereunder, or a Release of Hazardous Materials on, at, in,
under, above, to, from or about any of its Real Estate, that, in each case,
could reasonably be expected to have a Material Adverse Effect, then Borrower
and its Subsidiaries shall, upon Agent's written request (i) cause the
performance of such environmental audits including subsurface sampling of soil
and groundwater, and preparation of such environmental reports, at Borrower's
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrower
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder. Without limiting the
generality of the foregoing, Borrower will cause Tech Industries to report, to
the extent required by and in accordance with the requirements of the Rhode
Island Department of Environmental Management, elevated arsenic and TPH in
ground water at Tech Industries' facilities in Woonsocket, Rhode Island.
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2.8 Dissolution of Certain Subsidiaries. Borrower has caused each
of ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited Partnership and Fairmount Realty Associates to be
dissolved and liquidated.
SECTION 3.
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full of all Obligations and
termination of the obligations of Lenders with respect to all Letters of Credit,
Borrower shall perform and comply with, and shall cause each of the other Loan
Parties to perform and comply with, all covenants in this Section 3 applicable
to such Person.
3.1 Indebtedness. Borrower will not and will not permit any of its
Restricted Subsidiaries directly or indirectly to create, incur, assume, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation) except:
(A) the Obligations;
(B) intercompany Indebtedness arising from loans made by
Borrower to its Restricted Subsidiaries in the ordinary course of business;
provided, however, that upon the request of Agent at any time, such Indebtedness
owing by any Restricted Subsidiary that is a Loan Party shall be evidenced by
promissory notes having terms reasonably satisfactory to Agent, the sole
originally executed counterparts of which shall be pledged and delivered to
Agent, for the benefit of Agent and Lenders, as security for the Obligations;
(C) Indebtedness evidenced by (i) the Senior Notes and
any guaranties thereof in an aggregate outstanding principal amount not to
exceed $180,000,000, together with interest accrued thereon and (ii) the Senior
Defeased Notes and any guaranties thereof in an aggregate outstanding principal
amount of $110,000,000, together with interest thereon, provided Borrower has
satisfied all the conditions to Covenant Defeasance set forth in Article VIII of
the Senior Defeased Indenture;
(D) Indebtedness incurred after the Closing Date not to
exceed $8,000,000 (or the equivalent thereof in another currency) in the
aggregate for Borrower and its Restricted Subsidiaries on a Consolidated basis
at any time outstanding secured by purchase money Liens that are Permitted
Encumbrances or incurred with respect to capital leases;
(E) unsecured Indebtedness incurred after the Closing
Date not to exceed $1,500,000 (or the equivalent thereof in another currency) in
the aggregate at any time outstanding which is subordinated to the Obligations
in a manner satisfactory to Agent and Requisite Lenders;
(F) Indebtedness outstanding at the Closing Date and
shown on Schedule 3.1;
(G) Indebtedness with respect to the Chase Warrant and
the ▇▇▇▇▇▇ Warrant;
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(H) intercompany Indebtedness arising from loans made by
Subsidiaries to Borrower and its Restricted Subsidiaries; provided, however,
that such Indebtedness shall be evidenced by promissory notes having terms
reasonably satisfactory to Agent and all such Indebtedness shall be subordinated
to the Obligations in a manner satisfactory to Agent; and
(I) Indebtedness of Borrower or any of its Restricted
Subsidiaries under any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement entered into in the ordinary course of
business and designed to alter the risks arising from fluctuations in currency
values not to exceed $15,000,000 in the aggregate at any time outstanding, in
each case whether contingent or matured, so long as such agreement is not
speculative and has been approved by Agent (such approval not to be unreasonably
withheld).
Each of the classifications of Indebtedness permitted to be
incurred pursuant to subparts (A) through (I) hereof shall be deemed to be
separate and independent of the other classifications and, in the event any such
Indebtedness meets the criteria of more than one of the classifications of
Indebtedness described in subparts (A) through (I) permitted to be incurred
thereunder, Borrower will only be required to include the amount and type of
such Indebtedness in one of such classifications.
3.2 Liens and Related Matters.
(A) No Liens. Borrower will not and will not permit any
of its Restricted Subsidiaries directly or indirectly to create, incur, assume
or permit to exist any Lien on or with respect to any property or asset of
Borrower or any of its Restricted Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted Encumbrances.
"Permitted Encumbrances" means the following:
(1) Liens (other than any Lien relating to
Environmental Claims or imposed by ERISA or any rule or regulation promulgated
thereunder) for taxes, assessments or other governmental charges not yet due and
payable;
(2) 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 diligently contested in good
faith in a manner which stays enforcement of such Liens, provided that
appropriate provisions shall have been established therefor in accordance with
GAAP;
(3) Liens (other than any Lien relating to
Environmental Claims or imposed by ERISA or any rule or regulation promulgated
thereunder) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, bids, government contracts, trade
contracts, performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
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(4) deposits, in an aggregate amount for
Borrower and its Restricted Subsidiaries on a Consolidated basis not to exceed
$750,000 (or the equivalent thereof in another currency), made after the Closing
Date in the ordinary course of business to secure liability to insurance
carriers;
(5) Liens for purchase money obligations;
provided that: (a) the Indebtedness secured by any such Lien is permitted under
subsection 3.1; (b) any such Lien encumbers only the asset so purchased; and (c)
the Indebtedness secured by such Lien is incurred within ninety (90) days after
the purchase of such asset;
(6) any attachment or judgment Lien not
constituting an Event of Default under subsection 6.1(H);
(7) easements, rights of way, zoning
restrictions, licenses and other similar charges or encumbrances affecting the
use of real property and not interfering in any material respect with the
ordinary conduct of the business of Borrower or any of its Restricted
Subsidiaries;
(8) any interest or title of a lessor or
sublessor under any lease permitted by subsection 4.1;
(9) Liens in favor of Agent, for the benefit of
Agent and Lenders;
(10) Liens existing on the date hereof and
renewals and extensions thereof, which Liens are set forth on Schedule
3.2(A)(10) hereto;
(11) Liens arising from filing UCC or PPSA
financing statements regarding leases permitted by this Agreement;
(12) Liens on Equity Interests of Unrestricted
Subsidiaries securing Indebtedness of Unrestricted Subsidiaries that is
permitted hereunder;
(13) Liens on assets of Unrestricted Subsidiaries
securing Indebtedness of Unrestricted Subsidiaries that is permitted hereunder;
(14) customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with past
practices; and
(15) any other Lien not expressly permitted by
clauses (1) through (14) above, so long as such other Liens do not secure claims
exceeding $2,000,000 in the aggregate at any time outstanding.
Each of the classifications of Permitted Encumbrances
permitted to be incurred pursuant to subparts (1) through (15) hereof shall be
deemed to be separate and independent of the other classifications and, in the
event any such Permitted Encumbrance meets the criteria of more than one of the
classifications of Permitted Encumbrances described in subparts (1) through (15)
permitted to be incurred hereunder, Borrower will only be required to include
the amount and type of such Permitted Encumbrance in one of such
classifications.
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(B) No Negative Pledges. Borrower will not and will not
permit any of its Restricted Subsidiaries directly or indirectly to enter into
or assume any agreement (other than the Loan Documents and other than as
provided in the Senior Note Documents as in effect on the Closing Date)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
(C) No Restrictions on Restricted Subsidiary
Distributions to a Borrower. Except as provided herein or under the Senior Note
Indenture, Borrower will not and will not permit any of its Restricted
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Restricted Subsidiary to: (1) pay dividends or make
any other distribution on any of such Restricted Subsidiary's capital stock
owned by Borrower or any other Restricted Subsidiary; (2) pay any Indebtedness
owed to Borrower or any other Restricted Subsidiary; (3) make loans or advances
to Borrower or any other Restricted Subsidiary; or (4) transfer any of its
property or assets to Borrower or any other Restricted Subsidiary.
3.3 Investments. Borrower will not and will not permit any of its
Restricted Subsidiaries directly or indirectly to make or own any Investment,
except:
(A) Borrower and its Restricted Subsidiaries may make and
own Investments in Cash Equivalents; provided that such Cash Equivalents are not
subject to setoff rights;
(B) Borrower may make intercompany loans to its
Restricted Subsidiaries that are Loan Parties to the extent permitted under
subsection 3.1(B), and Borrower's Restricted Subsidiaries may make intercompany
loans to Borrower and its Restricted Subsidiaries that are Loan Parties to the
extent permitted under subsection 3.1(H);
(C) Loans and advances to employees for moving,
entertainment, travel and other similar expenses in the ordinary course of
business not to exceed $500,000 to any individual employee and, when aggregated
with the outstanding principal amount of the loan to ▇▇▇▇ ▇. ▇▇▇▇▇ described on
Subschedule 7.4, $2,000,000 in the aggregate for Borrower and all of its
Restricted Subsidiaries at any time outstanding;
(D) Investments existing on the Closing Date and set
forth in Subschedule 7.4 and extensions and renewals thereof, including
promotional loans of equipment to customers pursuant to the terms of subsection
3.7(c);
(E) Investments received in exchange for settlement of
claims with Account debtors;
(F) Investments received in exchange for any other
permitted Investment in conjunction with or as a result of any bankruptcy or
insolvency proceeding, reorganization or recapitalization of the issuer of such
other Investment or as a result of a foreclosure with respect to any secured
permitted Investment or other transfer of title with respect to any secured
permitted Investment in default;
(G) Investments (including intercompany loans) made after
the Closing Date in Unrestricted Subsidiaries and Restricted Subsidiaries which
are not Loan Parties; provided,
23
however, that no single Investment (or series of related Investments) made in
any such Subsidiary shall exceed $5,000,000 and the aggregate amount of all such
Investments shall not exceed $10,000,000 outstanding at any time (measured by
the fair market value of such Investment as of the date made); provided further,
that the aggregate amount of all such Investments in each of Asesoria Maxima,
S.A. de C.V. or Tech Industries U.K. Ltd. shall not exceed $25,000 outstanding
at any time;
(H) Investments made after the Closing Date in any of the
Mexican Restricted Subsidiary, Portola GmbH, or Portola s.r.o., or in joint
ventures with ▇▇▇▇▇▇▇ ▇▇ or its affiliates, not to exceed $10,600,000 in the
aggregate amount at any one time outstanding (measured by the fair market value
of such Investment as of the date made); and
(I) Investments made after the Closing Date in Persons,
including Subsidiaries, principally engaged in similar lines of business to that
of Borrower or Borrower's existing Restricted Subsidiaries that are Loan Parties
as of the Closing Date (including the packaging or product integrity business)
not to exceed the sum of (1) $10,000,000 plus (2) the aggregate net cash
proceeds from the issuance of capital stock or other equity securities of
Borrower after the Closing Date which are contributed as additional paid-in
capital to Borrower and are at all times prior to the making of any such
Investment held by Borrower in a segregated account and not co-mingled with any
other funds of Borrower or its Subsidiaries (less all of such net cash proceeds
used or otherwise segregated to repurchase Senior Notes or capital stock or
other equity securities of Borrower or applied for other purposes) in aggregate
amount at any one time outstanding (measured by the fair market value of such
Investment as of the date made); and
(J) currency hedging agreements entered into in
compliance with Section 3.1(I).
Each of the classifications of Investments permitted to be
made pursuant to subparts (A) through (J) hereof shall be deemed to be separate
and independent of the other classifications and, in the event any such
Investment meets the criteria of more than one of the classifications of
Investments described in subparts (A) through (J) permitted to be made
thereunder, Borrower will only be required to include the amount and type of
such Investment in one of such classifications.
For purposes of calculating the aggregate amount of
Investments permitted to be outstanding at any one time pursuant to clauses (G),
(H) and (I), (i) to the extent the consideration for any such Investment
consists of Equity Interests (other than Disqualified Stock) of Borrower, the
value of the Equity Interests so issued will be ignored in determining the
amount of such Investment, (ii) the aggregate amount of such Investments made by
Borrower and its Restricted Subsidiaries will be decreased (but not below zero)
by an amount equal to the cash return of capital to Borrower or a Restricted
Subsidiary with respect to such an Investment that is sold for cash or otherwise
liquidated or repaid for cash (less, in each case, the cost of disposition,
including applicable taxes, if any), provided, however, that in no event shall
the aggregate amount of such Investments so permitted be increased above the
amounts specified in such clauses (G), (H) and (I), and (iii) in the case of an
Investment made by issuing letters of credit (or reimbursement agreements in
respect thereof), the aggregate amount of such
24
Investments will be decreased by the amount remaining unpaid thereunder upon
termination of Borrower's obligations thereunder.
"Investment" means (i) any direct or indirect purchase or
other acquisition by Borrower or any of its Restricted Subsidiaries of any
beneficial interest in, including stock, partnership interest or other equity
securities of, or ownership interest in, any other Person; and (ii) any direct
or indirect loan, advance or capital contribution by Borrower or any of its
Restricted Subsidiaries to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment. The term "Investment" shall not include any guaranty of the Senior
Notes by any of Borrower's Subsidiaries.
"Cash Equivalents" means: (i) marketable direct obligations
issued or unconditionally guarantied by the United States, the United Kingdom or
Canadian Government or issued by any agency thereof and backed by the full faith
and credit of the United States, the United Kingdom, Canada, the European
Central Bank or any National Central Bank of an EU member state, in each case
maturing within one (1) year from the date of acquisition thereof; (ii)
commercial paper maturing no more than one (1) year from the date issued and, at
the time of acquisition, having a rating of at least A-1 from Standard & Poor's
Ratings Group or at least P-1 from ▇▇▇▇▇'▇ Investors Service, Inc.; (iii) (a)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any
Schedule I Bank organized under the laws of Canada having combined capital and
surplus of not less than $500,000,000 or (b) certificates of deposit issued in
London, England, and maturing within one (1) year from the date of issuance
thereof issued by an authorized institution under the Banking ▇▇▇ ▇▇▇▇ with
ratings of at least A-1 from Standard & Poor's Ratings Group or at least P-1
from ▇▇▇▇▇'▇ Investors Service, Inc. or at least A-1 from Fitch IBCA, Inc.; (iv)
time deposits maturing no more than thirty (30) days from the date of creation
thereof with commercial banks having membership in the Federal Deposit Insurance
Corporation or the Canadian Deposit Insurance Corporation in amounts not
exceeding the lesser of $100,000 or the maximum amount of insurance applicable
to the aggregate amount of Borrower's deposits at such institution; and (v)
deposits or investments in mutual or similar funds offered or sponsored by
brokerage or other companies having membership in the Securities Investor
Protection Corporation which invest substantially all of such funds' assets in
investments satisfying the requirements of clauses (i) through (iv) above.
3.4 Contingent Obligations. Borrower will not and will not permit
any of its Restricted Subsidiaries directly or indirectly to create or become or
be liable with respect to any Contingent Obligation except:
(A) Letter of Credit Liability;
(B) guaranties of the Obligations and of the Senior
Notes;
25
(C) Contingent Obligations of Borrower and the Restricted
Subsidiaries under the Loan Documents;
(D) those resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(E) those existing on the Closing Date and described in
Schedule 3.4 annexed hereto;
(F) those arising under indemnity agreements to title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
(G) those arising with respect to customary
indemnification obligations incurred in connection with Asset Dispositions;
(H) those incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations not exceeding at any time outstanding $500,000 (or
the equivalent thereof in another currency) in aggregate liability;
(I) those incurred after the Closing Date with respect to
Indebtedness permitted by subsection 3.1 so long as such Contingent Obligations
incurred after the Closing Date, in the aggregate at any time outstanding, do
not exceed $2,500,000 (or the equivalent thereof in another currency);
(J) Contingent Obligations under Interest Rate Agreements
approved by Agent in its sole discretion with respect to the Loans;
(K) Contingent Obligations consisting of customary
indemnification obligations in favor of officers and directors of Borrower and
its Restricted Subsidiaries in connection with the performance of their duties
for Borrower and its Restricted Subsidiaries to the extent permitted under
applicable corporate law;
(L) Contingent Obligations consisting of Investments
permitted pursuant to subsection 3.3; and
(M) any other Contingent Obligation not expressly
permitted by clauses (A) through (L) above and incurred after the Closing Date,
so long as any such other Contingent Obligations, in the aggregate at any time
outstanding, do not exceed $10,000,000 (or the equivalent thereof in another
currency).
Each of the classifications of Contingent Obligations
permitted to be incurred pursuant to subparts (A) through (M) hereof shall be
deemed to be separate and independent of the other classifications and, in the
event of any such Contingent Obligation meets the criteria of more than one of
the classifications of Contingent Obligations described in subparts (A) through
(M) permitted to be incurred hereunder, Borrower will only be required to
include the amount and type of such Contingent Obligations in one of such
classifications.
26
"Contingent Obligation", as applied to any Person, means any
direct or indirect liability of that Person: (i) with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
purpose or intent of the Person incurring such liability, or the effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; (ii) with respect to any letter
of credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (iii) under any foreign exchange
contract, currency swap agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates; (iv) to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, or (v) pursuant to any agreement to purchase,
repurchase or otherwise acquire any obligation or any property constituting
security therefor, to provide funds for the payment or discharge of such
obligation or to maintain the solvency, financial condition or any balance sheet
item or level of income of another. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount so
guaranteed.
3.5 Restricted Junior Payments. Borrower will not and will not
permit any of its Restricted Subsidiaries directly or indirectly to declare,
order, pay, make or set apart any sum for any Restricted Junior Payment, except
that:
(A)
(i) During the first Loan Year, Borrower may
repurchase the Chase Warrant and the ▇▇▇▇▇▇ Warrant and may redeem shares of its
capital stock, in each case so long as:
(a) no Default or Event of Default is
then in existence or would be created as a result thereof;
(b) after giving effect to such
repurchase or redemption, Availability is not less than $5,000,000; and
(c) the aggregate amount of such
Restricted Junior Payments shall not exceed $10,000,000; and
(ii) During the first Loan Year, and so long as
no Default or Event of Default is than in existence or would be created as a
result thereof, Borrower may repurchase the Chase Warrant and the ▇▇▇▇▇▇ Warrant
and may redeem shares of its capital stock with proceeds received by Borrower
from its issuance of the Senior Notes in an amount not exceeding $20,000,000
which are at all times prior to any such repurchase or redemption held by
Borrower in a segregated account and not co-mingled with any other funds of
Borrower or its Subsidiaries;
Notwithstanding the foregoing, Borrower may not repurchase the
Chase Warrant or the ▇▇▇▇▇▇ Warrant or redeem shares of its capital stock if
either such repurchase would constitute a breach of or result in a default under
the Senior Note Documents;
27
(B) Restricted Subsidiaries of Borrower may make
Restricted Junior Payments to Borrower;
(C) so long as no Default or Event of Default is then in
existence, or would occur as a result of such redemption, Borrower may redeem
shares of capital stock from any of its employees and directors for the purpose
of providing cash to such employee or director in an amount not in excess of
such employee's or director's federal and state tax liability from the exercise
of stock options granted by Borrower;
(D) Borrower may accept delivery of shares of its capital
stock from any of its employees and directors in payment of all or any portion
of the exercise price of stock options granted by Borrower;
(E) so long as no Default or Event of Default is then in
existence, or would occur as a result of such payment, Borrower may pay
management fees to PPI Management Company, a California corporation, such fees
not to exceed $60,000 in each of Borrower's 2004 and 2005 fiscal years and
$75,000 in each fiscal year thereafter; and
(F) so long as no Default or Event of Default is then in
existence, or would occur as a result of such redemption, Borrower may redeem
shares of its capital stock from any of its employees and directors whose
employment with Borrower has terminated, other than ▇▇▇▇ ▇. ▇▇▇▇▇, in an
aggregate amount not in excess of $300,000 in any fiscal year of Borrower.
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity security of, or ownership interest in, Borrower or any of its
Restricted Subsidiaries now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class; (ii) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock or other equity security of, or ownership interest in,
Borrower or any of its Restricted Subsidiaries now or hereafter outstanding;
(iii) any payment or prepayment of interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness subordinated to the
Obligations; and (iv) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock or other equity security of, or ownership interest in, Borrower or any
of its Restricted Subsidiaries now or hereafter outstanding.
3.6 Restriction on Fundamental Changes. Borrower will not and will
not permit any of its Restricted Subsidiaries directly or indirectly to: (a)
amend, modify or waive any term or provision of its organizational documents,
including, without limitation, its articles of incorporation, certificates of
designations pertaining to preferred stock, by-laws, partnership agreement or
operating agreement unless required by law; (b) enter into any transaction of
merger, amalgamation or consolidation except, upon not less than five (5)
Business Days' prior written notice to Agent, any wholly-owned Restricted
Subsidiary of Borrower may be merged or amalgamated with or into Borrower
(provided that Borrower is the surviving entity) or any other wholly-owned
Restricted Subsidiary of Borrower; (c) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution); or (d) acquire by purchase or otherwise
all or any
28
substantial part of the business or assets of any other Person, except in
connection with an Investment under subsection 3.3(I).
3.7 Disposal of Assets or Subsidiary Stock. Borrower will not and
will not permit any of its Restricted Subsidiaries directly or indirectly to
convey, sell, lease, sublease, transfer or otherwise dispose of, or grant any
Person an option to acquire, in one transaction or a series of related
transactions, any of its property, business or assets, or the capital stock of
or other equity interests in any of its Restricted Subsidiaries, whether now
owned or hereafter acquired, except for (a) bona fide sales of inventory to
customers for fair value in the ordinary course of business and dispositions of
obsolete equipment not used or useful in the business; (b) Asset Dispositions if
all of the following conditions are met: (i) (A) in the case of Asset
Dispositions involving assets deemed by Borrower to be no longer useful in the
business, the market value of such assets sold or otherwise disposed of in any
single transaction or series of related transactions does not exceed $500,000
(or the equivalent thereof in another currency) and the aggregate market value
of such assets sold or otherwise disposed of by Borrower and its Restricted
Subsidiaries in any fiscal year of Borrower does not exceed $2,500,000 (or the
equivalent thereof in another currency) and (B) in the case of Asset
Dispositions involving other assets, the market value of such assets sold or
otherwise disposed of in any single transaction or series of related
transactions does not exceed $1,000,000 (or the equivalent thereof in another
currency) and the aggregate market value of such assets sold or otherwise
disposed of by Borrower and its Restricted Subsidiaries in any fiscal year of
Borrower does not exceed $5,000,000 (or the equivalent thereof in another
currency); (ii) the consideration received is at least equal to the fair market
value of such assets; (iii) at least eighty percent (80%) of the consideration
received is cash (exclusive of non-cash consideration received in the form of
promissory notes in an aggregate amount not in excess of $3,000,000 during the
term of this Agreement); (iv) after giving effect to the Asset Disposition and
the repayment of Indebtedness with the proceeds thereof, Borrower is in
compliance on a pro forma basis with the covenants set forth in Section 4
recomputed for the most recently ended quarter for which information is
available and is in compliance with all other terms and conditions of this
Agreement; and (v) no Default or Event of Default then exists or would result
from such Asset Disposition; (c) loans and leases of equipment in the ordinary
course of business of Borrower, provided that the aggregate value of all such
equipment that is loaned during any fiscal year of Borrower shall not exceed one
and one-fifth percent (1.2%) of Borrower's total annual sales revenues for the
immediately preceding fiscal year; (d) Asset Dispositions the net proceeds of
which are used to purchase replacement assets within ninety (90) days of such
Asset Disposition. Notwithstanding the foregoing, Borrower may sell all or any
portion of the Chino Property, the Sumter Property or the ▇▇▇▇▇▇▇▇▇ Property so
long as such sale complies with the requirements of this subsection 3.7(b)(ii),
(iii), (iv) and (v); and (e) any Restricted Subsidiary may convey all or any
portion of its property and assets to Borrower or to any Restricted Subsidiary
that is a Loan Party. In the event that Borrower or any Restricted Subsidiary
makes an Asset Disposition that, but for the operation of this sentence, would
result in Borrower's being obligated to make an Asset Sale Offer (as defined in
the Senior Note Indenture), then immediately following such Asset Disposition,
the Net Proceeds of such Asset Disposition shall be applied in repayment of the
Revolving Loans, and upon such repayment, the Revolving Loan Commitment shall be
permanently reduced to the extent necessary to prevent Borrower from being
required to make an Asset Sale Offer.
29
3.8 Transactions with Affiliates. Borrower will not and will not
permit any of its Restricted Subsidiaries directly or indirectly to enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any management, consulting,
investment banking, advisory or other similar services) with any Affiliate or
with any director, officer or employee of any Loan Party, except (a) as set
forth on Schedule 3.8, (b) transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of Borrower or any of its
Restricted Subsidiaries and upon fair and reasonable terms which are fully
disclosed to Agent and are no less favorable to Borrower or such Restricted
Subsidiary than would be obtained in a comparable arm's length transaction with
a Person that is not an Affiliate, (c) intercompany Indebtedness permitted
pursuant to subsection 3.1, (d) Investments permitted pursuant to subsection
3.3, (e) Restricted Junior Payments permitted pursuant to subsection 3.5, (f)
payment of reasonable compensation to officers and employees for services
actually rendered to Borrower or such Restricted Subsidiary and (g) payment of
director's fees for board and committee service not to exceed $500,000 (or the
equivalent thereof in another currency) in the aggregate for any fiscal year of
Borrower; provided, however, that any employment, stock option, stock purchase
or stock grant agreement entered into by Borrower or any of its Restricted
Subsidiaries with directors, officers and employees in the ordinary course of
business and consistent with the past practice of Borrower or such Restricted
Subsidiaries shall not be deemed a transaction with an Affiliate.
Notwithstanding the foregoing, unless otherwise approved by Requisite Lenders,
no payments may be made with respect to any items set forth as subparts 2, 4, 9,
10, 12, 19 and 24 under the heading "Portola Packaging, Inc." on Schedule 3.8
after the occurrence and during the continuation of a Default or Event of
Default or if a Default or Event of Default would result therefrom.
3.9 Conduct of Business. Borrower will not and will not permit any
of its Restricted Subsidiaries directly or indirectly to engage in any business
other than businesses of the type described on Schedule 3.9.
3.10 Changes Relating to Indebtedness. Borrower will not and will
not permit any of its Restricted Subsidiaries directly or indirectly to change
or amend the terms of any of its Indebtedness permitted by subsections 3.1 (C)
or (F) if the effect of such amendment is to: (a) increase the interest rate on
such Indebtedness; (b) change the dates upon which payments of principal or
interest are due on or principal amount of such Indebtedness; (c) change any
event of default or add or make more restrictive any covenant with respect to
such Indebtedness; (d) change the prepayment provisions of such Indebtedness;
(e) change the subordination provisions thereof, if any (or the subordination
terms of any guaranty thereof, if any); or (f) change or amend any other term if
such change or amendment would materially increase the obligations of the
obligor or confer additional material rights on the holder of such Indebtedness
in a manner adverse to Borrower, any of its Restricted Subsidiaries or Lenders.
3.11 Fiscal Year. Borrower will not and will not permit any of its
Restricted Subsidiaries to change their fiscal year.
3.12 Press Release; Public Offering Materials. Borrower will not
and will not permit any of its Subsidiaries to disclose the name of Agent or any
Lender in any press release or in any prospectus, proxy statement or other
materials filed with any governmental entity relating to a
30
public offering of the securities of any Loan Party unless Agent or the
applicable Lender has approved the content of any such disclosure.
3.13 Subsidiaries. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to establish, create or acquire any new
Subsidiary not listed on Subschedule 7.7 except in connection with an Investment
permitted under subsection 3.3, and provided that upon Agent's request, Borrower
shall pledge to Agent, for the benefit of Lenders, all of Borrower's right,
title and interest in and to the capital stock of each such Subsidiary that is a
Restricted Subsidiary and shall cause each such Subsidiary that is a Restricted
Subsidiary to guaranty the Obligations and to grant to Agent, for the benefit of
Lenders, a Lien in all of its assets.
3.14 Bank Accounts. Borrower will not and will not permit any of
its Restricted Subsidiaries to establish any new bank accounts without prior
written notice to Agent and unless Agent, Borrower or such Restricted Subsidiary
and the bank at which the account is to be opened enter into a tri-party
agreement regarding such bank account pursuant to which such bank acknowledges
the security interest of Agent in such bank account and agrees to limit its
set-off rights on terms satisfactory to Agent.
3.15 Applications under CCAA. Borrower acknowledges that its
business and financial relationships with Agent and Lenders are unique from its
relationship with any other of its creditors. Borrower agrees that it shall not
and shall not permit any of its Restricted Subsidiaries to file any plan of
arrangement under the CCAA ("CCAA Plan") which provides for, or would permit
directly or indirectly, Agent or any Lender to be classified with any other
creditor of such Borrower for purposes of such CCAA Plan or otherwise.
"CCAA" means the Companies' Creditors Arrangement Act
(Canada), as the same now exists or may from time to time hereafter be amended,
modified or supplemented, together with all official rules, regulations and
interpretations thereunder or related thereto.
3.16 Inactive Subsidiaries. Borrower will not and will not permit
any of its Restricted Subsidiaries to make any Investment in or transfer any
properties to any of the Inactive Subsidiaries (except for Investments in Tech
Industries U.K. Ltd. permitted in Section 3.3(G)). Borrower shall not permit any
of the Inactive Subsidiaries to have any assets or liabilities, except for Cap
Snap, Inc.'s right to receive payment pursuant to a judgment.
3.17 Press Release; Public Offering Materials. Borrower agrees that
neither it nor its Affiliates will in the future issue any press releases or
other public disclosure, including any prospectus, proxy statement or other
materials filed with any governmental authority relating to a public offering of
the stock of any Loan Party or Affiliate, using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Loan Party or Affiliate is required to do so
under law and then, in any event, such Loan Party or Affiliate will consult with
GE Capital before issuing such press release or other public disclosure.
31
3.18 Hazardous Materials. Borrower shall not and shall not cause or
permit its Subsidiaries to cause or permit a Release of any Hazardous Material
on, at, in, under, above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities by Borrower or any of its Subsidiaries under, any
Environmental Laws or Environmental Permits or (b) otherwise adversely impact
the value or marketability of any of the Real Estate or any of the Collateral,
other than such violations or Environmental Liabilities that could not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.
FINANCIAL COVENANTS/REPORTING
Borrower covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full of all Obligations and
termination of the Obligations of Lenders with respect to all Letters of Credit,
Borrower shall perform and comply with, and shall cause each of the other Loan
Parties to perform and comply with, all covenants in this Section 4 applicable
to such Person.
4.1 Lease Limits. Borrower will not and will not permit any of its
Restricted Subsidiaries directly or indirectly to become or remain liable in any
way, whether directly or by assignment or as a guarantor or other surety, for
the obligations of the lessee under any operating lease, synthetic lease or
similar off-balance sheet financing, if the aggregate amount of all rents (or
substantially equivalent payments) paid by Borrower and its Restricted
Subsidiaries under all such leases would exceed $6,000,000 (or the equivalent
thereof in another currency) in any fiscal year of Borrower.
4.2 Fixed Charge Coverage. Borrower shall not permit the Fixed
Charge Coverage for any twelve (12) month period ending on the last day of each
fiscal quarter set forth below to be less than the ratio set forth below for
such period.
Date Ratio
---- -----
February 28, 2004 1.00 to 1.00
May 31, 2004 1.00 to 1.00
August 31, 2004 1.00 to 1.00
November 30, 2004, and the last day of each
fiscal quarter thereafter 1.10 to 1.00
4.3 [Intentionally Omitted.]
4.4 Maintenance of Minimum Availability Borrower shall maintain an
aggregate Availability of at least (a) $3,000,000 at all times other than during
a Fixed Asset Draw Period and (b) $5,000,000 at all times during a Fixed Asset
Draw Period.
4.5 Financial Statements and Other Reports. Borrower will
maintain, and cause each of its Restricted Subsidiaries to maintain, a system of
accounting established and administered in
32
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP (it being understood that monthly financial
statements are not required to have footnote disclosures). Borrower will deliver
each of the financial statements and other reports described below to Agent (and
each Lender in the case of the financial statements and other reports described
in subsections (A) through (H), (J), (K) and (L)).
(A) Monthly Financials. As soon as available and in any
event within thirty (30) days after the end of each month (including the last
month of Borrower's fiscal year), Borrower will deliver (1) the Consolidated
balance sheet of Borrower and its Consolidated Subsidiaries, as at the end of
such month, and the related Consolidated and consolidating statements of income,
stockholders' equity and cash flow for such month and for the period from the
beginning of the then current fiscal year of Borrower to the end of such month
and (2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower and its Restricted Subsidiaries describing in reasonable detail each
such debt issue or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt issue or loan.
(B) Year-End Financials. As soon as available and in any
event within one hundred five (105) days after the end of each fiscal year of
Borrower (and on or before the Closing Date in the case of Borrower's 2003
fiscal year), Borrower will deliver (1) the Consolidated and consolidating
balance sheets of Borrower and its Consolidated Subsidiaries, as at the end of
such year, and the related Consolidated and consolidating statements of income,
stockholders' equity and cash flow for such fiscal year, (2) a schedule of the
outstanding Indebtedness for borrowed money of Borrower and its Restricted
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan and (3) a report with respect to
the consolidated financial statements from a firm of Certified Public
Accountants selected by Borrower and reasonably acceptable to Agent, which
report shall be prepared in accordance with Statement of Auditing Standards No.
58 (the "Statement") entitled "Reports on Audited Financial Statements" and such
report shall be "Unqualified" (as such term is defined in such Statement).
Borrower shall deliver a copy of each audited or reviewed financial statements
of the UK Restricted Subsidiary or either Canadian Restricted Subsidiary that
are required to be prepared under applicable law promptly following the
preparation of such financial statements.
(C) Compliance Certificate. Together with each delivery
of financial statements of Borrower and its Consolidated Subsidiaries pursuant
to subsections 4.5(A) and 4.5(B) above, Borrower will deliver a fully and
properly completed Compliance Certificate (in substantially the same form as
Exhibit 4.5(C) and attaching thereto a calculation, in form and substance
reasonably acceptable to Agent, of Borrower's compliance with the covenants set
forth in subsections 4.1, 4.2 and 4.4) signed by Borrower's president, chief
executive officer, chief operating officer or chief financial officer.
(D) Intercompany Indebtedness Report. As soon as
available and in any event within thirty (30) days after the end of each month
(including the last month of Borrower's fiscal year), Borrower will deliver a
schedule of the outstanding intercompany Indebtedness and Investments of
Borrower and its Subsidiaries describing in reasonable detail each such loan
33
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such loan.
(E) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted by Borrower's
firm of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of Borrower or its Restricted Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(F) Borrowing Base Certificate and Loan Report. (1) As
soon as available and in any event within twenty (20) days after the end of each
month, within five (5) Business Days following the sale or disposition of all or
any portion of the Chino Property, the Sumter Property or the ▇▇▇▇▇▇▇▇▇ Property
or any other Eligible PPE having an appraised value in excess of $500,000,
within five (5) Business Days following the consummation of any other
transaction or the occurrence of any event that results in a reduction in the
Borrowing Base by more than $500,000 (other than sales of Inventory and
collection of Accounts in the ordinary course of business), and from time to
time upon the request of Agent, Borrower will deliver to Agent a Borrowing Base
Certificate (in substantially the same form as Exhibit 4.5(F)) as at the last
day of such period; (2) as soon as available and in any event within twenty (20)
days after the end of each month, and from time to time upon the request of
Agent, Borrower will, and will cause each of its Restricted Subsidiaries to,
deliver to Agent an inventory summary report and accounts receivable summary
report for Borrower and each of its Restricted Subsidiaries, in form and
substance reasonably satisfactory to Agent; (3) upon Agent's request from time
to time, Borrower will, and will cause each of its Restricted Subsidiaries to,
deliver to Agent an aged trial balance as of the most recent month-end
immediately preceding such request of all Accounts and an aged trial balance as
of the most recent month-end immediately preceding such request of all accounts
payable in form and substance reasonably satisfactory to Agent; (4) upon Agent's
request from time to time, Borrower will, and will cause each of its Restricted
Subsidiaries to, deliver to Agent a detailed schedule of all Inventory as of the
most recent month-end immediately preceding such request in form and substance
reasonably satisfactory to Agent; and (5) upon Agent's request from time to
time, Borrower will, and will cause each of its Restricted Subsidiaries to,
deliver to Agent a detailed schedule of all PPE as of the most recent month-end
immediately preceding such request in form and substance reasonably satisfactory
to Agent.
(G) Management Report. Together with each delivery of
financial statements of Borrower pursuant to subsections 4.5(A) and 4.5(B),
Borrower will deliver a management report (1) describing the operations and
financial condition of Borrower and its Consolidated Subsidiaries for the month
then ended and the portion of the current fiscal year then elapsed (or for the
fiscal year then ended in the case of year-end financials), (2) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
Projections for the current fiscal year delivered pursuant to subsection 4.5(J)
and (3) discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer of Borrower to the effect that such information fairly
presents the results of operations and financial condition of Borrower and its
Consolidated Subsidiaries as at the dates and for the periods indicated.
34
(H) Collateral Value Report. Upon the request of Agent,
which may be made not more than once each year prior to an Event of Default and
at any time while and so long as an Event of Default shall be continuing,
Borrower will obtain and deliver to Agent, at Borrower's expense, a report of an
independent collateral auditor satisfactory to Agent (which may be, or be
affiliated with, a Lender) with respect to the accounts and inventory components
included in the Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Certificate most recently delivered
is accurate and complete in all material respects based upon a review by such
auditors of the accounts (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the billing
practices of Borrower) and inventory (including verification as to the value,
location and respective types).
(I) Appraisals. From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for Agent or such
Lender to comply with applicable laws or regulations, Agent will, at Borrower's
expense, obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or any
portion of the real estate owned by Borrower or any of its Restricted
Subsidiaries. In addition to the foregoing, (i) promptly following the Closing
Date, Borrower shall obtain and deliver to Agent appraisal reports in form and
substance and from appraisers satisfactory to Agent stating the then current
market values and/or orderly liquidation values of all of the Real Estate and
personal property owned by Borrower and its Restricted Subsidiaries and (ii)
thereafter from time to time, but in the absence of a Default or Event of
Default not more than once during each calendar year, Agent may require Borrower
to obtain and deliver to Agent appraisal reports in form and substance and from
appraisers satisfactory to Agent stating the then current market values and/or
orderly liquidation values of all or any portion of the Real Estate and personal
property owned by Borrower or any of its Restricted Subsidiaries.
(J) Projections. As soon as available and in any event no
later than the last day of each of Borrower's fiscal years, Borrower will
deliver Projections of Borrower and its Subsidiaries on a Consolidated basis for
the forthcoming three fiscal years, year by year, and for the forthcoming fiscal
year, quarter by quarter. Notwithstanding the immediately preceding sentence,
for each forthcoming fiscal year, projections will be prepared on a consolidated
and a Subsidiary by Subsidiary basis.
(K) Securities Filings and Press Releases. Promptly upon
their becoming available, Borrower will deliver copies of (1) all financial
statements, reports, notices and proxy statements sent or made available by
Borrower or any of its Restricted Subsidiaries to their security holders, (2)
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by Borrower or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (3) all press releases and
other statements made available by Borrower or any of its Restricted
Subsidiaries to the public concerning developments in the business of any such
Person.
(L) Events of Default, Etc. Promptly upon any executive
officer of Borrower obtaining knowledge of any of the following events or
conditions, Borrower shall deliver copies of all notices given or received by
Borrower or any of its Restricted Subsidiaries with respect to
35
any such event or condition and a certificate of Borrower's chief executive
officer, president or chief operating officer specifying the nature and period
of existence of such event or condition and what action Borrower or any of its
Restricted Subsidiaries has taken, is taking and proposes to take with respect
thereto: (1) any condition or event that constitutes an Event of Default or
Default; (2) any notice that any Person has given to Borrower or any of its
Restricted Subsidiaries or any other action taken with respect to a claimed
default or event or condition of the type referred to in subsection 6.1(B); (3)
any event or condition that could reasonably be expected to result in any
Material Adverse Effect; (4) any Default or Event of Default under the Senior
Note Indenture, Borrower's making of any Change of Control Offer or Asset Sale
Offer (each as defined in the Senior Note Indenture) or Borrower's receipt of
notice of acceleration of the Senior Notes; or (5) any default or event of
default with respect to any other Indebtedness of Borrower or any of its
Restricted Subsidiaries.
(M) Litigation. Promptly upon any executive officer of
Borrower obtaining knowledge of (1) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or affecting any
Loan Party or any property of any Loan Party not previously disclosed by
Borrower to Agent or (2) any material development in any action, suit,
proceeding, governmental investigation or arbitration at any time pending
against or affecting any Loan Party or any property of any Loan Party which, in
each case, could reasonably be expected to have a Material Adverse Effect,
Borrower will promptly give notice thereof to Agent and provide such other
information as may be reasonably available to them to enable Agent and its
counsel to evaluate such matter.
(N) Notice of Corporate and other Changes. Borrower shall
provide prompt written notice of (1) all jurisdictions in which a Loan Party
becomes qualified after the Closing Date to transact business, (2) any change
after the Closing Date in the authorized and issued equity securities of any
Loan Party or any amendment to their articles or certificate of incorporation,
by-laws, partnership agreement or other organizational documents, (3) any
Subsidiary created or acquired by any Loan Party after the Closing Date, such
notice, in each case, to identify the applicable jurisdictions, capital
structures or Subsidiaries, as applicable, and (4) any other event that occurs
after the Closing Date which would cause any of the representations and
warranties in Section 5 of this Agreement or in any other Loan Document to be
untrue or misleading in any material respect. The foregoing notice requirement
shall not be construed to constitute Requisite Lenders' consent to any
transaction referred to above which is not expressly permitted by the terms of
this Agreement.
(O) Customer Concentration. Borrower shall provide prompt
written notice if the Accounts of any customer exceed in the aggregate an amount
equal to twenty percent of the aggregate of all Accounts of Borrower at any
time.
(P) Other Information. With reasonable promptness,
Borrower will deliver such other information and data with respect to any Loan
Party or any Restricted Subsidiary of any Loan Party as from time to time may be
reasonably requested by Agent.
4.6 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements
36
and other information furnished to Agent pursuant to subsection 4.5 shall be
prepared in accordance with GAAP as in effect at the time of such preparation.
No "Accounting Changes" (as defined below) shall affect financial covenants,
standards or terms in this Agreement; provided that Borrower shall prepare
footnotes to each Compliance Certificate and the financial statements required
to be delivered hereunder that show the differences between the financial
statements delivered (which reflect such Accounting Changes) and the basis for
calculating financial covenant compliance (without reflecting such Accounting
Changes). "Accounting Changes" means: (a) changes in accounting principles
required by GAAP and implemented by Borrower; (b) changes in accounting
principles recommended by a Borrower's certified public accountants and
implemented by Borrower; and (c) changes in carrying value of Borrower's or any
of its Subsidiaries' assets, liabilities or equity accounts resulting from (i)
the application of purchase accounting principles (A.P.B. 16 and/or 17 and EITF
88-16 and FASB 109) to the Related Transactions or (ii) as the result of any
other adjustments that, in each case, were applicable to, but not included in,
the Pro Forma. All such adjustments described in clause (c) above resulting from
expenditures made subsequent to the Closing Date (including, but not limited to,
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into the Loan Documents,
to make Loans and to issue or cause to be issued Letters of Credit, Borrower
represents, warrants and covenants to Agent and each Lender that the following
statements are and, after giving effect to the Related Transactions, will remain
true, correct and complete for so long as the Revolving Loan Commitment
hereunder shall be in effect and until payment in full of all Obligations:
5.1 Disclosure. No representation or warranty of any Loan Party
contained in this Agreement, the financial statements referred to in subsection
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
5.2 No Material Adverse Effect. Since August 31, 2003, except as
set forth on Schedule 5.2, there have been no events or changes in facts or
circumstances affecting any Loan Party which individually or in the aggregate
have had or could reasonably be expected to have a Material Adverse Effect and
that have not been disclosed herein or in the attached Schedules.
5.3 No Conflict. The consummation of the Related Transactions does
not and will not violate or conflict with any laws, rules, regulations or orders
of any governmental authority or violate, conflict with, result in a breach of,
or constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation of any Loan Party except if such violations, conflicts,
breaches or defaults have either been waived on or before the Closing Date or
could
37
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
5.4 Organization, Powers, Capitalization and Good Standing.
(A) Organization and Powers. Each of the Loan Parties is
duly organized, incorporated, amalgamated or continued, validly existing and in
good standing under the laws of its jurisdiction of organization, incorporation,
amalgamation or continuance and qualified to do business in all jurisdictions
where such qualification is required except where failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect. The
jurisdiction of organization, incorporation or amalgamation and all
jurisdictions in which each Loan Party is qualified to do business are set forth
on Schedule 5.4(A). Each of the Loan Parties has all requisite power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Related Transactions
Document to which it is a party and to incur the Obligations, grant Liens and
security interests in the Collateral and carry out the Related Transactions.
(B) Capitalization. The authorized equity securities of
each of the Loan Parties is as set forth on Schedule 5.4(B). All issued and
outstanding equity securities of each of the Loan Parties are duly authorized
and validly issued, fully paid, nonassessable, free and clear of all Liens other
than transfer restrictions under federal and state securities laws, those in
favor of Agent for the benefit of Agent and Lenders and those set forth on
Schedule 5.4(B), and such equity securities were issued in compliance with all
applicable state, provincial, federal and foreign laws concerning the issuance
of securities. The identity of the holders of the equity securities of each of
the Loan Parties and for the ten largest shareholders of each Loan Party, the
percentage of their fully-diluted ownership of the equity securities of each of
the Loan Parties is set forth on Schedule 5.4(B). No shares of the capital stock
or other equity securities of any Loan Party, other than those described above,
are issued and outstanding. Except as provided in Schedule 5.4(B), there are no
preemptive or other outstanding rights, options, warrants, conversion rights or
similar agreements or understandings for the purchase or acquisition from any
Loan Party of any equity securities of any such entity.
(C) Binding Obligation. This Agreement is, and the other
Related Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally.
5.5 Financial Statements and Projections. All financial statements
concerning Borrower and its Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, including those listed below,
have been or will be prepared in accordance with GAAP consistently applied and
do or will present fairly the financial condition of the entities covered
thereby as at the dates thereof and the results of their operations for the
periods then ended.
38
(A) The Consolidated balance sheets at August 31, 2003
and the related statement of income of Borrower and its Consolidated
Subsidiaries, for the fiscal year then ended, audited by PricewaterhouseCoopers
LLP.
(B) The unaudited Consolidated balance sheet at October
31, 2003, and the related statement of income of Borrower and its Consolidated
Subsidiaries for the period then ended.
The Projections delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to subsection 4.5(J) represent and will represent
as of the date thereof the good faith estimate of Borrower and their senior
management concerning the most probable course of its business.
5.6 Title to Properties, Etc. Borrower and its Restricted
Subsidiaries have good, marketable and legal title, subject to Permitted
Encumbrances, to all their respective material properties and assets. Except for
Permitted Encumbrances, all such properties and assets are free and clear of
Liens. No effective financing statement or other form of Lien notice covering
all or any part of any properties or assets of Borrower or its Restricted
Subsidiaries is on file in any recording office, except for those in favor of
Agent, for the benefit of Lenders, and those relating to Permitted Encumbrances.
Schedule 5.6 sets forth (i) the chief executive office and the office where
Borrower and its Restricted Subsidiaries keep their books and records, (ii) any
trade name or fictitious business name that Borrower has used or done business
under during the past five years, (iii) the location of all Equipment and
Inventory of Borrower and its Restricted Subsidiaries, and (iv) a complete and
accurate list of all real property owned or leased by Borrower and its
Restricted Subsidiaries covered by a Mortgage (the "Mortgaged Property").
5.7 Intellectual Property. Borrower and each of its Restricted
Subsidiaries owns, is licensed to use or otherwise has the right to use, all
patents, trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of its business as currently conducted that
are material to the condition (financial or otherwise), business or operations
of Borrower or its Restricted Subsidiaries (collectively called "Intellectual
Property") and all such Intellectual Property is identified on Schedule 5.7 and
fully protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filings or
issuances. Except as disclosed in Schedule 5.7, the use of such Intellectual
Property by Borrower and its Restricted Subsidiaries, does not and has not been
alleged by any Person to infringe on the rights of any Person.
5.8 Investigations, Audits, Etc. Except as set forth on Schedule
5.8, none of Borrower or any of its Subsidiaries, is the subject of any review
or audit by the Internal Revenue Service or any governmental investigation
concerning the violation or possible violation of any law.
5.9 Employee Matters. Except as set forth on Schedule 5.9, (a) no
Loan Party nor any of their respective employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or
39
controversies pending or, to the best knowledge of Borrower after due inquiry,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 5.9, neither Borrower
nor any of its Restricted Subsidiaries is party to an employment contract.
5.10 Solvency. Borrower and each of its Restricted Subsidiaries:
(a) owns and will own assets the fair saleable value of which are (i) greater
than the total amount of its liabilities (including contingent liabilities) and
(ii) greater than the amount that will be required to pay the probable
liabilities of its then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to it; (b) has capital that is not unreasonably small in relation to
its business as presently conducted or after giving effect to any contemplated
transaction; and (c) does not intend to incur and does not believe that it will
incur debts beyond its ability to pay such debts as they become due.
5.11 [Intentionally Omitted]
5.12 Use of Proceeds; Margin Regulations. No part of the proceeds
of any Loan will be used for "buying" or "carrying" "margin stock" within the
respective meanings of such terms under Regulation U of the Board of Governors
of the Federal Reserve System as now and from time to time hereafter in effect
or for any other purpose that violates the provisions of the regulations of the
Board of Governors of the Federal Reserve System. If requested by Agent,
Borrower will furnish to Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form 0-1, as
applicable, referred to in Regulation U.
SECTION 6.
DEFAULT, RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence
or existence of any one or more of the following:
(A) Payment. (1) Failure to pay any installment or other
payment of principal of any Loan when due, or to repay Revolving Loans to reduce
their balance to the Maximum Revolving Loan Balance or to reimburse any L/C
Issuer for any payment made by such L/C Issuer under or in respect of any Letter
of Credit when due or (2) failure to pay, within five (5) days after the due
date, any interest on any Loan or any other amount due under this Agreement or
any of the other Loan Documents; or
(B) Default in Other Agreements. (1) The occurrence of a
Default or Event of Default under the Senior Note Indenture or (2) the
occurrence of any event that permits the Senior Note Trustee or any holder of
any Senior Notes to require the Borrower to repurchase the Senior Notes or any
portion thereof other than as a result of an Asset Sale Offer (as defined in the
Senior Note Indenture) or (3) failure of Borrower or any of its Restricted
Subsidiaries to pay when due or within any applicable grace period any principal
or interest on Indebtedness (other than the Loans and other than the Senior
Notes) or any Contingent Obligations (other than
40
Contingent Obligations with respect to the Loans or the Senior Notes) or (4)
breach or default of Borrower or any of its Restricted Subsidiaries, or the
occurrence of any condition or event, with respect to any Indebtedness (other
than the Loans and other than the Senior Notes) or any Contingent Obligations
(other than Contingent Obligations with respect to the Loans or the Senior
Notes), if the effect of such failure to pay, breach, default or occurrence is
to cause or to permit the holder or holders then to cause, Indebtedness and/or
Contingent Obligations having an individual principal amount in excess of
$1,000,000 (or the equivalent thereof in another currency) or having an
aggregate principal amount in excess of $2,000,000 (or the equivalent thereof in
another currency) to become or be declared due prior to their stated maturity;
or
(C) Breach of Certain Provisions. (1) Failure of Borrower
to perform or comply with any term or condition contained in that portion of
subsection 2.2 relating to Borrower's obligation to maintain insurance,
subsection 2.3, Section 3 or Section 4 or (2) failure of either Borrower or Tech
Industries to perform or comply with any term or condition contained in Section
7 of the Security Agreement to which it is a party or (3) failure of either
Canadian Restricted Subsidiary to perform or comply with any term or condition
contained in Section 7 of the Security Agreement to which it is a party or (4)
failure of the UK Restricted Subsidiary to perform or comply with any term or
condition contained in clause 5.1(b) of the debenture forming part of the UK
Security Documents; or
(D) Breach of Warranty. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) Other Defaults Under Loan Documents. Borrower or any
other Loan Party defaults in the performance of or compliance with any term
contained in this Agreement or the other Loan Documents (other than occurrences
described in other provisions of this subsection 6.1 for which a different grace
or cure period is specified or which constitute immediate Events of Default) and
such default is not remedied or waived within thirty (30) days after the earlier
of (1) receipt by Borrower of notice from Agent or Requisite Lenders of such
default or (2) actual knowledge of Borrower or any other Loan Party of such
default; or
(F) Defaults under Negative Pledge Agreements. ▇▇▇▇ ▇.
▇▇▇▇▇ or ▇▇▇▇▇ Manhattan Capital Corporation defaults in the performance of or
compliance with any term contained in the Negative Pledge Agreement to which
either is a party (other than occurrences described in other provisions of this
subsection 6.1 for which a different grace or cure period is specified or which
constitute immediate Events of Default) and such default is not remedied or
waived within thirty (30) days after the earlier of (1) receipt by Borrower of
notice from Agent or Requisite Lenders of such default or (2) actual knowledge
of Borrower or any other Loan Party of such default; or
(G) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(1) A court enters a decree or order for relief with respect to Borrower or any
of its Restricted Subsidiaries in an involuntary case under any Bankruptcy Law,
which decree or order is not stayed or other similar relief is not granted under
any applicable federal, provincial, state or foreign law; or (2) the continuance
of any of the following events for forty-five (45) days unless dismissed, bonded
or
41
discharged: (a) an involuntary petition, proceeding or case is commenced against
Borrower or any of its Restricted Subsidiaries, under any applicable bankruptcy,
insolvency, reorganization or other similar law of any jurisdiction now or
hereafter in effect or under any insolvency, arrangement, reorganization,
moratorium, receivership, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction now or hereafter in effect (whether at law or
equity); or (b) a decree or order of a court for the appointment of a receiver,
receiver-manager, administrator, manager, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Borrower or any of its
Restricted Subsidiaries, or over all or a substantial part of its property, is
entered; or (c) an interim receiver, receiver-manager, administrator, manager,
trustee or other custodian is appointed without the consent of Borrower or any
of its Restricted Subsidiaries, for all or a substantial part of the property
of, such Borrower or its Restricted Subsidiary; or
(H) Voluntary Bankruptcy; Appointment of Receiver, Etc.
(1) Borrower or any of its Restricted Subsidiaries commences a voluntary
petition, proceeding or case under any Bankruptcy Law or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter
in effect (whether at law or equity), or consents to the entry of an order for
relief in an involuntary case or to the conversion of an involuntary case to a
voluntary case under any such law or consents to the appointment of or taking
possession by a receiver, receiver-manager, trustee or other custodian for all
or a substantial part of its property; or (2) Borrower or any of its Restricted
Subsidiaries makes any assignment for the benefit of creditors; or (3) Borrower
or any of its Restricted Subsidiaries is unable, or admits in writing its
inability, to pay its debts as they mature, or commits any other act of
bankruptcy; or (4) the Board of Directors of Borrower or any of its Restricted
Subsidiaries adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this subsection 6.1(G); or
(I) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than those described elsewhere
in this subsection 6.1) involving (1) an amount in any individual case in excess
of $1,000,000 (or the equivalent thereof in another currency) or (2) an amount
in the aggregate at any time in excess of $2,000,000 (or the equivalent thereof
in another currency) (in either case to the extent not adequately covered by
insurance as to which the insurance company has acknowledged coverage) is
entered or filed against Borrower or any of its Restricted Subsidiaries or any
of their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5)
Business Days prior to the date of any proposed sale thereunder; or
(J) Dissolution. Any order, judgment or decree is entered
against Borrower or any of its Restricted Subsidiaries decreeing the
dissolution, winding-up or split up of Borrower or any of its Restricted
Subsidiaries and such order remains undischarged or unstayed for a period in
excess of fifteen (15) days; or
(K) Solvency. Borrower or any of its Restricted
Subsidiaries ceases to be solvent (however evidenced or defined and as
represented in subsection 5.9) or admits in writing its present or prospective
inability to pay its debts as they become due;
42
(L) Injunction. Borrower or any of its Restricted
Subsidiaries is enjoined, restrained or in any way prevented by the order of any
court or any administrative or regulatory agency from conducting all or any
material part of its business for more than fifteen (15) days; or
(M) ERISA; Pension Plans. (1) Borrower or any of its
Affiliates fails to make full payment when due of all amounts which, under the
provisions of any employee benefit plans or any applicable provisions of the
IRC, any such Person is required to pay as contributions thereto and such
failure results in or is likely to result in a Material Adverse Effect; or (2)
an accumulated funding deficiency in excess of $500,000 occurs or exists,
whether or not waived, with respect to any such employee benefit plans; or (3)
any employee benefit plan loses its status as a qualified plan under the IRC
which results in or could reasonably be expected to result in a Material Adverse
Effect; or (4) as to any Canadian Pension Plan of Borrower or the other Loan
Parties, (i) such Canadian Pension Plan fails to be duly registered under all
applicable provincial pension benefits legislation; (ii) Borrower or any other
Loan Party fails to perform any material obligation (including fiduciary, funds,
investment and administration obligations) required to be performed in
connection with such Canadian Pension Plans or fails to perform the funding
agreements therefor in a timely fashion or an outstanding material dispute
arises concerning the assets held pursuant to any such funding agreement; (iii)
Borrower or other Loan Party fails to make in a timely fashion any contributions
or premium payment required to be made to such Canadian Pension Plan in
accordance with the terms of the Canadian Pension Plans and applicable laws and
regulations; (iv) Borrower or other Loan Party fails to withhold any material
employee contributions to such Canadian Pension Plan required to be made by way
of authorized payroll deduction or to pay such contributions into such Canadian
Pension Plan in a timely fashion; (v) Borrower or other Loan Party fails to file
or distribute in a timely fashion any material report or disclosure relating to
such Canadian Pension Plans required by any applicable laws or regulations; (vi)
there shall occur a material improper withdrawal, or application of, the assets
of any such Canadian Pension Plan; (vii) a material amount becomes owning by any
such Canadian Pension Plans under the Income Tax Act (Canada) or any provincial
taxation statute; (viii) any such Canadian Pension Plan fails to be fully funded
either on an ongoing basis or on a solvency basis (using actuarial assumptions
and methods which are consistent with the valuations last filed with the
applicable governmental authorities and which are consistent with generally
accepted actuarial principles); or (ix) any such Canadian Pension Plan becomes
the subject of any material investigation, proceeding, action or claim.
(N) Environmental Matters. Borrower or any of its
Subsidiaries fails to: (1) obtain or maintain any operating licenses or permits
required by environmental authorities; (2) begin, continue or complete any
remediation activities as required by any environmental authorities; (3) store
or dispose of any hazardous materials in accordance with applicable
environmental laws and regulations; or (4) comply with any environmental laws;
if any such failure, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; or
(O) Invalidity of Loan Documents. Any of the Loan
Documents for any reason, other than a partial or full release in accordance
with the terms thereof, ceases to be in full force and effect or is declared to
be null and void, or any Loan Party denies that it has any further liability
under any Loan Documents to which it is party, or gives notice to such effect;
or
43
(P) Damage; Strike; Casualty. Any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty which causes, for more than thirty (30) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of Borrower or any of its Subsidiaries, if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or
revocation of, or failure to renew, any license or permit now held or hereafter
acquired by Borrower or any of its Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably be expected to have a Material
Adverse Effect; or
(R) Failure of Security. Agent, for the benefit of Agent
and Lenders, does not have or ceases to have a valid and perfected first
priority Lien in the Collateral (subject to Permitted Encumbrances) or any
substantial portion thereof, in each case, for any reason other than the failure
of Agent to take any action within its control; or
(S) Change in Control. A Change of Control shall occur.
(T) Subordinated Indebtedness. The failure of Borrower or
any other creditor of Borrower to comply with the terms of any subordination or
intercreditor agreement or any subordination provisions of any note or other
document running to the benefit of Agent or Lenders.
(U) Income Tax Act. A requirement from the Minister of
National Revenue for payment pursuant to Section 224 or any successor section of
the Income Tax Act (Canada) or Section 317, or any successor section of the
Excise Tax Act (Canada) or any comparable provision of similar legislation shall
have been received by Agent or any Lender or any other Person in respect of
Borrower or any of its Subsidiaries or otherwise issued in respect of Borrower
or any of its Subsidiaries.
6.2 Suspension or Termination of Revolving Loan Commitment. Upon
the occurrence of any Default or Event of Default, Agent may, and at the request
of Requisite Lenders Agent shall, without notice or demand, immediately suspend
or terminate all or any portion of Lenders' obligations to make additional Loans
or issue or cause to be issued Letters of Credit under the Revolving Loan
Commitment; provided that, in the case of a Default, if the subject condition or
event is waived by Requisite Lenders or cured within any applicable grace or
cure period, the Revolving Loan Commitment shall be reinstated.
6.3 Acceleration and other Remedies. Upon the occurrence of any
Event of Default described in subsections 6.1(G) or 6.1(H), the unpaid principal
amount of and accrued interest and fees on the Revolving Loans, the aggregate
outstanding Letter of Credit Liability and all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by Borrower,
and the Revolving Loan Commitment shall thereupon terminate. Upon the occurrence
and during the continuance of any other Event of Default, Agent may, and at the
request of the Requisite
44
Lenders Agent shall, by written notice to Borrower (a) declare all or any
portion of the Loans and all or any portion of the other Obligations to be, and
the same shall forthwith become, immediately due and payable together with
accrued interest thereon, and the obligations of Agent, L/C Issuers and Lenders
to make Revolving Loans and issue Letters of Credit shall thereupon terminate,
(b) demand that Borrower immediately deposit cash with Agent for the benefit of
L/C Issuers in an amount equal to one hundred and five percent (105%) of the
aggregate outstanding Letter of Credit Liability and (c) exercise any other
remedies which may be available under the Loan Documents or applicable law.
Borrower hereby grants to Agent, for the benefit of L/C Issuers and each Lender
with a participation in any Letters of Credit then outstanding, a security
interest in such cash collateral to secure all of the Letter of Credit
Liability. Any such cash collateral shall be made available by Agent to L/C
Issuers to reimburse L/C Issuers for payments of drafts drawn under such Letters
of Credit and any fees and expenses of Bank Line Issuers or L/C Issuers with
respect to such Letters of Credit and the unused portion thereof, after all such
Letters of Credit shall have expired or been fully drawn upon, shall be applied
to repay any other Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon and all Obligations shall have been satisfied
and paid in full, the balance, if any, of such cash collateral shall be returned
to Borrower. Borrower shall from time to time execute and deliver to Agent such
further documents and instruments as Agent may request with respect to such cash
collateral.
6.4 Performance by Agent. If Borrower or any Loan Party shall fail
to perform any covenant, duty or agreement contained in any of the Loan
Documents, Agent may perform or attempt to perform such covenant, duty or
agreement on behalf of Borrower or such Loan Party after the expiration of any
cure or grace periods set forth herein. In such event, Borrower shall, at the
request of Agent, promptly pay any amount reasonably expended by Agent in such
performance or attempted performance to Agent, together with interest thereon at
the highest rate of interest in effect upon the occurrence of an Event of
Default as specified in subsection 1.2(E) from the date of such expenditure
until paid. Notwithstanding the foregoing, it is expressly agreed that Agent
shall not have any liability or responsibility for the performance of any
obligation of Borrower under this Agreement or any other Loan Document.
6.5 Appointment of Receiver. Agent and Lenders may appoint, remove
and reappoint any person or persons, including any employee or agent of Agent
and Lenders to be a receiver (the "Receiver") which term shall include a
receiver and manager of, or agent for, all or any part of the Collateral. Any
such Receiver shall, as far as concerns responsibility for his acts, be deemed
to be the agent of Borrower and not of Agent or any Lender, and Agent and
Lenders shall not in any way be responsible for any misconduct, negligence or
non-feasance of such Receiver, its employees or agents. Except as otherwise
directed by Agent and Lenders, all money received by such Receiver shall be
received in trust for and paid to Agent for the benefit of Lenders. Such
Receiver shall have all of the powers and rights of Agent and Lenders described
in Section 6. Agent may, either directly or through its agents or nominees,
exercise any or all powers and right of a Receiver.
SECTION 7.
CONDITIONS TO LOANS
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The obligations of Lenders to make Loans and to issue or cause
to be issued Letters of Credit are subject to satisfaction of all of the
applicable conditions set forth below.
7.1 Conditions to Initial Loans. The obligations of Lenders to
make the initial Loans and to issue or cause to be issued Letters of Credit on
the Closing Date are, in addition to the conditions precedent specified in
subsection 7.2, subject to the delivery of all documents listed on, the taking
of all actions set forth on and the satisfaction of all other conditions
precedent listed on Schedule 7.1, all in form and substance, or in a manner,
satisfactory to Agent and Lenders, on or prior to January 30, 2004. Until such
conditions have been satisfied on the Closing Date, the Existing Credit
Agreement shall remain in effect in accordance with its terms. In the event that
all of the conditions precedent set forth in this Section 7.1 have not been met
and satisfied on or prior to 5:00 p.m. (Chicago time) on January 30, 2004, this
Agreement shall automatically terminate and be of no further force and effect
(other than with respect to subsections 1.3(D) and 9.1.), and the Existing
Credit Agreement shall continue to remain in full force and effect in accordance
with its terms.
7.2 Conditions to All Loans. The obligations of Lenders to make
Loans and to issue or cause to be issued Letters of Credit on any date ("Funding
Date") are subject to the further conditions precedent set forth below.
(A) Agent shall have received a request for an advance of
a Loan or the issuance of a Letter of Credit, in each case in accordance with
the applicable provisions of subsection 1.1.
(B) The representations and warranties contained in
Section 5 of this Agreement and elsewhere herein and in the Loan Documents shall
be (and each request by Borrower for a Loan or a Letter of Credit shall
constitute a representation and warranty by Borrower that such representations
and warranties are) true, correct and complete in all material respects on and
as of that Funding Date to the same extent as though made on and as of that
date, except for any representation or warranty expressly limited by its terms
to a specific date and taking into account any amendments to the schedules,
subschedules or exhibits as a result of any disclosures made in writing by
Borrower to Agent after the Closing Date and approved by Agent and Requisite
Lenders in writing.
(C) No event shall have occurred and be continuing or
would result from the funding or such Loans or the issuance of such Letters of
Credit that would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or from issuing or causing to be issued any Letter of Credit.
SECTION 8.
ASSIGNMENT; PARTICIPATION; AGENT; ETC.
8.1 Assignments and Participations.
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(A) Assignments. Each Lender may from time to time
assign, subject to the terms of an Assignment and Acceptance Agreement, its
rights and delegate its obligations under this Agreement to another Person,
provided that (i) such Lender (excluding GE Capital) shall first obtain the
written consent of Agent, which consent shall not be unreasonably withheld; (ii)
the Pro Rata Share of the Revolving Loan Commitment being assigned shall in no
event be less than the lesser of (a) $10,000,000 and (b) the entire amount of
the Pro Rata Share of the Revolving Loan Commitment of the assigning Lender; and
(iii) upon the consummation of each such assignment, the assigning Lender shall
pay Agent an administrative fee of $3,500. The administrative fee referred to in
clause (iii) of the preceding sentence shall not apply to an assignment
described in paragraph (E) below. In the case of an assignment authorized under
this subsection 8.1, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as it would if it were an initial
Lender hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Pro Rata Share of the Revolving Loan Commitment or
assigned portion thereof. Borrower hereby acknowledges and agrees that any
assignment will give rise to a direct obligation of Borrower to the assignee and
that the assignee shall be considered to be a Lender hereunder.
(B) Recording of Assignments. Agent shall maintain at its
office in Chicago, Illinois a copy of each Assignment and Acceptance Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be presumptive evidence of the amounts due and
owing to Lender in the absence of manifest error. Borrower, Agent and each
Lender may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement.
(C) Acceptance of Assignment by Agent. Upon its receipt
of a duly completed Assignment and Acceptance Agreement executed by an assigning
Lender and its assignee (together with the Notes subject to such assignment) and
the administrative fee referred to above, Agent shall (subject to the consent of
Agent to such assignment, if required) (1) accept such Assignment and Acceptance
Agreement, (2) record the information contained therein in the Register and
replace Schedule 10.1(B) to reflect such Assignment and Acceptance Agreement and
(3) give prompt notice thereof to Borrower and Lenders. Upon request by Agent,
Borrower shall promptly execute and deliver to Agent Notes evidencing the
Obligations owed by Borrower to the assignee and, if applicable, the assigning
Lender, after giving effect to the assignment. Agent shall cancel the Notes
delivered to it by the assigning Lender and deliver the new Notes to the
assignee and, unless the assigning Lender has assigned all of its interests
under this Agreement, the assigning Lender.
(D) Participations. Any Lender may sell participations in
all or any part of its Pro Rata Share of the Revolving Loan Commitment to
another Person, provided that such Lender (excluding GE Capital) shall first
obtain the prior written consent of Agent, which consent shall not be
unreasonably withheld, and any such participation shall be in a minimum amount
of $10,000,000. All amounts payable by Borrower hereunder shall be determined as
if that Lender had not sold such participation and the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly effecting (i) any reduction in
the principal amount or interest rate payable with respect to any
47
Loan in which such holder participates; (ii) any extension of the Commitment
Termination Date, or the date fixed for any payment of interest payable with
respect to any Loan in which such holder participates; or (iii) any release of
all or substantially all of the Collateral (except if the sale, disposition or
release of such Collateral is permitted under subsection 3.7 or 8.2 or any other
Loan Document). Borrower hereby acknowledges and agrees that any participation
will give rise to a direct obligation of Borrower to the participant, and the
participant shall for purposes of subsections 1.8, 1.9, 8.4 and 9.1 be
considered to be a Lender hereunder.
(E) Transactions with the Federal Reserve Bank;
Assignments to Affiliates. Notwithstanding any other provision of this
Agreement, any Lender may at any time, following written notice to Agent, (a)
create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System and (b) assign all or any portion of its funded Loans to an Affiliate of
such Lender which is at least fifty percent (50%) owned by such Lender or its
parent company, to one or more other Lenders or to a Related Fund. For purposes
of this paragraph, a "Related Fund" shall mean, with respect to any Lender, a
fund or other investment vehicle that invests in commercial loans and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
(F) Other Matters. Except as otherwise provided in this
subsection 8.1, no Lender shall, as between Borrower and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of a participation in, all
or any part of the Loans, the Notes or other Obligations owed to such Lender.
Each Lender may furnish any information concerning Borrower and its Subsidiaries
in the possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to the provisions of
subsection 9.13. Borrower agrees that it will use its best efforts to assist and
cooperate with Agent and any Lender in any manner reasonably requested by Agent
or such Lender to effect the sale of a participation or an assignment described
above, including, without limitation, assistance in the preparation of
appropriate disclosure documents or placement memoranda. Notwithstanding
anything contained in this Agreement to the contrary, so long as the Requisite
Lenders shall remain capable of making LIBOR Loans, no Person shall become a
Lender hereunder unless such Person shall also be capable of making LIBOR Loans.
8.2 Agent.
(A) Appointment. Each Lender hereby designates and
appoints GE Capital as its Agent under this Agreement and the other Loan
Documents, and Lender hereby irrevocably authorizes GE Capital to execute and
deliver the Security Documents and to take such action or to refrain from taking
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in this subsection 8.2 and subsections 8.3 and 9.2. The provisions of
this subsection 8.2 are solely for the benefit of Agent and Lenders and neither
Borrower nor any other Loan Party shall have any rights as a third party
beneficiary of any of the provisions
48
hereof. In performing its functions and duties under this Agreement, Agent shall
act solely as agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for Borrower or any other Loan Party. Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents or employees.
(B) Nature of Duties. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of Borrower in connection with the extension of
credit hereunder and shall make its own appraisal of the creditworthiness of
Borrower, and 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 (other than as expressly required herein). If Agent seeks
the consent or approval of any Lenders to the taking or refraining from taking
any action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither 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 Loan
Documents, or in connection herewith or therewith, except that Agent shall be
liable to the extent of their own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. 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 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 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). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but neither Agent
nor any of its agents or representatives shall be responsible to any Lender for
any recitals, statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
or sufficiency of this Agreement or any of the Loan Documents or the
transactions contemplated thereby, or for the financial condition of any Loan
Party. 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 Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
Loan Documents Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, 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 Loan Documents until it shall have
received such instructions from Requisite Lenders or all or such other portion
of the Lenders as shall be
49
prescribed by this Agreement. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of Requisite Lenders and, notwithstanding
the instructions of Requisite Lenders, Agent shall not have any obligation to
take any action if it believes, in good faith, that such action exposes Agent to
any liability for which it has not received satisfactory indemnification in
accordance with subsection 8.2(E).
(D) Reliance. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any written or oral 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 Loan Documents and their duties hereunder or thereunder.
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; 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 to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against even if so directed by Requisite Lenders until such additional indemnity
is furnished. The obligations of Lenders under this subsection 8.2(E) shall
survive the payment in full of the Obligations and the termination of this
Agreement.
(F) GE Capital Individually. With respect to its
obligations under the Revolving Loan Commitment and the Loans made by it, GE
Capital 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 "Lenders" or "Requisite Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include GE
Capital in its individual capacity as a Lender or one of the Requisite Lenders.
GE Capital may lend money to, acquire equity or other ownership interests in,
and generally engage in any kind of banking, trust or other business with any
Loan Party as if it were not acting as Agent pursuant hereto.
(G) Successor Agent.
(1) Resignation. Agent may resign from the
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days'
50
prior written notice to Borrower and the Lenders. Such resignation shall take
effect upon the acceptance by a successor Agent of appointment pursuant to
clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such
notice of resignation pursuant to clause (1) above, Requisite Lenders shall
appoint a successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (1) above, the retiring Agent, upon notice to Borrower,
shall then appoint a successor Agent who shall serve as Agent until such time,
if any, as Requisite Lenders appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this subsection 8.2 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
(H) Collateral Matters.
(1) Release of Collateral. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (i) upon termination of the
Revolving Loan Commitment and payment and satisfaction of all Obligations (other
than contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted); (ii) constituting property being sold or disposed
of if Borrower certifies to Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry); or (iii)
in accordance with the provisions of the next sentence. In addition, with the
consent of Requisite Lenders, Agent may release any Lien granted to or held by
Agent upon any Collateral having a book value not greater than ten percent (10%)
of the total book value of all Collateral, either in a single transaction or in
a series of related transactions; provided, however, that in no event will
Agent, acting under the authority granted to it pursuant to this sentence,
release Collateral having a total book value in excess of twenty percent (20%)
of the book value of all Collateral, as determined by Agent, during any calendar
year.
(2) Confirmation of Authority; Execution of
Releases. Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth in
subsection 8.2(H)(1)), each Lender agrees to confirm in writing, upon request by
Agent or Borrower, the authority to release any Collateral conferred upon Agent
under clauses (i) and (ii) of subsection 8.2(H)(1). Upon receipt by Agent of any
required confirmation from the Requisite Lenders of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent upon such Collateral; provided,
51
however, that (i) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Loan Party, in respect of), all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(3) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender or any other Person to assure that the
property covered by the Security Documents exists or is owned by Borrower or any
Loan Party or is cared for, protected or insured or has been encumbered or that
the Liens granted to Agent 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 Agent in this subsection 8.2(H)
or in any of the Loan Documents, it being understood and agreed that in respect
of the property covered by the Security Documents or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent's own interest in property covered by the Security
Documents as one of the Lenders and that Agent shall have no duty or liability
whatsoever to any of the other Lenders, provided that Agent shall exercise the
same care which it would in dealing with loans for its own account.
(4) Power of Attorney for Quebec Property. For
the purpose of holding any security granted by any of the Loan Parties pursuant
to the laws of the Province of Quebec, Agent shall be the holder of an
irrevocable power of attorney for all present and future Lenders. By executing
an Assignment and Acceptance, any future Lender shall be deemed to ratify the
power of attorney granted to Agent hereunder. Lenders and Loan Parties agree
that notwithstanding Section 32 of the Act respecting the Special Powers of
Legal Persons (Quebec), Agent may, as the person holding the power of attorney
of Lenders, acquire any debenture or other title of indebtedness secured by any
hypothec granted by any Loan Party to Agent pursuant to the laws of the Province
of Quebec.
(5) Priority of Secured Obligations. Anything in
this Agreement or the other Loan Documents to the contrary notwithstanding, no
amount received by Agent or any Lender from any realization on the Collateral or
from any right of setoff shall be applied in repayment of the Cash Management
Obligations unless and until all of the other Obligations shall have first been
paid in full.
(I) Agency for Perfection. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's Lien in
assets which, in accordance with the Uniform Commercial Code in any applicable
jurisdiction or any applicable Personal Property Legislation, can be perfected
only by possession. Should any Lender (other than Agent) obtain possession of
any such assets, such Lender shall notify Agent thereof, and, promptly upon
Agent's request therefor, shall deliver such assets to Agent or in accordance
with Agent's instructions. Each Lender agrees that it will not have any right
individually to enforce or seek to enforce any Security Document or to realize
upon any collateral security for the Loans unless
52
instructed to do so by Agent, it being understood and agreed that such rights
and remedies may be exercised only by Agent.
(J) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". Agent will notify each Lender of its receipt of any such notice. Agent
shall take such action with respect to such Default or Event of Default as may
be requested by Requisite Lenders in accordance with Section 6. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.
8.3 Amendments, Consents and Waivers.
(A) Except as otherwise provided in subsection 8.2, this
subsection 8.3 or in subsection 9.2 and except as to matters set forth in other
subsections hereof or in any other Loan Document as requiring only Agent's
consent, the consent of Requisite Lenders and Borrower will be required to
amend, modify, terminate, or waive any provision of this Agreement or any of the
other Loan Documents. The consent of Borrower shall constitute consent of all of
its Subsidiaries.
(B) In the event Agent requests the consent of a Lender
and does not receive a written consent or denial thereof within ten (10)
Business Days after such Lender's receipt of such request, then such Lender will
be deemed to have denied the giving of such consent.
(C) If, in connection with any proposed amendment,
modification, termination or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under subsection 9.2, the
consent of Requisite Lenders is obtained but the consent of one or more other
Lenders whose consent is required is not obtained, then Borrower shall have the
right, so long as all such non-consenting Lenders are either replaced or prepaid
as described in clauses (A) or (B) below, to either (A) replace the
non-consenting Lenders with one or more Replacement Lenders pursuant to
subsection 1.10(A) so long as each such Replacement Lender consents to the
proposed amendment, modification, termination or waiver or (B) prepay in full
the Obligations of the non-consenting Lenders and terminate the non-consenting
Lenders' Pro Rata Shares of the Revolving Loan Commitment in accordance with
subsection 1.10(B).
8.4 Set Off and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, each Lender is
hereby authorized by Borrower at any time or from time to time, with reasonably
prompt subsequent notice to Borrower (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(A) balances held by such Lender at any of its offices for the account of
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to Borrower or its Subsidiaries), and (B) other property at any time
held or owing by such Lender to
53
or for the credit or for the account of Borrower or any of its Subsidiaries,
against and on account of any of the Obligations; except that no Lender shall
exercise any such right without the prior written consent of Agent. Any Lender
exercising a right to set off shall purchase for cash (and the other Lenders
shall sell) interests in each of such other Lender's Pro Rata Share of the
Obligations as would be necessary to cause all Lenders to share the amount so
set off with each other Lender in accordance with their respective Pro Rata
Shares. Borrower agrees, to the fullest extent permitted by law, that any Lender
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and upon doing so shall deliver such amount so set
off to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5 Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrower for Loans requested. Each Lender shall reimburse
Agent on demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan before
Agent disburses same to Borrower. If Agent elects to require that each Lender
make funds available to Agent, prior to a disbursement by Agent to Borrower,
Agent shall advise each Lender by telephone or telecopy of the amount of such
Lender's Pro Rata Share of the Loan requested by Borrower no later than 1:00
p.m. (Chicago, Illinois time) on the Funding Date applicable thereto, and each
such Lender shall pay Agent such Lender's Pro Rata Share of such requested Loan,
in same day funds, by wire transfer to Agent's account on such Funding Date. If
any Lender fails to pay the amount of its Pro Rata Share within one (1) Business
Day after Agent's demand, Agent shall promptly notify Borrower, and Borrower
shall immediately repay such amount to Agent. Any repayment required pursuant to
this subsection 8.5 shall be without premium or penalty. Nothing in this
subsection 8.5 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of subsection 8.6, shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights that Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
8.6 Disbursements of Advances; Payment.
(A) Revolving Loan Advances, Payments and Settlements;
Interest and Fee Payments.
(1) The Revolving Loan balance may fluctuate
from day to day through Agent's disbursement of funds to, and receipt of funds
from, Borrower. In order to minimize the frequency of transfers of funds between
Agent and each Lender notwithstanding terms to the contrary set forth in Section
1 or subsection 8.5, Revolving Loan advances and payments will be settled among
Agent and Lenders according to the procedures described in this subsection 8.6.
Notwithstanding these procedures, each Lender's obligation to fund its portion
of any advances made by Agent to Borrower will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each
week, or more frequently (including daily), if Agent so elects (each such day
being a "Settlement Date"), Agent will advise each Lender by telephone or
telecopy of the amount of each such Lender's Pro Rata
54
Share of the Revolving Loan balance as of the close of business of the (2nd)
second Business Day immediately preceding the Settlement Date. In the event that
payments are necessary to adjust the amount of such Lender's required Pro Rata
Share of the Revolving Loan balance to such Lender's actual Pro Rata Share of
the Revolving Loan balance as of any Settlement Date, the party from which such
payment is due will pay the other, in same day funds, by wire transfer to the
other's account not later than 3:00 p.m. (Chicago, Illinois time) on the
Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A)(3),
the following terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount
calculated as of the end of each calendar day by subtracting
(i) the cumulative principal amount paid by Agent to a Lender
on a Loan from the Closing Date through and including such
calendar day, from (ii) the cumulative principal amount on a
Loan advanced by such Lender to Agent on that Loan from the
Closing Date through and including such calendar day.
(b) "Daily Interest Rate" means an amount
calculated by dividing the interest rate payable to a Lender
as of each calendar day by three hundred sixty (360).
(c) "Daily Interest Amount" means an amount
calculated by multiplying the Daily Loan Balance of a Loan by
the associated Daily Interest Rate on that Loan.
(d) "Interest Ratio" means a number calculated
by dividing the total amount of the interest on a Loan
received by Agent with respect to the immediately preceding
month by the total amount of interest on that Loan due from
Borrower during the immediately preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each applicable Lender by telephone or telecopy of the amount
of such Lender's share of interest and fees on each of the Loans as of the end
of the last day of the immediately preceding month. Provided that such Lender
has made all payments required to be made by it under this Agreement, Agent will
pay to such Lender, by wire transfer to such Lender's account (as specified by
such Lender on the signature page of this Agreement or the applicable Assignment
and Acceptance Agreement, as amended by such Lender from time to time after the
date hereof pursuant to the notice provisions contained herein or in the
applicable Assignment and Acceptance Agreement) not later than 3:00 p.m.
(Chicago, Illinois time) on the next Business Day following the Interest
Settlement Date, such Lender's share of interest and fees on each of the Loans.
Such Lender's share of interest on each Loan will be calculated for that Loan by
adding together the Daily Interest Amounts for each calendar day of the prior
month for that Loan and multiplying the total thereof by the Interest Ratio for
that Loan. Such Lender's share of the commitment fee described in subsection
1.2(B) shall be paid and calculated in a manner consistent with the payment and
calculation of interest as described in this subsection 8.6(A). Such Lender's
share of the Letter of Credit fee described in subsection 1.2(C) with respect to
55
each Letter of Credit shall be calculated based on the average daily amount of
such Lender's participation in such Letter of Credit pursuant to subsection
1.1(B) for the period for which such fee is payable and shall be paid on each
Interest Settlement Date.
(B) Availability of Lender's Pro Rata Share.
(1) Unless Agent shall have received notice from
a Lender prior to a Funding Date that such Lender will not make available its
Pro Rata Share of a Loan requested by Borrower, Agent may assume that such
Lender has made such amount available to Agent on the Business Day following the
next Settlement Date. If a Lender has not in fact made its Pro Rata Share
available to the Agent on such date (any such Lender, a "Defaulting Lender"),
then the Defaulting Lender and Borrower severally agree to pay to Agent
forthwith on demand such amount without set-off, counterclaim or deduction of
any kind, together with interest thereon, for each day from and including the
date such amount is made available to Agent by Borrower or such Defaulting
Lender to but excluding the date of payment to Agent, at (a) in the case of the
Defaulting Lender, the greater of the Federal Funds Effective Rate and a rate
determined by Agent in accordance with banking industry rules on interbank
compensation or (b) in the case of Borrower, the interest rate applicable under
this Agreement with respect to such Loan.
(2) Agent shall not be obligated to transfer to
a Defaulting Lender any payment made by Borrower or any Loan Party to Agent or
any amount otherwise received by Agent for application to the Obligations nor
shall Defaulting Lender be entitled to the sharing of any interest, fees or
other payments hereunder.
(3) For purposes of voting or consenting to
matters with respect to the Loan Documents or any other matters concerning the
Loans, a Defaulting Lender shall be deemed not to be a "Lender" and such
Defaulting Lenders Commitments and outstanding Loans shall be deemed to be zero.
(4) Without limiting the generality of the
foregoing, each Lender shall be obligated to fund its Pro Rata Share of any
Revolving Loan made after any Event of Default or acceleration of the
Obligations with respect to any draw on a Letter of Credit.
(C) Return of Payments.
(1) If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from Borrower and such related payment is not received
by Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind together with interest
thereon, for each day from and including the date such amount is made available
by Agent to such Lender to but excluding the date of repayment to Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by Agent in
accordance with banking industry rules on interbank compensation.
(2) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to Borrower or
paid to any other Person pursuant to any requirement of law, court order or
otherwise, then, notwithstanding any other term or condition of this Agreement,
Agent will not be required to distribute any portion thereof to any Lender. In
56
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to Borrower or such other Person, without
set-off, counterclaim or deduction of any kind.
SECTION 9.
MISCELLANEOUS
9.1 Indemnities. Borrower agrees to indemnify, pay, and hold each
Agent, each Lender (individually and in their capacity as L/C Issuers) and their
respective officers, directors, employees, agents, and attorneys (the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs and
expenses (including all reasonable fees and expenses of counsel to such
Indemnitees) of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Indemnitee as a result of such Indemnitees being a
party to this Agreement or the transactions consummated pursuant to this
Agreement or otherwise relating to any of the Related Transactions; provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to liabilities to the extent resulting from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower agrees to make the maximum contribution
to the payment and satisfaction thereof which is permissible under applicable
law. This subsection 9.1 and other indemnification provisions contained within
the Loan Documents shall survive the termination of this Agreement.
9.2 Amendments and Waivers. Except as otherwise provided herein,
no amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
applicable Assignment and Acceptance Agreement, no amendment, modification,
termination or waiver shall, unless in writing and signed by all Lenders, do any
of the following: (a) increase the Revolving Loan Commitment or any Lender's Pro
Rata Share of the Revolving Loan Commitment; (b) reduce the principal of or the
rate of interest on any Loan or the fees or other amounts payable with respect
to any Loan or Letter of Credit; (c) extend the Commitment Termination Date or
any date fixed for any payment of principal, interest or fees; (d) change the
definition of the term Requisite Lenders or the percentage of Lenders which
shall be required for Lenders to take any action hereunder; (e) release
Collateral (except if the sale, disposition or release of such Collateral is
permitted under subsection 3.7 or 8.2 or any other Loan Document); (f) amend or
waive this subsection 9.2 or the definitions of the terms used in this
subsection 9.2 insofar as the definitions affect the substance of this
subsection 9.2; (g) consent to the assignment, delegation or other transfer by
any Loan Party of any of its rights and obligations under any Loan Document; or
(h) increase any of the advance rates set forth in the Borrowing Base
Certificate; and provided, further, that no amendment, modification, termination
or waiver affecting the rights or duties of Agent under any Loan Document shall
in any event be effective, unless in writing and signed by Agent, in addition to
all Lenders required to take such action. Notwithstanding anything to the
contrary in this subsection 9.2, Agent and Borrower may execute amendments to
this Agreement
57
and the other Loan Documents for the purpose of correcting typographical errors
without the consent of Lenders. Each amendment, modification, termination or
waiver shall be effective only in the specific instance and for the specific
purpose for which it was given. No amendment, modification, termination or
waiver shall be required for Agent to take additional Collateral pursuant to any
Loan Document. No notice to or demand on Borrower or any other Loan Party in any
case shall entitle Borrower or any other Loan Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this subsection 9.2
shall be binding upon each holder of the Notes at the time outstanding, each
future holder of the Notes and, if signed by a Loan Party, on such Loan Party.
9.3 Notices. Any notice or other communication required shall be
in writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. (Chicago, Illinois time); (c) if
delivered by overnight courier, one (1) Business Day after delivery to the
courier properly addressed; or (d) if delivered by U.S. mail, four (4) Business
Days after deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: PORTOLA PACKAGING, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or GE Capital: GENERAL ELECTRIC CAPITAL
CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: [Deal Name] Account
Officer
Telecopy: (___) ___-____
58
With a copy to: GENERAL ELECTRIC CAPITAL
CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Corporate Counsel
Commercial Finance -
Merchant Banking
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
GENERAL ELECTRIC CAPITAL
CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Corporate Counsel
Commercial Finance -
Merchant Banking
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Lender: To the address set forth on the
signature page hereto or in the
applicable Assignment and
Acceptance Agreement
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5 Marshalling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that Borrower makes payment(s) or Agent enforces
its Liens or Agent or any Lender exercises its right of set-off, and such
payment(s) or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required
to be repaid by anyone, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
9.6 Severability. The invalidity, illegality, or unenforceability
in any jurisdiction of any provision under the Loan Documents shall not affect
or impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender
59
pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 Headings. Section and subsection headings are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes or be given substantive effect.
9.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that Borrower may not assign its rights or obligations
hereunder without the written consent of all Lenders.
9.11 No Fiduciary Relationship; Limited Liability. No provision in
the Loan Documents and no course of dealing between the parties shall be deemed
to create any fiduciary duty owing to Borrower by Agent or any Lender. Borrower
agrees that neither Agent nor any Lender shall have liability to Borrower or any
other Person (whether sounding in tort, contract or otherwise) for losses
suffered by Borrower or any other Person in connection with, arising out of, or
in any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless and to the extent that it is determined that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought as determined by a court of competent
jurisdiction. Neither Agent nor any Lender shall have any liability with respect
to, and Borrower hereby waives, releases and agrees not to ▇▇▇ for, any special,
indirect or consequential damages suffered by Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.12 Construction. Agent, each Lender and Borrower acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review the Loan Documents with its legal counsel and
that the Loan Documents shall be construed as if jointly drafted by Agent, each
Lender and Borrower.
9.13 Confidentiality. Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public information delivered pursuant
to the Loan Documents and identified as such by Borrower and not to disclose
such information to Persons other than to potential assignees or participants or
to Persons employed by or engaged by Agent, a Lender or a Lender's assignees or
participants including attorneys, auditors, professional consultants, rating
agencies, insurance industry associations and portfolio management services. The
confidentiality provisions contained in this Section 9.13 shall not apply to
disclosures (i) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrower. The obligations of Agent
and Lenders under this Section 9.13 shall supersede and replace the obligations
of Agent and Lenders under any confidentiality agreement in respect of this
60
financing executed and delivered by Agent or any Lender prior to the date
hereof. Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions contemplated by this Agreement, shall not apply to
the federal tax structure or federal tax treatment of the transactions
contemplated by this Agreement, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the transactions contemplated by this Agreement. The preceding
sentence is intended to cause the transaction contemplated by this Agreement to
be treated as not having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
Regulations promulgated under Section 6011 of the IRC, and shall be construed in
a manner consistent with such purpose. In addition, each party hereto
acknowledges that it has no proprietary or exclusive rights to the federal tax
structure of the transaction contemplated by this Agreement or any federal tax
matter or federal tax idea related to the transaction contemplated by this
Agreement.
9.14 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF ▇▇▇▇, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO
AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. TO THE EXTENT PERMITTED
BY LAW, BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER, AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION
OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF BORROWER
OR OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE
PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT
TRIAL OR OTHERWISE). BORROWER AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL IN ANY
SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF
UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE
USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. BORROWER IN ANY
EVENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT
OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER
FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE OTHER THAN
THOSE
61
WHICH ARE PROTECTED BY ATTORNEY-CLIENT PRIVILEGE OR WHICH CONSTITUTE ATTORNEY
WORK PRODUCT.
9.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
9.16 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrower set
forth in subsections 1.3(D), 1.8, 1.9 and 9.1 shall survive the repayment of the
Obligations and the termination of this Agreement.
9.17 Entire Agreement. This Agreement, the Notes and the other Loan
Documents and the Fee Letter embody the entire agreement among the parties
hereto and supersede all prior commitments, agreements, representations, and
understandings, whether oral or written, relating to the subject matter hereof,
and may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto.
9.18 Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by facsimile transmission and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
9.19 Judgment Currency. To the extent permitted by applicable law,
the obligations of Borrower and any Loan Party in respect to any amount due
under this Agreement or any other Loan Document shall, notwithstanding any
payment in any other currency (the "Other Currency") (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
currency in which it is due (the "Agreed Currency") that Agent or any Lender
may, in accordance with normal banking procedures, purchase with the sum paid in
the Other Currency (after any premium and costs of exchange) on the Business Day
immediately after the day on which Agent or such Lender receives the payment. If
the amount in the Agreed Currency that may be so purchased for any reason falls
short of the amount originally due, Borrower or such Loan Party shall pay
additional amounts, in the Agreed Currency, as may be necessary to compensate
for the shortfall. Any obligation of Borrower or any Loan Party not discharged
by
62
that payment shall, to the extent permitted by applicable law, be due as a
separate and independent obligation and, until discharged, continue in full
force and effect.
SECTION 10.
DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in
this Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Accounts" means all of the following: (a) accounts
receivable, contract rights, book debts, notes, drafts and other
obligations and indebtedness arising from the sale, lease or exchange
of goods or other property and/or the performance of services; (b)
rights in, to and under all purchase orders for goods, services or
other property; (c) 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
under all contracts for the sale, lease or exchange of goods or other
property and/or the performance of services (whether or not yet earned
by performance); and (e) Proceeds of any of the foregoing and all
collateral security and guaranties of any kind given by any Person with
respect to any of the foregoing.
"Affiliate" means any Person (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b)
directly or indirectly owning or holding five percent (5%) or more of
any equity interest in Borrower; or (c) five percent (5%) or more of
whose voting stock or other equity interest is directly or indirectly
owned or held by Borrower. For purposes of this definition, "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 the ownership
of voting securities or by contract or otherwise. Notwithstanding the
foregoing, none of Agent, any Lender nor any of their respective
Affiliates shall be considered an Affiliate of Borrower or any of its
Subsidiaries.
"Agent" means GE Capital in its capacity as agent for the
Lenders under this Agreement and any successor appointed pursuant to
Subsection 8.2(G).
"Agreement" means this Credit Agreement (including all
schedules, subschedules and exhibits hereto), as the same may from time
to time be amended, supplemented or otherwise modified.
"Asset Disposition" means the disposition whether by sale,
lease, transfer, exchange, loss, damage, destruction, casualty,
condemnation or otherwise of any of the following: (a) any of the
capital stock or other equity or ownership interest of any of
Borrower's Subsidiaries or (b) any or all of the assets of Borrower or
any of its Subsidiaries other than sales of inventory in the ordinary
course of business.
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"Assignment and Acceptance Agreement" means an agreement among
Agent, a Lender and such Lender's assignee or transferee regarding
their respective rights and obligations with respect to assignments of
the Loans, the Revolving Loan Commitment and other interests under this
Agreement and the other Loan Documents, substantially in the form of
Exhibit 10.1(A) and with such amendments as the laws of any relevant
jurisdiction may require.
"Availability" means the Maximum Revolving Loan Balance minus
the aggregate outstanding principal balance of Revolving Loans.
"Bankruptcy Law" means Title 11 of the United States Code
entitled "Bankruptcy", the Bankruptcy and Insolvency Act (Canada), the
Companies' Creditors Arrangement Act (Canada), the Winding-Up and
Restructuring Act (Canada) and The ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (▇▇▇▇▇▇
▇▇▇▇▇▇▇), each as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect
in any jurisdiction and all rules and regulations promulgated
thereunder.
"Borrower" means Portola Packaging, Inc., a Delaware
corporation, and its successors and permitted assigns.
"Business Day" means (a) for all purposes other than as
covered by clause (b) below, any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of Illinois,
the State of California or the Commonwealth of Pennsylvania, or is a
day on which banking institutions located in any such states are
closed, and (b) with respect to all notices, determinations, fundings
and payments in connection with Loans bearing interest at LIBOR, any
day that is a Business Day described in clause (a) above and that is
also a day on which banks in the City of London are generally open for
interbank or foreign exchange transaction.
"C$" or "Canadian Dollars" means Canadian dollars, the lawful
currency of Canada on the date of this Agreement.
"Canadian Pension Plan" means any plan, program or arrangement
that is a pension plan for the purposes of any applicable pension
benefits legislation or any tax laws of Canada or a Province thereof,
whether or not registered under any such laws, which is sponsored,
maintained or contributed to by, or to which there is or may be an
obligation to contribute by, Borrower or any other Loan Party in
respect of any Person's employment in Canada with Borrower or such Loan
Party.
"Canadian Restricted Subsidiary" means Portola Packaging
Canada Ltd., a corporation amalgamated under the laws of Yukon.
"Canadian Security Documents" means all instruments, documents
and agreements executed by or on behalf of Canadian Restricted
Subsidiary or any other Person to guaranty or provide collateral
security with respect to the Obligations of Borrower including, without
limitation, the Security Agreement, any other security agreement or
pledge agreement, any guaranty of the Obligations, any mortgage or deed
64
of trust, any hypothec and all instruments, documents and agreements
executed pursuant to the terms of the foregoing.
"Capital Expenditures" means, for any period, the sum (without
duplication) of the following for Borrower and its Consolidated
Subsidiaries on a Consolidated basis: (a) the amount capitalized as
capital expenditures for the period, under GAAP, as property, plant,
and equipment or similar fixed asset accounts and (b) deposits made in
the period in connection with property, plant, and equipment, less
deposits of a prior period included above.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of
corporate stock, including, without limitation, with respect to
partnerships, partnership interests (whether general or limited) and
any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, such partnership.
"Cash Management Obligations" has the meaning assigned to such
term in the Security Agreement.
"Change of Control" means (a) any sale, lease, exchange or
transfer (in one transaction or in a series of related transactions) of
all or substantially all the assets of Borrower to any Person or group
of related Persons (other than Permitted Investors), (b) the merger or
consolidation of Borrower with or into another corporation or the
merger or consolidation of another corporation into Borrower with the
effect that immediately after such transaction the stockholders of
Borrower immediately prior to such transaction hold less than fifty
percent (50%) of the total voting power of all securities generally
entitled to vote in the election of directors, managers or trustees of
the Person surviving such merger or consolidation, (c) (i) prior to
Borrower's first Public Equity Offering, the acquisition by any
"person" or "group" (as those terms are used in Sections 13(d) and
14(d) of the Exchange Act) (other than the Permitted Investors) of the
ultimate "beneficial ownership" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of more than fifty percent (50%) of the voting
power of all securities of Borrower generally entitled to vote in the
election of directors of Borrower and (ii) after Borrower's first
Public Equity Offering, the acquisition by any person or group (defined
as set forth in clause (i) above) (other than the Permitted Investors)
of more than the greater of (A) forty percent (40%) of the voting power
of all securities of Borrower generally entitled to vote in the
election of directors of Borrower or (B) the total percentage of the
voting power of all securities of Borrower generally entitled to vote
in the election of directors of Borrower held by the Permitted
Investors in the aggregate at the time of determination, (d) during any
period of twenty-four consecutive months, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose election by such Board or whose
nomination for election by the stockholders of Borrower was approved by
a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the Board of
Directors of Borrower, (e) the stockholders of Borrower shall approve
any plan for the liquidation or
65
dissolution of Borrower, (f) ▇▇▇▇ ▇. ▇▇▇▇▇ and Related Parties with
respect to ▇▇▇▇ ▇. ▇▇▇▇▇ shall at any time fail collectively to own,
beneficially and of record, at least 2,200,000 shares of Class B Common
Stock of Borrower (as appropriately adjusted to reflect any stock
divisions, stock dividends or other similar transactions with respect
to such capital stock after the date hereof), (g) Borrower shall at any
time fail to own, beneficially and of record, all of the outstanding
stock of Canadian Restricted Subsidiary, UK Restricted Subsidiary and
Tech Industries or (h) the occurrence of a "Change of Control" (as such
term is defined in the Senior Note Indenture). As used in this
definition:
(x) "Permitted Investors" means ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Partners (Bank SBIC Manager), Inc. and Related Parties of any of the
foregoing; and
(y) "Related Party" with respect to any Permitted Investor
means (A)(1) any controlling stockholder, eighty percent (80%) (or
more) owned Subsidiary, or spouse or immediate family member (in the
case of an individual) of such Permitted Investor or (2) a trust,
corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an
eighty percent (80%) or more controlling interest of which consist of
such Permitted Investor and/or such other persons referred to in the
immediately preceding clause (1) or (B) with respect to ▇▇ ▇▇▇▇▇▇
Partners (Bank SBIC Manager), Inc., any Person controlled by ▇▇ ▇▇▇▇▇▇
Partners LLC.
"Chase Warrant" means, collectively, the amended and restated
Warrant No. 6A dated as of June 30, 1994, issued to ▇▇ ▇▇▇▇▇▇ Partners
(Bank SBIC Manager), Inc. evidencing rights to purchase 2,052,526
shares of Class A Common Stock of Borrower, subject to adjustment as
provided therein, and all warrants issued upon transfer, division or
combination, or in substitution for, any thereof, in each case, as
amended, supplemented or restated from time to time.
"Chino Property" means ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Closing Date" means the date on or before January 30, 2004
upon which the conditions set forth in subsection 7.1 have been
satisfied or otherwise waived by GE Capital.
"Collateral" has the meaning assigned to such term in the
Security Documents and shall also include all other property from time
to time securing the Obligations.
"Consolidated" means, with respect to Borrower, the
consolidation in accordance with GAAP (except to the extent that the
exclusion of the accounts of Unrestricted Subsidiaries in any such
consolidation would not be in accordance with GAAP) of the financial
statements, assets, liabilities, stockholders equity, income or
expense, as applicable, of Borrower and its Consolidated Subsidiaries
or Consolidated Restricted Subsidiaries, as applicable.
"Consolidated Restricted Subsidiary" means, with respect to
any Person, each Restricted Subsidiary of such Person whose financial
statements are consolidated with the financial statements of such
Person in accordance with GAAP.
66
"Consolidated Subsidiary" means, with respect to any Person,
each Subsidiary of such Person whose financial statements are
consolidated with the financial statements of such Person in accordance
with GAAP.
"Default" means a condition or event that, after notice or
lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable
grace or cure period.
"Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part on or prior to a date that is one year
after the Commitment Termination Date.
"EBITDA" means, for any period, the sum (without duplication)
of the following for Borrower and its Restricted Subsidiaries on a
Consolidated basis: (a) Net Income for the period, (b) any provision
for (or less any benefit from) income and franchise taxes included in
the determination of Net Income, (c) interest expense deducted in the
determination of Net Income, (d) amortization and depreciation deducted
in determining Net Income, (e) losses (or less gains) from Asset
Dispositions or other non-cash items included in the determination of
Net Income (excluding sales, expenses or losses related to current
assets), (f) extraordinary losses (or less gains), as defined under
GAAP, net of related tax effects, included in the determination of Net
Income and (g) non-recurring restructuring charges approved by
Requisite Lenders, including for Borrower's 2004 fiscal year, severance
and relocation costs not exceeding $3,500,000 in the aggregate incurred
in connection with (i) relocating operations from Borrower's facilities
in California to its facility in Tolleson, Arizona, and (ii) relocating
operations from Borrower's South Carolina facility to its facilities in
Kingsport, Tennessee and elsewhere, to the extent such costs are
deducted in determining Net Income for such period. To the extent
EBITDA is being calculated for any period which includes any of the
following months, EBITDA for such months shall be deemed to be as
follows: January 2003, $2,501,000; February 2003, $3,048,000; March
2003, $2,910,000; April 2003, $3,147,000; May 2003, $4,587,000; June
2003, $4,277,000; July 2003, $3,571,000; August 2003, $5,348,000;
September 2003, $2,928,000; October 2003, $2,201,000; and November
2003, $2,770,000.
"Environmental Claims" means claims, liabilities,
investigations, administrative proceedings, whether pending or, to the
best of the Borrower's knowledge, threatened, or judgments or orders
relating to any Hazardous Materials.
"Environmental Laws" means all applicable federal, state,
provincial, local and foreign laws, statutes, ordinances, codes, rules,
standards and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including
any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating
to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata,
67
wildlife, aquatic species and vegetation). Environmental Laws include
CERCLA; the Hazardous Materials Transportation Authorization Act of
1994 (49 U.S.C. Sections 5101 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic
Substance Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air
Act (42 U.S.C. Sections 7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. Sections 1251 et seq.); the Occupational Safety
and Health Act (29 U.S.C. Sections 651 et seq.); and the Safe Drinking
Water Act (42 U.S.C. Sections 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state,
provincial, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes related in any
manner to environmental, natural resource or human health and safety
matters.
"Environmental Liability" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs, capital
costs, operation and maintenance costs, losses, damages, punitive
damages, property damages, natural resource damages, consequential
damages, treble damages, costs and expenses (including all reasonable
fees, disbursements and expenses of counsel, experts and consultants),
fines, penalties, sanctions and interest incurred as a result of or
related to any claim, suit, action, investigation, proceeding or demand
by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common law,
arising under or related to any Environmental Laws, Environmental
Permits, or in connection with any Release or threatened Release or
presence of a Hazardous Material whether on, at, in, under, from or
about or in the vicinity of any real or personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by
any governmental authority under any Environmental Laws.
"Equipment" means all "equipment" (as defined in the UCC),
including, without limitation, all machinery, motor vehicles, trucks,
trailers, vessels, aircraft and rolling stock and all parts thereof and
all additions and accessions thereto and replacements therefor.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Stock).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Existing Obligations" means the obligations of Borrower
arising under and pursuant to the Existing Credit Agreement.
"Faulstich Property" means the following parcels of property:
890 and ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
68
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100th of
1%) of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the
next 1/100th of 1%) of the quotations for such day for such
transactions received by Agent from three Federal funds brokers of
recognized standing selected by it.
"Fixed Asset Draw Period" means any period during which
Revolving Credit Exposure is based in part on Fixed Asset Availability
(as defined in Exhibit 4.5(F)).
"Fixed Charge Coverage" means, for any period, Operating Cash
Flow for such period divided by Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum of the
following for Borrower and its Restricted Subsidiaries on a
Consolidated basis: (a) interest expense, net of interest income,
included in the determination of Net Income, less (i) amortization of
capitalized fees and expenses included in interest expense and incurred
with respect to the Related Transactions or the transactions under the
Existing Credit Agreement, (ii) amortization of any original issue
discount attributable to any warrants included in interest expense and
(iii) interest paid in kind and included in interest expense, (b) any
provision for (benefit from (but only to the extent received in cash))
income or franchise taxes included in the determination of net income,
(c) increases (decreases) in short-term and long-term deferred tax
assets, (d) decreases (increases) in short-term and long-term deferred
tax liabilities, (e) scheduled payments of principal with respect to
all Indebtedness (including the principal portion of scheduled payments
of capital lease obligations but excluding reductions of the Revolving
Loan) and (f) Restricted Junior Payments made in cash, other than
Restricted Payments permitted under subsection 3.5(A). To the extent
Fixed Charges are being calculated for any period which includes any of
the following months, Fixed Charges for such month shall be deemed to
be as follows: January 2003, $912,000; February 2003, $979,000; March
2003, $1,065,000; April 2003, $1,118,000; May 2003, $1,287,000; June
2003, $2,630,000; July 2003, $1,836,000; August 2003, $3,396,000;
September 2003, $1,595,000; October 2003, $875,000; and November 2003,
$1,537,000.
"GAAP" means, (a) with respect to Borrower and the Restricted
Subsidiaries other than the Canadian Restricted Subsidiary, the UK
Restricted Subsidiary and any other Foreign Restricted Subsidiary,
generally accepted accounting principles as set forth in statements
from Auditing Standards No. 69 entitled "The Meaning of `Present Fairly
in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board that are applicable to the circumstances as of the date of
determination, (b) with respect to the Canadian Restricted Subsidiary,
generally accepted accounting principles in Canada as in effect from
time to time as set forth in the opinions and pronouncements of the
relevant Canadian public and private accounting boards and
69
institutes which are applicable to the circumstances as of the date of
determination consistently applied, (c) with respect to the UK
Restricted Subsidiary, accounting principles and practices which are
from time to time generally acceptable in the United Kingdom and (d)
with respect to any other foreign Restricted Subsidiary accounting
principles and practices which are from time to time considered
generally acceptable or generally accepted accounting principles in
such foreign country in accordance with any public or private
accounting boards or institutes located in such country.
"Hazardous Material" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as "hazardous
substances", "hazardous materials", "hazardous wastes", "toxic
substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity or "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or
geothermal resources; (c) any flammable substances or explosives or any
radioactive materials; and (d) asbestos in any form or electrical
equipment which contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of fifty parts per million.
"▇▇▇▇▇▇ Warrant" means, collectively, the Warrant No. 7A dated
as of June 30, 1994, issued to ▇▇▇▇▇▇ Financial, Inc. in substitution
for that certain Warrant No. 3A dated as of October 9, 1992, issued by
Portola - California to ▇▇▇▇▇▇ Financial, Inc., evidencing rights to
purchase 440,215 shares of Class A Common Stock of Borrower, subject to
adjustment as provided therein, and all warrants issued upon transfer,
division or combination, or in substitution for, any thereof, in each
case, as amended, supplemented or restated from time to time.
"Inactive Subsidiaries" means, collectively, Buyerlink
Networks, Inc., a Delaware corporation, Cap Snap, Inc., a California
corporation, Cap Snap Seal, Inc., a California corporation, Cap Snap
Co., a Delaware corporation, Northern Plastics Corporation -- Puerto
Rico, a Pennsylvania corporation, Northern Engineering and Plastics
Corporation, a Puerto Rico corporation, Atlantic Packaging Sales, LLC,
a Delaware limited liability company and Tech Industries U.K. Ltd., a
corporation organized under the laws of Rhode Island.
"Indebtedness" as applied to any Person, means: (a) all
indebtedness for borrowed money; (b) that portion of obligations with
respect to capital leases that is properly classified as a liability on
a balance sheet in conformity with GAAP; (c) any obligation under any
lease (a "synthetic lease") treated as an operating lease under GAAP
and as a loan or financing for United States income tax purposes; (d)
notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (e) any
obligation owed for all or any part of the deferred purchase price of
property or services if the purchase price is due more than six (6)
months from the date the obligation is incurred or is evidenced by a
note or similar written instrument; (f) "earnouts" and similar payment
obligations; (g) obligations under forward contracts,
70
future contracts, swaps, options or other financing agreements or
arrangements the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices; and (h) all
indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit
of that Person; provided, that Indebtedness shall exclude obligations
of Borrower under the Chase Warrant to the extent that cash in the
amount of such obligations is held in a segregated account subject to a
control agreement in favor of Agent and in form and substance
satisfactory to Agent, and not co-mingled with any other funds of
Borrower and its Subsidiaries.
"Index Rate Loan" means a Loan bearing interest by reference
to the Index Rate.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect any
Person against fluctuations in interest rates.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time and all rules and regulations promulgated thereunder.
"Inventory" means all inventory (including all "inventory," as
defined in the UCC or as defined in any other Personal Property
Security Legislation), 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 returned and repossessed goods.
"L/C Issuer" means GE Capital or a Subsidiary thereof or a
bank or other legally authorized Person selected by or acceptable to
Agent in its sole discretion, in such Person's capacity as an issuer of
Letter of Credit hereunder and GE Capital as the representative party
for the Lenders under risk participation agreements with banks
supporting the issuance of Letters of Credit hereunder.
"Lender" means, collectively, each Person executing this
Agreement as a Lender set forth on the signature pages hereto, and each
Person that hereafter becomes a party to this Agreement as a Lender
pursuant to subsection 8.1 and the L/C Issuers.
"Letters of Credit" means documentary or standby letters of
credit, risk participation agreements or guarantees issued for the
account of Borrower by L/C Issuers for which Agent and Lenders have
incurred Letter of Credit Liability and including, without limitation,
the letters of credit issued by Bank of America, N.A. for the account
of Borrower in the aggregate undrawn face amount of $793,562.54 as of
the date hereof.
"Letter of Credit Liability" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance of Letters of Credit by L/C Issuers or the
purchase of a participation as set forth in Section 1.1(b) with respect
to any Letter of Credit. The amount of such Letter of Credit Liability
shall equal the maximum amount that may be payable by Agent and Lenders
thereupon or pursuant thereto. In case of any Letter of Credit that is
issued in a currency other than US Dollars, the
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corresponding Letter of Credit Liability shall be determined in US
Dollars based on the currency exchange rate from time to time
applicable to the issuer of such Letter of Credit or, in the case such
Letter of Credit is issued by a bank with which L/C issuer has entered
into a risk participation agreement, the corresponding Letter of Credit
Liability shall be determined in US Dollars based on the currency
exchange rate from time to time applicable to L/C Issuer under such
risk participation agreement.
"LIBOR Loan" means a Loan bearing interest by reference to
LIBOR.
"Lien" means any lien, hypothec, mortgage, pledge, security
interest, charge, encumbrance or governmental levy or assessment of any
kind, whether voluntary or involuntary (including any conditional sale
or other title retention agreement and any lease in the nature
thereof), and any agreement to give any lien, hypothec, mortgage,
pledge, security interest, charge or encumbrance (excluding the deposit
of proceeds of the Senior Notes on the Closing Date with the Senior
Defeased Trustee in an amount necessary to defease the Senior Deferred
Notes).
"Loan" or "Loans" means an advance or advances under the
Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Negative Pledge Agreements and all other instruments,
documents and agreements executed by or on behalf of any Loan Party and
delivered concurrently herewith or at any time hereafter to or for the
benefit of Agent or any Lender in connection with the Loans and other
transactions contemplated by this Agreement, all as amended,
supplemented or modified from time to time.
"Loan Party" means, collectively, Borrower and each Subsidiary
thereof which is or becomes a party to any Loan Document.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit to be dated as of the Closing Date
between Borrower, as applicant, and GE Capital.
"Master Standby Agreement" means the Master Agreement for
Standby Letters of Credit to be dated as of the Closing Date between
Borrower, as applicant, and GE Capital.
"Material Adverse Effect" means (a) a material adverse effect
upon the business, operations, properties, assets or condition
(financial or otherwise) of Borrower and its Restricted Subsidiaries
taken as a whole or (b) the impairment of the ability of any Loan Party
to perform its obligations under any Loan Document to which it is a
party or of Agent or any Lender to enforce any Loan Document or collect
any of the Obligations. In determining whether any individual event
would result in a Material Adverse Effect, notwithstanding that such
event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event
and all other then existing events would result in a Material Adverse
Effect.
72
"Mexican Restricted Subsidiary" means Portola Packaging Inc.
Mexico, S.A. de C.V., a corporation organized under the laws of Mexico.
"Mexican Security Documents" means all instruments, documents
and agreements executed by or on behalf of Mexican Restricted
Subsidiary or any other Person to guaranty or provide collateral
security with respect to the Obligations of Borrower including, without
limitation, the Security Agreement, any other security agreement or
pledge agreement, any guaranty of the Obligations, any mortgage or deed
of trust, and all instruments, documents and agreements executed
pursuant to the terms of the foregoing.
"Mortgage" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments
of leases or other real estate security documents delivered by any Loan
Party to Agent, with respect to Mortgaged Property, all in form and
substance satisfactory to Agent.
"Negative Pledge Agreements" means the Negative Pledge
Agreements to be dated as of the Closing Date, to be executed by each
of ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ Partners (Bank SBIC Manager), Inc. and the
trustees of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Family Revocable
Trusts, in favor of Agent, for the benefit of Lenders as amended,
supplemented or restated from time to time thereafter.
"Net Income" means, for any period, the net income (or loss)
for the period of Borrower and its Restricted Subsidiaries on a
Consolidated basis determined in accordance with GAAP, but excluding:
(a) the income (or loss) of any Person (other than Restricted
Subsidiaries of Borrower) in which Borrower or any of its Restricted
Subsidiaries has an ownership interest unless received by Borrower or
its Restricted Subsidiaries in a cash distribution; and (b) the income
(or loss) of any Person accrued prior to the date it became a
Restricted Subsidiary of Borrower or is merged into or consolidated
with Borrower.
"Net Proceeds" means cash proceeds received by Borrower or any
of its Subsidiaries from any Asset Disposition (including insurance
proceeds, awards of condemnation, and payments under notes or other
debt securities received in connection with any Asset Disposition), net
of (a) the costs of such sale, lease, transfer or other disposition
(including taxes attributable to such sale, lease or transfer) and (b)
amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Lien on the asset or property disposed.
"Note" or "Notes" means one or more of the promissory notes of
Borrower substantially in the form of Exhibit 10.1(B), or any
combination thereof.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owed
to Agent, any L/C Issuer or any Lender under the Loan Documents
including, without limitation, the principal amount of all debts,
claims and indebtedness, accrued and unpaid interest, all reimbursement
obligations in respect of any Interest Rate Agreements and Letters of
Credit, and all fees, costs and
73
expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable whether before or after the filing of a proceeding under
any Bankruptcy Law by or against Borrower, any of its Subsidiaries or
any other Loan Party.
"Operating Cash Flow" means, for any period (a) EBITDA for
such period, less (b) Unfinanced Capital Expenditures for such period,
excluding Unfinanced Capital Expenditures made during Fiscal Years 2004
and 2005 in connection with projects undertaken by any of the Mexican
Restricted Subsidiary, Portola GmbH or Portola s.r.o. or with ▇▇▇▇▇▇▇
▇▇ or its affiliates (in an aggregate amount not to exceed $4,000,000
during fiscal year 2004 and $6,600,000 during Fiscal Year 2005), less
(c) all Investments made in cash by Borrower or any of its Restricted
Subsidiaries during such period (other than Investments made in
Borrower by a Restricted Subsidiary of Borrower), less (d) Other
Capitalized Costs, excluding other Capitalized Costs with respect to
Borrower's acquisition of Tech Industries. "Other Capitalized Costs,"
means the gross amount capitalized, for such period, as long term
assets (net of cash received in respect of long term assets), other
than (i) Capital Expenditures and (ii) fees and expenses capitalized
with respect to the Related Transactions or the transactions under the
Existing Credit Agreement.
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, limited liability
partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions
thereof and their respective permitted successors and assigns (or in
the case of a governmental person, the successor functional equivalent
of such Person).
"(pound)" or "Pounds Sterling" means British pounds sterling
or such other lawful currency of the United Kingdom from time to time.
"Personal Property Security Legislation" means any applicable
personal property security legislation as all such legislation now
exists or may from time to time hereafter be amended, modified,
recodified, supplemented or replaced, together with all rules,
regulations thereunder or related thereto.
"PPE" means Equipment and Real Estate of Borrower and its
Restricted Subsidiaries to the extent classified as property, plant and
equipment on Borrower's Consolidated balance sheet prepared in
accordance with GAAP.
"PPSA" means the Personal Property Security Act (Ontario) as
such legislation now exists or may from time to time hereafter be
amended, modified, recodified, supplemented or replaced, together with
all rules, regulations thereunder or related thereto. Reference to
sections of the PPSA shall be construed to also refer to any successor
sections.
74
"Priority Payable Reserves" means, at any time, the full
amount of the liabilities at such time which have a trust imposed to
provide for payment or Lien ranking or capable of ranking senior to or
pari passu with security interests, liens or charges securing the
Obligations on any of the Collateral under federal, provincial, state,
county, municipal, common or local law including, but not limited, to
claims for unremitted and accelerated rents, taxes, wages, workers'
compensation obligations, government royalties or pension fund
obligations, together with the aggregate value, determined in
accordance with GAAP, of all Eligible Inventory which Agent, acting
reasonably, considers may be or may become subject to a right of a
supplier to recover possession thereof under any federal, state or
provincial law, where such supplier's right may have priority over the
security interests, liens or charges securing the Obligations
including, without limitation, Eligible Inventory subject to a right of
a supplier to repossess goods pursuant to Section 81.1 of the
Bankruptcy and Insolvency Act (Canada). Agent shall from time to time
determine in its reasonable discretion the amount of Priority Payables
Reserve and shall deliver written notice of such determination to
Borrower and Lenders.
"Pro Forma" means the unaudited Consolidated and consolidating
balance sheets of Borrower and its Consolidated Subsidiaries prepared
in accordance with GAAP (except for the exclusion of the accounts of
Unrestricted Subsidiaries in Consolidated financial statements) as of
November 30, 2003 after giving effect to the Related Transactions. The
Pro Forma is annexed hereto as Schedule 10.1(A).
"Pro Rata Share" means (a) with respect to a Lender's
obligation to make Revolving Loans and such Lender's right to receive
payments of interest and principal with respect thereto and the related
commitment fee described in subsection 1.2(B) and with respect to a
Lender's obligation to share in Letter of Credit Liability and to
receive the related Letter of Credit fee described in subsection
1.2(C), except as otherwise provided in subsection 8.6(A)(3), the
percentage obtained by dividing (i) the Revolving Credit Exposure of
such Lender by (ii) the aggregate Revolving Credit Exposure of all
Lenders and (b) for all other purposes (including, without limitation,
the indemnification obligations arising under subsection 8.2(E)) with
respect to any Lender, the percentage obtained by dividing (i) the
Revolving Credit Exposure of that Lender by (ii) the aggregate
Revolving Credit Exposure of all Lenders, in each case as the
applicable percentages may be adjusted by assignments permitted
pursuant to subsection 8.1. The Pro Rata Shares of each Lender and
their respective commitment amounts are set forth on Schedule 10.1(B)
hereto.
"Proceeds" means all proceeds of, and all other profits,
rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of,
or realization upon, any Collateral including, without limitation, all
claims against third parties for loss of, damage to or destruction of,
or for proceeds payable under, or unearned premiums with respect to,
policies of insurance with respect to any Collateral, and any
condemnation or requisition payments with respect to any Collateral, in
each case whether now existing or hereafter arising.
"Projections" means Borrower's forecasted Consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c)
cash flow statements; and (d)
75
capitalization statements, all prepared on a Subsidiary by Subsidiary
basis on a consistent basis with Borrower's historical financial
statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Public Equity Offering" means a bona fide underwritten sale
of common stock of Borrower pursuant to a registration statement (other
than on Form S-8 or any other form relating to securities issuable
under any benefit plan of Borrower or its Subsidiaries) that is
declared effective by the Securities and Exchange Commission.
"Real Estate" means all now or hereafter owned or leased
estates in real property, including, without limitation, all fees,
leaseholds and future interests, together with all now or hereafter
owned or leased interests in the improvements and emblements thereon,
the fixtures attached thereto and the easements appurtenant thereto.
"Related Transactions" means the execution and delivery of the
Related Transactions Documents, each borrowing under the Revolving Loan
on the Closing Date the issuance of the Senior Notes on the Closing
Date, the defeasance of the Senior Defeased Notes on the Closing Date
and the payment of all fees, costs and expenses associated with all of
the foregoing.
"Related Transactions Documents" means the Loan Documents, the
Senior Note Documents and all other agreements, instruments and
documents executed or delivered in connection with the Related
Transactions.
"Release" means any release, known threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape,
injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in
the air, soil, surface water, ground water or property.
"Requisite Lenders" means Lenders (other than Defaulting
Lenders) having (a) sixty-six and two-thirds percent (66-2/3%) or more
of the Revolving Loan Commitment or (b) if the Revolving Loan
Commitment has been terminated, sixty-six and two-thirds percent
(66-2/3%) or more of the aggregate outstanding principal balance of the
Loans of all Lenders that are not Defaulting Lenders.
"Restricted Subsidiary" means any Subsidiary of Borrower,
whether existing on or after the date hereof, unless such Subsidiary is
an Unrestricted Subsidiary or is designated an Unrestricted Subsidiary
prior to the date it becomes a Subsidiary.
"Revolving Credit Exposure" means, with respect to any Lender
as of any date of determination, (a) prior to the termination of the
Revolving Loan Commitment, such Lender's Revolving Loan Commitment and
(b) after termination of the Revolving Loan Commitment, the sum of (i)
the aggregate outstanding principal amount of the Revolving Loans of
such Lender plus (ii) the aggregate amount of all participations
purchased by such Lender in the outstanding Letter of Credit Liability.
76
"Security Agreement" means those separate security agreements,
hypothecs and debentures executed by Borrower and its Restricted
Subsidiaries in favor of Agent, and securing Borrower's and its
Restricted Subsidiaries' Obligations hereunder and under the Loan
Documents.
"Security Documents" means, collectively, the US Security
Documents, the UK Security Documents, the Canadian Security Documents
and the Mexican Security Documents.
"Senior Defeased Indenture" means that certain Indenture dated
as of October 2, 1995, between Borrower and the Senior Defeased
Trustee, as amended, supplemented or restated from time to time.
"Senior Defeased Notes" means Borrower's 10 3/4% Senior Notes
due October 1, 2005 issued an aggregate principal amount of
$110,000,000.
"Senior Defeased Trustee" means US Bank.
"Senior Note Documents" means the Senior Note Indenture and
the other documents, instruments and agreements executed or delivered
in connection with the issuance of the Senior Notes.
"Senior Note Indenture" means that certain Indenture to be
dated as of the Closing Date, between Borrower and the Senior Note
Trustee, as amended, supplemented or restated from time to time.
"Senior Note Trustee" means, US Bank National Association, as
trustee for the holders of the Senior Notes.
"Senior Notes" means Borrower's Senior Notes to be issued
under the Senior Note Indenture on the Closing Date in an aggregate
principal amount of up to $180,000,000.
"Subordinated Indebtedness" means Indebtedness of Borrower or
any of its Restricted Subsidiaries that is subordinated in right of
payment to the Obligations on terms reasonably satisfactory to Agent.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or
other business entity of which more than fifty percent (50%) of the
total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or
a combination thereof.
"Sumter Property" means ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Tech Industries" means Tech Industries, Inc., a Rhode Island
corporation.
77
"UK Restricted Subsidiary" means Portola Packaging Limited
(U.K.) a corporation organized under the laws of England and Wales.
"UK Security Documents" means all instruments, documents and
agreements executed by or on behalf of UK Restricted Subsidiary or any
other Person to guaranty or provide collateral security with respect to
the Obligations of Borrower including, without limitation, the Security
Agreement, any other security agreement or pledge agreement, any
guaranty of the Obligations, any mortgage or deed of trust, and all
instruments, documents and agreements executed pursuant to the terms of
the foregoing.
"Unfinanced Capital Expenditures" means, for any period (a)
Capital Expenditures for such period, less (b) the portion of such
Capital Expenditures financed under capital leases or other
Indebtedness (Indebtedness, for this purpose, does not include drawings
under the Revolving Loan).
"Unrestricted Subsidiary" means (a) those Subsidiaries
designated as Unrestricted Subsidiaries on subschedule 7.7, (b) any
Subsidiary of Borrower which at the time of determination is designated
an Unrestricted Subsidiary (as designated by the Board of Directors of
Borrower as provided below) and (c) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of Borrower may designate any
Subsidiary (other than Canadian Restricted Subsidiary, U.K. Restricted
Subsidiary, Mexican Restricted Subsidiary or Tech Industries) as an
Unrestricted Subsidiary so long as (x) neither Borrower nor any
Restricted Subsidiary is directly or indirectly liable for any
Indebtedness or any other obligation or liability of such Subsidiary,
(y) no default with respect to any Indebtedness or any other obligation
or liability of such Subsidiary would permit (upon notice, lapse of
time or otherwise) any holder of any other Indebtedness or any other
obligation or liability of Borrower or any Restricted Subsidiary to
declare a default on such other Indebtedness, obligation or liability
of Borrower or a Restricted Subsidiary or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and (z) neither
Borrower nor any Restricted Subsidiary shall have made any Investment
in such Subsidiary unless such Investment is permitted under subsection
3.3. Any such designation by the Board of Directors shall be evidenced
by a resolution of the Board of Directors delivered to Agent. The Board
of Directors of Borrower may designate any Unrestricted Subsidiary as a
Restricted Subsidiary at any time in the same manner as it would
designate a Subsidiary as an Unrestricted Subsidiary, so long as
immediately after such designation as a Restricted Subsidiary, there
would be no Default or Event of Default hereunder.
"US Dollar", "Dollar" or "$" means, unless otherwise
qualified, dollars in lawful currency of the United States of America.
"US Security Documents" means all instruments, documents and
agreements executed by or on behalf of Borrower or any other Person to
guaranty or provide collateral security with respect to the Obligations
of Borrower including, without limitation, the Security Agreement, any
other security agreement or pledge agreement, any guaranty of the
Obligations, any mortgage or deed of trust, and all instruments,
documents and agreements executed pursuant to the terms of the
foregoing.
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10.2 Other Definitional Provisions. References to "Sections",
"subsections", "Exhibits," "Schedules" and "subschedules" shall be to Sections,
subsections, Exhibits, Schedules and subschedules, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 10.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. References to an agreement
shall include all amendments, restatements, modifications and supplements to
such agreement, subject to such consents or approvals of Agent or any Lenders as
may be required by the terms of this Agreement. In this Agreement, "hereof,"
"herein," "hereto," "hereunder" and the like mean and refer to this Agreement as
a whole and not merely to the specific section, paragraph or clause in which the
respective word appears; words importing any gender include the other gender;
references to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to agreements and other contractual instruments shall be deemed to
include subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
SECTION 11.
RESTATEMENT OF EXISTING CREDIT AGREEMENT
11.1 Transactions on the Closing Date. The parties hereto agree
that, on the Closing Date, the following transactions shall be deemed to occur
automatically, without further action by any party hereto:
(A) the Existing Credit Agreement shall be deemed to be
amended and restated in its entirety in the form of this Agreement;
(B) all Existing Obligations outstanding on the Closing
Date shall, to the extent not paid on the Closing Date, be deemed to be
Obligations outstanding hereunder; and
(C) the Security Documents, including the Liens created
thereunder in favor of Agent for the benefit of Agent and Lenders or in favor of
Agent and Lenders, as applicable, and securing payment of the Existing
Obligations, as the same may be amended and/or restated on the Closing Date,
shall remain in full force and effect with respect to the Obligations and are
hereby reaffirmed; and
(D) all references in the other Loan Documents to the
Existing Credit Agreement shall be deemed to refer without further amendments to
this Agreement.
The parties acknowledge and agree that this Credit Agreement
and the other Loan Documents do not constitute a novation, payment and
reborrowing or termination of the Existing Obligations and that, as of the
Closing Date, all such Existing Obligations will in all respects be continued
and outstanding as Obligations under this Credit Agreement and the Notes with
only
79
the terms being modified from and after the Closing Date as provided in this
Credit Agreement, the Notes and the other Loan Documents.
Until the earlier of such time as the conditions to the
Initial Loans set forth in Subsection 7.1 have been satisfied, or in the event
this Agreement is terminated in accordance with Subsection 7.1, the Existing
Credit Agreement shall continue to remain in effect in accordance with its
terms.
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Witness the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
PORTOLA PACKAGING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: President
---------------------------------
S-1
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, an
L/C Issuer and a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Its: Authorized Signature
S-2
SCHEDULE 1.2
PRICING TABLE
Average Daily Availability for
Calculation Period Index Rate Margin LIBOR Margin
------------------------------ ----------------- ------------
< or = $12,500,000 1.25% 2.75%
> $12,500,000 1.00% 2.50%
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.1(A) - Funding/Conversion/Continuation Request
Exhibit 4.5(C) - Compliance Certificate
Exhibit 4.5(F) - Borrowing Base Certificate
Exhibit 10.1(A) - Assignment and Acceptance Agreement
Exhibit 10.1(B) - Form of Revolving Note
SCHEDULES
Schedule 1.2 - Pricing Table
Schedule 3.1 - Existing Indebtedness
Schedule 3.2(A)(10) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 5.2 - Material Adverse Effect
Schedule 5.4(A) - Jurisdictions of Organization and Qualifications
Schedule 5.4(B) - Capitalization
Schedule 5.6 - Title to Properties, Etc.
Schedule 5.7 - Intellectual Property
Schedule 5.8 - Investigations and Audits
Schedule 5.9 - Employee Matters
Schedule 7.1 - List of Closing Documents
Subschedule 7.1 - Litigation
Subschedule 7.2 - Employee Benefit Plans
Subschedule 7.3 - Closing Fees
Subschedule 7.4 - Investments
Subschedule 7.5 - Derivatives
Subschedule 7.6 - Bank Accounts
Subschedule 7.7 - Subsidiaries
Schedule 10.1(A) - Pro Forma
Schedule 10.1(B) - Pro Rata Shares and Commitment Amounts
S-2