EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of December 31, 1998
among
IMATION CORP.
and
IMATION ENTERPRISES CORP.
as the Borrowers
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
BANKAMERICA BUSINESS CREDIT, INC.
as Agent and Collateral Agent
BANKBOSTON, N.A.
and
NBD BANK
as Syndication Agents and Co-Agents
TABLE OF CONTENTS
Section Page
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ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions....................................................-1-
1.2 Accounting Terms..............................................-23-
1.3 Other Terms...................................................-24-
1.4 Computation of Time Periods...................................-24-
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility................................................-24-
2.2 Revolving Loans...............................................-24-
2.3 Letters of Credit.............................................-31-
ARTICLE 3
INTEREST AND FEES
3.1 Interest......................................................-37-
3.2 Conversion or Continuation....................................-40-
3.3 Special Provisions Governing LIBOR Loans......................-41-
3.4 Maximum Interest Rate.........................................-44-
3.5 Agent's Fee...................................................-44-
3.6 Unused Line Fee...............................................-44-
3.7 Letter of Credit Fee..........................................-45-
3.8 Audit Fees....................................................-45-
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans...............................................-45-
4.2 Reduction or Termination of Revolver Facility.................-46-
4.3 Place and Form of Payments; Extension of Time.................-46-
4.4 Payments as Revolving Loans...................................-46-
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Section Page
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4.5 Apportionment, Application and Reversal of Payments...........-47-
4.6 Indemnity for Returned Payments...............................-48-
4.7 Increased Capital.............................................-48-
4.8 Register; Collateral Agent's and Lenders' Books and Records;
Monthly Statements............................................-49-
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest....................................-49-
5.2 Perfection and Protection of Security Interest................-51-
5.3 Location of Collateral........................................-52-
5.4 Title to, Liens on, and Sale and Use of Collateral............-52-
5.5 Appraisals....................................................-52-
5.6 Access and Examination; Confidentiality.......................-52-
5.7 Collateral Reporting..........................................-54-
5.8 Accounts......................................................-54-
5.9 Collection of Accounts; Payments..............................-56-
5.10 Inventory....................................................-57-
5.11 Equipment....................................................-58-
5.12 Right to Cure................................................-58-
5.13 Power of Attorney............................................-59-
5.14 The Collateral Agent's and Lenders' Rights, Duties
and Liabilities.............................................-59-
5.15 Pledge of Stock of Foreign Subsidiaries......................-59-
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records.............................................-60-
6.2 Financial Information.........................................-60-
6.3 Notices to the Lenders........................................-63-
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
7.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents........................................-65-
7.2 Validity and Priority of Security Interest.....................-66-
7.3 Organization and Qualification.................................-66-
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Section Page
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7.4 Corporate Name; Prior Transactions............................-66-
7.5 Subsidiaries and Other Affiliates.............................-66-
7.6 Financial Statements and Projections..........................-66-
7.7 Solvency......................................................-67-
7.8 Debt..........................................................-67-
7.9 Title to Property.............................................-67-
7.10 Real Estate; Leases..........................................-67-
7.11 Proprietary Rights...........................................-68-
7.12 Trade Names..................................................-68-
7.13 Litigation...................................................-68-
7.14 Restrictive Agreements.......................................-68-
7.15 Labor Disputes...............................................-68-
7.16 Environmental Laws...........................................-69-
7.17 No Violation of Law..........................................-70-
7.18 No Default...................................................-70-
7.19 ERISA.........................................................-71-
7.20 Taxes........................................................-71-
7.21 Investment Company Act, etc..................................-72-
7.22 Public Utility Holding Company...............................-72-
7.23 Margin Stock.................................................-72-
7.24 Broker's Fees................................................-72-
7.25 No Material Adverse Change...................................-72-
7.26 Disclosure...................................................-72-
7.27 Bank Accounts................................................-73-
7.28 Fiscal Years.................................................-73-
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
8.1 Taxes and Other Obligations...................................-73-
8.2 Corporate Existence and Good Standing.........................-73-
8.3 Compliance with Law and Agreements............................-73-
8.4 Maintenance of Property.......................................-74-
8.5 Insurance.....................................................-74-
8.6 Condemnation..................................................-75-
8.7 Environmental Laws............................................-75-
8.8 ERISA.........................................................-76-
8.9 Mergers, Consolidations and Sales.............................-76-
8.10 Distributions; Capital Change................................-77-
8.11 Transactions Affecting Collateral or Obligations.............-77-
8.12 Guaranties...................................................-77-
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Section Page
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8.13 Debt.........................................................-77-
8.14 Transactions with Affiliates.................................-77-
8.15 Investment Banking and Finder's Fees.........................-78-
8.16 Business Conducted...........................................-78-
8.17 Liens........................................................-78-
8.18 Sale and Leaseback Transactions..............................-78-
8.19 New Subsidiaries.............................................-78-
8.20 Restricted Investments.......................................-79-
8.21 Minimum Borrowing Base Availability..........................-79-
8.22 Adjusted Tangible Net Worth..................................-80-
8.23 Fiscal Year..................................................-80-
8.24 Further Assurances...........................................-80-
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the Closing Date...-80-
9.2 Conditions Precedent to Each Loan.............................-81-
ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default............................................-83-
10.2 Remedies.....................................................-86-
ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination.........................................-87-
ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers...........................................-88-
12.2 Amendments and Waivers.......................................-88-
12.3 Assignments; Participations..................................-89-
12.4 Binding Effect; Assignment...................................-92-
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Section Page
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ARTICLE 13
COLLATERAL AGENT; THE AGENTS
13.1 Appointment..................................................-92-
13.2 Nature of Duties.............................................-93-
13.3 Rights, Exculpation, Etc.....................................-93-
13.4 Reliance.....................................................-94-
13.5 Indemnification of the Collateral Agent and the Agents
by the Lenders..............................................-94-
13.6 Collateral Agent in Individual Capacity......................-95-
13.7 Successor Collateral Agent...................................-95-
13.8 Collateral Matters...........................................-96-
13.9 Restrictions on Actions by Lenders; Sharing of Payments......-97-
13.10 Agency for Perfection.......................................-98-
13.11 Payments by Collateral Agent to Lenders.....................-98-
13.12 Concerning the Collateral and the Related Loan Documents....-98-
13.13 Field Audit Reports; Disclaimers by Lenders.................-98-
13.14 Relations Among Lenders.....................................-99-
ARTICLE 14
MISCELLANEOUS
14.1 Cumulative Remedies; No Prior Recourse to Collateral.......-100-
14.2 Severability................................................-100-
14.3 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver..........................................-100-
14.4 Survival of Representations and Warranties..................-102-
14.5 Other Security and Guaranties...............................-102-
14.6 Fees and Expenses...........................................-102-
14.7 Notices.....................................................-103-
14.8 Indemnity of the Collateral Agent and the Lenders
by the Borrowers...........................................-103-
14.9 Limitation of Liability.....................................-104-
14.10 Waiver of Notices..........................................-104-
14.11 Final Agreement; No Strict Construction....................-104-
14.12 Counterparts...............................................-104-
14.13 Captions...................................................-105-
14.14 Right of Set-Off...........................................-105-
14.15 Taxes......................................................-105-
14.16 Joint and Several Liability................................-108-
14.17 Contribution and Indemnification between the Borrowers.....-109-
14.18 Agency of Imation for Enterprises..........................-109-
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EXHIBITS AND SCHEDULES
EXHIBIT A - Form of Borrowing Base Certificate
EXHIBIT B-1 - Financial Statements
EXHIBIT B-2 - Latest Projections
EXHIBIT B-3 - Pro Forma Statements of Borrowers
EXHIBIT C - List of Closing Documents
EXHIBIT D - Form of Notice of Borrowing
EXHIBIT E - Form of Notice of Conversion/Continuation
EXHIBIT F - Form of Assignment and Acceptance
SCHEDULE 2.2 - Accounts for Loans; Authorized officers
SCHEDULE 5.1(b) - Mortgaged Real Estate
SCHEDULE 5.3 - Locations of Collateral
SCHEDULE 5.15 - Foreign Subsidiaries - Stock to be Pledged
SCHEDULE 7.2 - Permitted Liens
SCHEDULE 7.3 - Good Standing Jurisdictions
SCHEDULE 7.4 - Trade Names
SCHEDULE 7.5 - Subsidiaries and Affiliates
SCHEDULE 7.10 - Real Estate and Leases;
SCHEDULE 7.13 - Litigation
SCHEDULE 7.15 - Labor Contracts and Disputes
SCHEDULE 7.16 - Environmental Matters
SCHEDULE 7.19 - Employee Benefit Plans
SCHEDULE 7.27 - Bank Accounts
SCHEDULE 8.13 - Debt
SCHEDULE 8.14 - Foreign Subsidiary Investments
SCHEDULE 13.11 - Lenders' Payment Instructions
SCHEDULE 14.7 - Notice Addresses
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This LOAN AND SECURITY AGREEMENT (the "Agreement") is dated as
of December 31, 1998 among IMATION CORP., a Delaware corporation ("Imation"),
with an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and IMATION
ENTERPRISES CORP., a Delaware corporation ("Enterprises"), with an office at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Imation and Enterprises being sometimes
hereinafter referred to collectively as the "Borrowers" and individually as a
"Borrower"), the financial institutions named on the signature pages of this
Agreement as "Lenders" (such financial institutions and their respective
successors and assigns being sometimes hereinafter referred to collectively as
the "Lenders" and each of such financial institutions and its successors and
assigns being sometimes hereinafter referred to individually as a "Lender"),
BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation ("BABC"), as agent and
collateral agent for the Lenders (in such capacity, the "Collateral Agent"), and
BANKBOSTON, N.A., and NBD BANK, as syndication agents and co-agents for the
Lenders (in such capacities, the "Co-Agents" and collectively with the
Collateral Agent, the "Agents"). In consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrowers, the Lenders, the
Agents and the Collateral Agent hereby agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means all of each Borrower's now owned or hereafter
acquired or arising accounts, contract rights, and any other rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"Accounting Changes" has the meaning specified in Section 1.2.
"Activation Event", "Activation Notice" and "Activation
Period" have the meanings specified in Section 5.9(a).
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period of Imation, the net income of Imation and its Subsidiaries on
a consolidated basis after provision for income taxes for such fiscal period, as
determined in accordance with GAAP and reported on the Financial Statements for
such fiscal period, less any and all of the following included in such net
income: (a) gain or loss arising from the sale of any capital asset; (b) gain
arising from any write-up in the book value of any asset; (c) earnings of any
business entity, substantially all the assets of which have been acquired in any
manner, or which has merged or otherwise consolidated with and into Imation or
any such Subsidiary to the extent realized by such other business entity prior
to the date of such acquisition, merger or consolidation; (d) earnings of any
business entity (other than a Subsidiary) in which Imation or any such
Subsidiary has an
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ownership interest unless (and only to the extent) such earnings shall actually
have been received by Imation or any such Subsidiary in the form of cash
distributions; (e) earnings of any Person to which assets of Imation or any such
Subsidiary shall have been sold, transferred or disposed of, or into which
Imation or any such Subsidiary shall have been merged (unless the surviving
entity is a Subsidiary), or which has been a party with Imation or any such
Subsidiary to any consolidation or other form of reorganization in which Imation
or a Subsidiary is not the surviving entity, after the date of such transaction;
(f) gain arising from the acquisition of debt or equity Securities of Imation or
any such Subsidiary or from cancellation or forgiveness of Debt; (g) gain
arising from adjustments relating to the overaccrual of restructuring expenses
during any prior fiscal period; and (h) gain arising from extraordinary items,
as determined in accordance with GAAP, or from any other non-recurring
transaction.
"Adjusted Tangible Assets" means all of the assets of Imation
and its Subsidiaries on a consolidated basis, as determined in accordance with
GAAP and reported on the Financial Statements except: (a) deferred assets
(except for deferred taxes); (b) patents, copyrights, trademarks, trade names,
franchises, goodwill, and other similar intangibles; (c) Restricted Investments,
other than those described in clauses (a), (b), (c) or (g) of Section 8.20; (d)
unamortized debt discount and expense; (e) assets of Imation and its
Subsidiaries constituting capitalized software or information systems; and (f)
fixed assets to the extent of any write-up in the book value thereof resulting
from a revaluation effective after the Closing Date.
"Adjusted Tangible Net Worth" means, at any date: (a) the book
value (net of depreciation, obsolescence, amortization, valuation, and other
proper reserves as determined in accordance with GAAP) at which Adjusted
Tangible Assets would be shown on a consolidated balance sheet of Imation and
its Subsidiaries at such date prepared in accordance with GAAP; less (b) (i) the
amount at which the liabilities of Imation and its Subsidiaries would be shown
on such consolidated balance sheet, including as liabilities all reserves for
contingencies and other potential liabilities which would be shown on such
consolidated balance sheet, and (ii) to the extent not reflected on such
consolidated balance sheet, the amount of the liabilities of Imation and its
Subsidiaries under Guaranties of Debt.
"Affiliate" means: (a) any Person which, directly or
indirectly, controls, is controlled by or is under common control with, a
Borrower; (b) any Person which beneficially owns or holds, directly or
indirectly, five percent (5.0%) or more of any class of Voting Stock of a
Borrower; or (c) any Person, five percent (5.0%) or more of any class of the
Voting Stock of which is beneficially owned or held, directly or indirectly, by
a Borrower. Control (including, with correlative meanings, the terms "controlled
by" and "under common control with"), as used herein, means the possession,
directly or indirectly, of the power in any form to direct or cause the
direction of the management and policies of the Person in question.
"Agent" and "Agents" have the meanings specified in the
introductory paragraph hereof.
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"Aggregate Revolver Outstandings" means, at any time, the sum
of (1) the unpaid balance of Revolving Loans, (2) the aggregate undrawn face
amount of all outstanding Letters of Credit, and (3) the aggregate amount of any
unpaid reimbursement obligations in respect of Letters of Credit.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable L/C Fee Margin" means the per annum rate from time
to time in effect, payable with respect to outstanding Letters of Credit, as
determined by reference to the grid contained in Section 3.1.
"Applicable LIBOR Margin" means the per annum interest rate
from time to time in effect, payable in addition to the LIBO Rate, as determined
by reference to the grid contained in Section 3.1.
"Applicable Margins" means, collectively, the Applicable L/C
Fee Margin, the Applicable LIBOR Margin and the Applicable Reference Rate
Margin.
"Applicable Reference Rate Margin" means the per annum
interest rate from time to time in effect, payable in addition to the Reference
Rate, as determined by reference to Section 3.1.
"Appraised Equipment" shall mean that Equipment covered by the
MB Valuation appraisal dated October 26, 1998.
"Assignment and Acceptance" has the meaning specified in
Section 12.3(a).
"Authorized Officer" means the chief executive officer, chief
operating officer, chief financial officer, any vice president, the treasurer or
any assistant treasurer of either Borrower, and for purposes of Sections 6.3 (f)
and 7.16, includes the chief environmental officer of Imation, whatever the
title of such Person may be.
"Availability" means, at any time, (a) the Maximum Revolver
Amount at such time minus (b) the sum of Aggregate Revolver Outstandings at such
time plus all Pending Revolving Loans at such time. In determining pursuant to
Sections 2.2(a), 2.2(g) or 2.2(h) whether Revolving Loans to be made on any date
would exceed Availability on such date, such proposed Revolving Loans shall be
counted as either Revolving Loans or Pending Revolving Loans for purposes of
calculating Availability on such date, but shall not be counted as both
Revolving Loans and Pending Revolving Loans.
"BABC" means BankAmerica Business Credit, Inc., a Delaware
corporation.
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor entity
thereto.
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"Bankruptcy Code" means Title 11 of the United States Code (11
▇.▇.▇.▇▇. 101 et seq.).
"Base LIBO Rate" means, during any Interest Period, the rate
of interest per annum (rounded upward to the nearest whole multiple of 1/16 of
1.0%, if such rate is not such a multiple) equal to the rate of interest
notified to the Collateral Agent by Bank of America at which Dollar deposits in
the approximate amount of the Loans to be made or continued as, or converted
into, LIBOR Loans for such Interest Period and having a maturity comparable to
such Interest Period would be offered by the London lending office of Bank of
America in the London interbank market at approximately 11:00 a.m. (London time)
two (2) Business Days prior to the commencement of such Interest Period.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which a
Borrower or an ERISA Affiliate is, or since July 1, 1996 was, an "employer" as
defined in Section 3(5) of ERISA.
"Borrower" and "Borrowers" have the meanings specified in the
introductory paragraph hereof.
"Borrowing" means a borrowing consisting of Reference Rate
Loans or LIBOR Loans made, continued or converted on the same day by the Lenders
(or by BABC in the case of a Borrowing funded by Swing Loans) or by the
Collateral Agent in the case of a Borrowing consisting of a Collateral Agent
Advance.
"Borrowing Base" means, at any time, the sum of (a) eighty
percent (80.0%) of the Net Amount of Eligible Accounts at such time plus (b) an
amount equal to the lesser of (1) $60,000,000, and (2) fifty percent (50.0%) of
the value of Eligible Inventory at such time; plus (c) the Machinery and
Equipment Component at such time.
"Borrowing Base Availability" means, at any time, (a) the
Borrowing Base at such time, minus the sum of (i) reserves for accrued interest
on the Obligations (provided, that such reserves for accrued interest shall be
established only during the continuance of an Event of Default), (ii) any
Environmental Compliance Reserve, (iii) any Rent Reserve, and (iv) all other
reserves which the Collateral Agent reasonably deems necessary or desirable to
maintain with respect to the Borrowers' accounts, including, without limitation,
reserves for any amounts which the Collateral Agent or any Lender may be
obligated to pay in the future for the account of either Borrower; minus (b) the
sum of the Aggregate Revolver Outstandings at such time plus all Pending
Revolving Loans at such time.
"Borrowing Base Certificate" means a certificate of the chief
financial officer, the treasurer or any assistant treasurer of Imation (for
itself and as agent for Enterprises) substantially in the form of Exhibit A (or
another form mutually acceptable to the Collateral Agent and the Borrowers)
setting forth calculations of the Borrowing Base, including calculations of each
component thereof, all in such detail as shall be reasonably satisfactory to the
Collateral Agent.
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All calculations of the Borrowing Base in connection with the preparation of any
Borrowing Base Certificate shall originally be made by Imation (for itself and
as agent for Enterprises) and certified to the Collateral Agent; provided, that
the Collateral Agent shall have the right to review and adjust, in the exercise
of its reasonable credit judgment, any such calculation (1) to reflect its
reasonable estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in accordance with
this Agreement.
"Business Day" means (a) any day that is not a Saturday, a
Sunday, or a day on which banks in Chicago, Illinois are required or permitted
to be closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBO Rate or LIBOR Loans, any day that is a
Business Day pursuant to clause (a) above and that is also a day on which
trading is carried on by and between banks in the London interbank market.
"Capital Expenditures" means, with respect to Imation and its
Subsidiaries on a consolidated basis for any period, the cost of any fixed asset
or improvement, or replacement, substitution, or addition thereto, acquired
during such period and having a useful life of more than one year, including,
without limitation, those costs arising in connection with the direct or
indirect acquisition of such assets by way of increased product or service
charges or offset items or in connection with a Capital Lease.
"Capital Lease" means any lease of property by Imation or any
of its Subsidiaries on a consolidated basis which, in accordance with GAAP, is
or should be reflected as a capital lease on the consolidated balance sheet of
Imation and its Subsidiaries.
"Closing Date" means the date on which the initial extension
of credit is made hereunder.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute.
"Collateral" has the meaning specified in Section 5.1.
"Collateral Agent" means BankAmerica Business Credit, Inc., in
its capacity as collateral agent for the Lenders, and any successor Collateral
Agent appointed pursuant to Section 13.7.
"Collateral Agent Advances" has the meaning specified in
Section 2.2(i).
"Collateral Agent's Fee" has the meaning specified in Section
3.5.
"Collateral Agent's Liens" means the Liens granted to the
Collateral Agent, for the ratable benefit of the Collateral Agent, the Agents
and the Lenders, pursuant to this Agreement and the other Loan Documents.
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"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 12.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
12.3 or reduced pursuant to Section 4.2(a), and "Commitments" means,
collectively, the aggregate amount of the commitments of all of the Lenders.
"Commitment Fee Letter" means the commitment fee letter dated
as of December 31, 1998 among BABC, BankBoston, N.A., NBD Bank, Imation and
Enterprises.
"Compliance Certificate" has the meaning specified in Section
6.2(e).
"Concentration Account" has the meaning specified in Section
5.9(a).
"Contaminant" means any hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or
any constituent of any such hazardous substance or waste, as those terms are
defined or used in any Environmental Laws.
"Corporate Campus Assets" means the real property, buildings
and improvements comprising Imation's corporate headquarters campus in Oakdale,
Minnesota, and all Equipment integral to the operation of such real property,
buildings and improvements, and all Equipment leased to ▇▇▇▇▇▇▇ Kodak Company
located in the Discovery building that is part of such headquarters campus.
"Debt" of a Person means, without duplication, (a) all
indebtedness of such Person for borrowed money; (b) all obligations issued,
undertaken or assumed by such Person as the deferred purchase price of property
or services (other than trade payables entered into in the ordinary course of
business on ordinary terms); (c) all reimbursement or payment obligations of
such Person with respect to surety instruments; (d) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments; (e) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (f) all obligations of such Person
with respect to capital leases which should be recorded on a balance sheet of
such Person in accordance with GAAP; (g) all indebtedness of the types referred
to in clauses (a) through (f) above secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Debt, provided, that the amount of any such Debt shall be deemed
to be the lesser of the face principal amount thereof and the fair market value
of the property subject to such Lien; and (h) all obligations of such Person
under Guaranties of Debt of any other Person of the types described in clauses
(a) -
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(g). Debt of any Person shall include all Debt of any partnership or joint
venture in which such Person is a general partner or a joint venturer (other
than any such Debt which is expressly non-recourse to such Person).
"Default" means any event or condition which would constitute
an Event of Default if any requirement in connection therewith for the giving of
notice or the lapse of time, or both, had been satisfied.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent 2.0%. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate.
"Defaulting Lender" has the meaning specified in Section
2.2(g)(ii).
"Distribution" means (a) the payment or making of any dividend
or other distribution of property in respect of capital stock (or any options
or warrants for such stock), other than distributions in capital stock (or any
options or warrants for such stock) of the same class, or in respect of a
limited liability company or partnership interest, membership or other equity
interest (or any options or warrants for such equity interests); or (b) the
redemption or other acquisition of any capital stock (or any options or warrants
for such stock), partnership interest, membership interest or other equity
interest (or any options or warrants for such equity interests).
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"EBIT" means, with respect to any fiscal period of Imation and
its Subsidiaries, on a consolidated basis, Adjusted Net Earnings from Operations
for such period, plus, to the extent deducted in computing such Adjusted Net
Earnings from Operations, (1) interest expense, and (2) any provision for income
taxes.
"Eligible Accounts" means, at any time, those Accounts which,
when scheduled to the Lenders and at all times thereafter, do not violate the
negative covenants and other provisions of this Agreement and do satisfy the
affirmative covenants and other provisions of this Agreement and which the
Collateral Agent deems eligible as the basis for Revolving Loans, based on
criteria which the Collateral Agent establishes in its reasonable credit
judgment. Without limiting the foregoing, no Account shall be an Eligible
Account if:
(1) It is more than sixty (60) days past due, or it is due or
unpaid more than one hundred twenty (120) days after the date of the
original invoice issued by the applicable Borrower with respect to the
sale or services giving rise thereto; or
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(2) Fifty percent (50.0%) or more (based on aggregate Dollar
amount) of the Accounts from the Account Debtor are more than sixty
(60) days past due, or are due or unpaid more one hundred twenty (120)
days after the date of the original invoice issued by the applicable
Borrower with respect to the sale or services giving rise thereto; or
(3) It is an Intercompany Account or arises out of a sale not
made in the ordinary course of the applicable Borrower's business; or
(4) Any representation or warranty contained in this Agreement
with respect to all Eligible Accounts or any warranty with respect to
such Account contained in this Agreement has been breached; or
(5) The Account is subject to any right of set-off by the
Account Debtor, and that Account Debtor has not entered into an
agreement with the Collateral Agent which is reasonably acceptable to
the Collateral Agent with respect to the waiver of rights of set-off;
or the Account Debtor has disputed liability, or made any claim with
respect to any other Account due from such Account Debtor to the
applicable Borrower, provided, that such Account shall be rendered
ineligible only to the extent of the amount of such set-off, dispute or
claim; or
(6) The Account Debtor (i) has filed a petition for bankruptcy
or any other petition for relief under the Bankruptcy Code or any other
bankruptcy or insolvency law or has made an assignment for the benefit
of creditors, (ii) has had filed against it any petition or other
application for relief under the Bankruptcy Code or any other
bankruptcy or insolvency law, (iii) has suspended its business
operations, become insolvent, or suffered a receiver or a trustee to be
appointed for any of its assets or affairs, or (iv) in the case of any
Account Debtor which is an individual, is deceased or has been declared
judicially incompetent; or
(7) It arises out of a sale to an Account Debtor outside the
continental United States and Canada, unless the sale is on letter of
credit or acceptance terms reasonably acceptable to the Collateral
Agent; or
(8) It arises out of a sale to a customer on (a) a C.O.D.
basis, or (b) a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale
on approval, consignment, or any other repurchase or return basis; or
(9) The Collateral Agent believes, in its reasonable judgment,
that collection of such Account is insecure or that such Account may
not be paid by reason of the Account Debtor's financial inability to
pay; or
(10) The Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Borrower
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assigns its right to payment of such Accounts to the Collateral Agent
in accordance with the terms of the Assignment of Claims Act of 1940,
as amended (31 U.S.C. ss. 3727 et seq.); or
(11) The goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the
applicable Borrower and, if applicable, accepted by the Account Debtor,
or the Account Debtor revokes its acceptance of such goods or services;
or
(12) It is owed by an Account Debtor which is obligated to the
Borrowers respecting Accounts the aggregate unpaid balance of which
exceeds five percent (5.0%) of the aggregate unpaid balance of all
Accounts owed to the Borrowers at such time by all of the Account
Debtors, provided, that such Account shall be rendered ineligible only
to the extent the amount thereof exceeds such percentage; or
(13) The Account from the respective Account Debtor exceeds a
credit limit reasonably determined by the Collateral Agent, in its
reasonable discretion, at any time or times hereafter, to the extent
such Account exceeds such limit; or
(14) It is an Account with respect to which the Account Debtor
is located in any State requiring the filing of a Notice of Business
Activities Report or similar report in order to permit the applicable
Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such
state or has filed a Notice of Business Activities Report or equivalent
report for the then current year; or
(15) The Account is evidenced by chattel paper or instruments;
or
(16) The Account arises out of a contract or order which, by
its terms, forbids, restricts or makes void or unenforceable the
assignment by the applicable Borrower to the Collateral Agent of such
Account; or
(17) With respect to such Account, a check or other instrument
for the payment of money, tendered in full or partial satisfaction of
such Account, has been received, presented for payment and returned
uncollected for any reason; or
(18) The applicable Borrower has extended the time for payment
for such Account beyond the time periods set forth in clause (1) above
without the consent of the Collateral Agent; or
(19) The perfection, enforceability or validity of the
Collateral Agent's Liens in such Account, or, except as set forth in
clause (10) above, the Collateral Agent's or
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Lenders' ability to obtain direct payment of the proceeds of such
Account, is governed by any federal, state or local statutory
requirements other than those of the UCC; or
(20) The Account Debtor is any state, municipality, or other
political subdivision of the United States of America, or any
department, agency, public corporation or other instrumentality thereof
and as to which the Collateral Agent determines that its Lien therein
is not or cannot be perfected; or
(21) The Account is not subject to a first priority perfected
security interest in favor of the Collateral Agent and free of all
Liens other than Permitted Liens; or
(22) The Account arises out of the sale of a service contract;
or
(23) The Account is owed by an Account Debtor which is an
employee, officer or director of the applicable Borrower or of any
Affiliate of the applicable Borrower.
If any Account at any time ceases to be an Eligible Account by
reason of (a) any of the foregoing exclusions, or (b) any failure to meet any
other eligibility criteria established by the Collateral Agent in the exercise
of its reasonable credit judgment upon five (5) Business Days prior notice to
the applicable Borrower, such Account shall immediately be excluded from the
calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, determined on a
first-in-first-out basis and valued at the lower of cost or market value, and
net of any standard cost adjustments, which the Collateral Agent deems eligible
as the basis for Revolving Loans, based on criteria which the Collateral Agent
establishes in the exercise of its reasonable credit judgment. Without limiting
the foregoing, no Inventory shall be Eligible Inventory if: (a) it is obsolete
or unmerchantable; (b) it is located at premises not owned by the applicable
Borrower unless the Collateral Agent has received bailment agreements, landlord
waivers, consignment agreements, UCC notification statements or such other
agreements and instruments as are reasonably acceptable to the Collateral Agent
with respect to such Inventory (provided, that with respect to Inventory located
at the Borrowers' distribution centers located in Kansas City, Missouri,
Ontario, California and Harrisburg, Pennsylvania, and the leased locations in
White City, Oregon and Houston, Texas, such Inventory shall not, in the absence
of appropriate landlord waivers, be excluded from Eligible Inventory but shall
be the subject of the Rent Reserve); (c) it is not subject to a first priority
perfected security interest in favor of the Collateral Agent and free of all
Liens other than Permitted Liens; (d) it is raw material, work-in-process, spare
parts, packaging or shipping materials, or supplies; (e) it is ▇▇▇▇-and-hold
Inventory, returned or defective Inventory, Inventory delivered to the
applicable Borrower on consignment, or Inventory which is in transit; or (f) it
is Inventory which in any way fails to meet or violates any applicable
representation, warranty or covenant contained in this Agreement relating
directly or indirectly to such Inventory. In addition to the foregoing, and
without duplicating the deduction of any Inventory from the amount of Eligible
Inventory, the Collateral Agent shall establish a reserve against the amount of
Eligible Inventory for slow-moving Inventory, in an amount equal to (i) one
hundred percent
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(100.0%) of the amount of Inventory in a category with respect to which there
has been no sales activity during the preceding twelve (12) months, (ii)
twenty-five percent (25.0%) of the amount of Inventory in a category with
respect to which there has been no sales activity during the preceding three (3)
months, or (iii) twenty-five (25.0%) of the amount of Inventory in a category
with respect to which there exists greater than a one-year supply, based upon
historical usage; provided, that the Collateral Agent shall be permitted to
revise its methodology for calculating slow-moving Inventory set forth in this
sentence in the exercise of its reasonable credit judgment..
If any Inventory at any time ceases to be Eligible Inventory
by reason of (a) any of the foregoing exclusions or (b) any failure to meet any
other eligibility criteria established by the Collateral Agent in the exercise
of its reasonable credit judgment upon five (5) Business Days prior notice to
the applicable Borrower, such Inventory shall immediately be excluded from the
calculation of Eligible Inventory.
"Enterprises" has the meaning specified in the introductory
paragraph hereof.
"Environmental Compliance Reserve" means any reserves which
the Collateral Agent from time to time establishes in its reasonable credit
judgment for amounts that are required to be expended in order for a Borrower
and such Borrower's operations and property to comply with Environmental Laws or
in order to correct any violation by such Borrower or such Borrower's operations
or property of Environmental Laws.
"Environmental Laws" means all federal, state and local laws,
rules, regulations, ordinances, programs, and permits relating to health,
safety, hazardous substances, and environmental matters applicable to a Borrower
and/or its business and facilities (whether or not owned by it). Such laws and
regulations include but are not limited to the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended; the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., as amended; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.,
as amended; the Clean Water Act, 42 U.S.C. ss. 466 et seq., as amended; the
Clean Air Act, 46 U.S.C. ss. 7401 et seq., as amended; state and federal lien
and environmental cleanup programs; the Occupational Safety and Health Act, 29
U.S.C. ss. 651 et seq.; and U.S. Department of Transportation regulations, each
as from time to time hereafter in effect.
"Environmental Lien" means a Lien in favor of any Public
Authority for (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Public Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any
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property for environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"Equipment" means all of a Borrower's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including, without limitation,
motor vehicles, aircraft, dies, tools, jigs, and office equipment, as well as
all of such types of property leased by such Borrower and all of such Borrower's
rights and interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and auxiliary
parts and supplies used or to be used in connection therewith, and all
substitutes for any of the foregoing, and all manuals, drawings, instructions,
warranties and rights with respect thereto; wherever any of the foregoing is
located.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means (i) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as a Borrower; (ii) a partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with a Borrower; or (iii) for purposes of Section
412 of the Code, a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as a Borrower, any corporation described
in clause (i) above or any partnership, trade or business described in clause
(ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Federal Reserve Board, as in effect from time to
time.
"Event of Default" has the meaning specified in Section 10.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Collateral Agent from three (3) federal
funds brokers of recognized standing selected by the Collateral Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Letter" means the fee letter dated as of December 31,
1998 among BABC, Imation and Enterprises.
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"Financial Statements" means, according to the context in
which it is used, the financial statements attached hereto as Exhibit B-1, or
the pro forma balance sheet attached hereto as Exhibit B-3, or any financial
statements required to be given to the Lenders pursuant to Sections 6.2(a), (b),
and (c), or any combination thereof.
"Fiscal Year" means the Borrowers' fiscal year for financial
accounting purposes.
"Foreign Subsidiary" means any Subsidiary organized under the
laws of a jurisdiction other than the United States or any state thereof.
"Foreign Subsidiary Guaranties" means Guaranties by either
Borrower of the obligations of a Foreign Subsidiary.
"Foreign Subsidiary Letter of Credit" means a Letter of Credit
issued to a lender to a Foreign Subsidiary to support the obligations of such
Foreign Subsidiary to such lender under the related loan documents.
"Funding Date" means the date any Revolving Loans (including
Swing Loans and Collateral Agent Advances) are to be made hereunder.
"GAAP" means at any particular time generally accepted
accounting principles as in effect at such time, consistently applied.
"General Intangibles" means all of a Borrower's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of such Borrower of every kind and
nature (other than Accounts), including, without limitation, all Proprietary
Rights, corporate or other business records, inventions, designs, blueprints,
plans, specifications, patents, patent applications, trademarks, service marks,
trade names, trade secrets, goodwill, copyrights, computer software, customer
lists, registrations, licenses, franchises, tax refund claims, any funds which
may become due to such Borrower in connection with the termination of any Plan
or other employee benefit plan or any rights thereto and any other amounts
payable to such Borrower from any Plan or other employee benefit plan, rights
and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which such Borrower is beneficiary, and any letter of
credit, guarantee, claim, security interest or other security held by or granted
to such Borrower to secure payment by an Account Debtor of any of the Accounts.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligation of any other Person, other than
endorsements of items submitted for collection or deposit in the ordinary course
of business, (the "guaranteed obligations"), or assure or in effect assure the
holder of the guaranteed obligations against loss in respect thereof, including,
without limitation, any such
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obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity Securities
or other property or services.
"Imation" has the meaning specified in the introductory
paragraph hereof.
"Interest Coverage Ratio" means, for any fiscal period, the
ratio of (a) EBIT for such fiscal period, to (b) interest expense for such
fiscal period.
"Interest Period" means, with respect to each LIBOR Loan, the
interest period applicable to such LIBOR Loan as determined pursuant to Section
3.3(b).
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Inventory" means all of a Borrower's now owned and hereafter
acquired inventory, goods, and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, other materials and supplies of any kind, nature or description which
are or might be consumed in such Borrower's business or used in connection with
the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.
"IRS" means the Internal Revenue Service or any successor
agency.
"Latest Projections" means the projections of Imation's
consolidated quarterly financial condition, results of operations, and cash flow
for the 1999 Fiscal Year, attached hereto as Exhibit B-2.
"L/C Credit Support" has the meaning specified in Section
2.3(a).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof.
"Lender Affiliate" means an affiliate of a Lender.
"Letter of Credit" means a stand-by letter of credit issued or
caused to be issued for the account of a Borrower or with respect to which L/C
Credit Support is provided, in any case pursuant to Section 2.3.
"Letter of Credit Fee" has the meaning specified in Section
3.7.
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"LIBO Rate" means, for any Interest Period with respect to
LIBOR Loans comprising part of the same Borrowing, the rate of interest per
annum (rounded upward to the next 1/1000th of 1.0%) determined by the Collateral
Agent as follows:
LIBO Rate = Base LIBO Rate
-------------------------------
1.00 - LIBOR Reserve Percentage
"LIBOR Interest Rate Determination Date" means each date of
calculating the LIBO Rate for purposes of determining the interest rate with
respect to an Interest Period. The LIBOR Interest Rate Determination Date for
any LIBOR Loan shall be the second Business Day prior to the first day of the
related Interest Period for such LIBOR Loan.
"LIBOR Loan" means a Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the LIBO Rate.
"LIBOR Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1.0%) in effect on such day (whether or not applicable to
any Lender) under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
Liabilities having a term comparable to such Interest Period.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including, without limitation, a security interest, charge, claim,
or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assign ment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes; and (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance affecting
property.
"Loan" means each Revolving Loan.
"Loan Documents" means this Agreement, the Mortgages, the
Pledge Agreements, and other agreements, instruments, and documents heretofore,
now or hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.
"Lock-Box Account" and "Lock-Box Bank" have the meanings
specified in Section 5.9(a).
"Machinery and Equipment Component" means an amount equal to
$37,600,000 on the Closing Date, such amount to be reduced by $1,880,000 on the
first day of each calendar quarter, commencing April 1, 1999. The Machinery and
Equipment Component shall be further
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reduced by an amount equal to eighty percent (80.0%) of the appraised orderly
liquidation value of any item of Appraised Equipment which shall be lost,
damaged (to the extent of the damage), destroyed, condemned, sold, or otherwise
disposed of, and increased in the event that the applicable Borrower acquires
replacement Equipment for any Appraised Equipment so lost, damaged, destroyed,
condemned, sold or otherwise disposed of, such increase (a) to be effective upon
delivery to the Collateral Agent of (i) an appraisal of such replacement
Equipment reasonably satisfactory to the Collateral Agent and (ii) evidence that
the Collateral Agent has a perfected first priority security interest in such
replacement Equipment, free of all Liens other than Permitted Liens, and (b) to
be in an amount equal to the lesser of (i) 80% of the appraised orderly
liquidation value of such replacement Equipment and (ii) the amount of the
reduction in the Machinery and Equipment Component as a result of the loss,
damage, destruction, condemnation, sale or other disposition of the Appraised
Equipment so replaced. Any such replacement Equipment shall be Appraised
Equipment upon the conditions of clause (a) above having been satisfied.
"Majority Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate at least sixty-six and two-thirds percent (66.66%) as such
percentage is determined under the definition of Pro Rata Share set forth
herein.
"Material Environmental Event" means an event, occurrence or
condition relating to Environmental Laws or other environmental matters which
could reasonably be expected to result in liability to a Borrower in excess of
$500,000 in any year or to materially and adversely impair the Borrowers'
ability to perform their obligations hereunder.
"Material Subsidiary" means a Subsidiary the assets of which
comprise five percent (5%) or more of the consolidated assets of Imation and its
Subsidiaries.
"Maximum Revolver Amount" means, at any time, (a) the lesser
of (1) the amount of the Revolver Facility at such time; or (2) the Borrowing
Base at such time; minus (b) the sum of (i) reserves for accrued interest on the
Obligations (provided, that such reserves for accrued interest shall be
permitted to be established only during the continuance of an Event of Default);
(ii) any Environmental Compliance Reserve; (iii) any Rent Reserve; and (iv) all
other reserves which the Collateral Agent reasonably deems necessary or
desirable to maintain with respect to the Borrowers' accounts, including,
without limitation, reserves for any amounts which the Collateral Agent or any
Lender may be obligated to pay in the future for the account of either Borrower.
"Mortgages" means all real property mortgages, leasehold
mortgages, assignments of leases, mortgage deeds, deeds of trust, deeds to
secure debt, security agreements, and other similar instruments entered into at
any time which provide the Collateral Agent a Lien, for the ratable benefit of
the Collateral Agent, the Agents and the Lenders, on, or other interest in any
portion of the Premises or the Real Estate or which relate to any such Lien or
interest.
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"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or since July 1, 1996 contributed to by a Borrower or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes, and less
Rebates Payable, returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed.
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
"Notice of Conversion/Continuation" has the meaning specified
in Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by each Borrower to
the Collateral Agent, the Co-Agents and/or any Lender, arising under or pursuant
to this Agreement or the other Loan Documents, whether or not evidenced by any
note, instrument or document, whether arising from an extension of credit,
opening of a letter of credit, acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment from others, and any participation by the Collateral
Agent and/or any Lender in each Borrower's debts owing to others), absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
such Borrower hereunder or under another Loan Document. "Obligations" includes,
without limitation, all debts, liabilities, and obligations now or hereafter
owing from each Borrower to the Collateral Agent, the Agents and/or any Lender
under or in connection with the Letters of Credit.
"Other Taxes" has the meaning specified in Section 14.15.
"Participating Lender" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this Agreement pursuant to Section 12.3(e), and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Person succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice(s) of Borrowing
received by the Collateral Agent but which Revolving Loans have not yet been
advanced at such time.
"Permitted Acquisitions" means acquisitions by either Borrower
of substantially all of the assets or capital stock of any Person, provided,
that (a) such Borrower shall have notified the Collateral Agent and the Lenders
of any contemplated acquisition at least ten (10)
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Business Days in advance thereof, (b) the Collateral Agent shall have received
perfected Liens on all of the acquired assets (which shall be prior to all Liens
other than Permitted Liens) within ten days after such acquisition, (c) in the
event that the acquisition shall be of capital stock, and the acquired Person
shall remain a Subsidiary of such Borrower, such Borrower shall cause such
Subsidiary to deliver to the Collateral Agent a Guaranty of the Obligations,
secured by a perfected Lien on the assets of such Subsidiary (which shall be
prior to all Liens other than Permitted Liens) within ten days after such
acquisition and such Borrower shall pledge such capital stock to the Collateral
Agent within ten days after such acquisition, pursuant to a guaranty and a
pledge agreement, in each case in form and substance reasonably satisfactory to
the Collateral Agent, (d) each such acquisition shall be of a business or line
of business engaged in by the Borrowers on the Closing Date or a business
reasonably related thereto, and (e) the aggregate consideration (including
assumed Debt) for all such acquisitions during the term of this Agreement shall
not exceed $50,000,000. Notwithstanding the foregoing, in the case of the
acquisition of a Foreign Subsidiary, the requirement of Liens in clauses (b) and
(c) shall be limited to Liens on 65% of the capital stock of such Foreign
Subsidiary.
"Permitted Liens" means:
(a) Liens for taxes not yet payable; or statutory Liens for
taxes in an amount not to exceed $250,000, provided that the payment of such
taxes which are due and payable is being contested in good faith and by proper
proceedings diligently pursued, and that reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor
and that a stay of enforcement of any such Lien is in effect;
(b) the Collateral Agent's Liens;
(c) Liens upon Equipment granted in connection with the
acquisition of such Equipment by the applicable Borrower after the Closing Date
(including, without limitation, pursuant to Capital Leases), provided that (i)
the Debt incurred to finance each such acquisition is permitted by Section 8.13,
and (ii) each such Lien attaches only to the Equipment acquired with the Debt
secured thereby;
(d) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(e) Liens which arise by operation of law under Article 2 of
the Uniform Commercial Code in favor of unpaid sellers of goods or prepaying
buyers of goods, or liens in items of any accompanying documents or proceeds of
either arising by operation of law under Article 4 of the Uniform Commercial
Code in favor of a collecting bank;
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(f) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, provided
that if any such Lien arises from the nonpayment of such claims or demands when
due, such unpaid claims or demands do not exceed $1,000,000 in the aggregate;
(g) Reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of the applicable Borrower's
business;
(h) Judgment Liens to the extent that the attachment or
enforcement of such liens would not result in an Event of Default hereunder;
(i) Liens in existence on the Closing Date and reflected on
Schedule 7.2;
(j) Liens on equipment or real property of a Person that
becomes a Subsidiary of either Borrower as a result of a Permitted Acquisition,
and not created in contemplation of such Permitted Acquisition;
(k) Liens on the Corporate Campus Assets;
(l) Liens on a Borrower's Equipment or Real Estate securing
other liabilities in an amount not exceeding $500,000 at any time; and
(m) Liens replacing Liens permitted under clauses (c), (j) and
(k) above, provided that any such replacement Liens shall not attach to assets
other than assets to which the Lien being replaced applies, or secure Debt other
than the Debt refinancing the Debt secured by the Lien being replaced.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Public Authority, or other entity.
"Plan" means any employee benefit plan as defined in Section
3(3) of ERISA (other than a Multiemployer Plan) in respect of which a Borrower
or any ERISA Affiliate is, or since July 1, 1996 was, an "employer" as defined
in Section 3(5) of ERISA.
"Pledge Agreements" means the Stock Pledge Agreement dated as
of the date hereof executed by Imation in favor of the Collateral Agent, for the
benefit of itself and the Lenders, pledging the capital stock of Enterprises,
Publishing Software and Imation Funding Corp., and the Pledge Agreement dated as
of the date hereof executed by Imation in favor of the Collateral Agent, for the
benefit of itself and the Lenders, pledging Imation's limited partnership
interests in Hummer Winblad Venture Partners L.P., Hummer Winblad Venture
Partners II, L.P., 21st Century Internet Fund, L.P. and ▇▇▇▇▇▇▇ IV, L.P.
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"Premises" means the land identified by addresses on Schedule
7.10, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditament, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which a Borrower has
any interest on the Closing Date.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
"Proprietary Rights" means all of a Borrower's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent, trademark and
service ▇▇▇▇ applications, and all licenses and rights related to any of the
foregoing, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to ▇▇▇ for past, present and future
infringement of any of the foregoing.
"Public Authority" means the government of any country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or any department, agency, public corporation or other
instrumentality of any of the foregoing.
"Publishing Software" means Imation Publishing Software Corp.,
a Delaware corporation and wholly-owned Subsidiary of Imation.
"Rebates Payable" means rebates payable by either Borrower
with respect to Eligible Accounts, in amounts reflected in such Borrower's books
and records.
"Real Estate" means all of the present and future interests of
a Borrower, as owner, lessee, or otherwise, in the Premises, including, without
limitation, any interest arising from an option to purchase or lease the
Premises or any portion thereof.
"Reference Rate" means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
in San Francisco, California, as its "reference rate." The "reference rate" is a
rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in the reference rate
announced by Bank of America shall take effect at the opening of business on the
date specified in the public announcement of such change. Each Interest Rate
based upon the Reference Rate shall be adjusted simultaneously with any change
in the Reference Rate.
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"Reference Rate Loan" means a Loan, or portion thereof, during
any period in which it bears interest at a rate based upon the Reference Rate.
"Register" has the meaning specified in Section 12.3(c).
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rent Reserve" means a reserve to be established by the
Collateral Agent in an amount from time to time equal to the sum of one month's
rent (including expense for logistic services) for the Borrowers' distribution
centers located in Kansas City, Missouri, Ontario, California and Harrisburg,
Pennsylvania and the leased locations in White City, Oregon and Houston, Texas;
provided, that no such reserve shall be established with respect to any such
location with respect to which the Collateral Agent shall have received a
landlord's waiver in form and substance reasonably satisfactory to the
Collateral Agent.
"Report" has the meaning specified in Section 13.13.
"Reportable Event" means any of the events described in
Section 4043 of ERISA.
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate at least fifty-one percent (51.0%), as such percentage is
determined under the definition of Pro Rata Share set forth herein.
"Restricted Investment" means any acquisition of property by a
Borrower in exchange for cash or other property, whether in the form of an
acquisition of stock, debt Security, or other indebtedness or obligation, or the
purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except Permitted Acquisitions and acquisi tions
of the following: (a) fixed assets to be used in the business of such Borrower;
(b) Inventory in the ordinary course of business; (c) current assets arising
from the sale or lease of goods or the rendition of services in the ordinary
course of business of such Borrower; and (d) Imation's capital stock permitted
pursuant to Section 8.10.
"Revolver Facility" means, as the context may require, either
(a) $175,000,000, as such amount may be reduced pursuant to Section 4.2(a), or
(b) the agreement by the Lenders to provide Revolving Loans and Letters of
Credit up to such amount subject to the terms of this Agreement.
"Revolving Loans" has the meaning specified in Section 2.2,
and includes each Swing Loan and Collateral Agent Advance.
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"Security" has the meaning specified in Section 2(1) of the
Securities Act of 1933, as amended.
"Settlement" and "Settlement Date" have the meanings specified
in Section 2.2(j)(1).
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means December 31, 2001.
"Subsidiary" means any business entity of which more than
fifty percent (50.0%) of the outstanding Voting Stock is at the time, directly
or indirectly through one or more intermediaries, owned by a Borrower and/or one
or more of its Subsidiaries.
"Supporting Letter of Credit" has the meaning specified in
Section 2.3(j).
"Swing Loan" and "Swing Loans" have the meanings specified in
Section 2.2(h).
"Taxes" has the meaning specified in Section 14.15.
"Termination Date" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Revolver Facility is terminated
either by the Borrowers pursuant to Section 4.2 or by the Majority Lenders
pursuant to Section 10.2, and (iii) the date this Agreement is otherwise
terminated for any reason whatsoever.
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"Termination Event" means: (1) a Reportable Event with respect
to any Benefit Plan; (2) the withdrawal of a Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which such Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (3) the imposition of an obligation on a Borrower or any ERISA Affiliate
under Section 4041 of ERISA to provide affected parties written notice of intent
to terminate a Benefit Plan in a distress termination described in Section
4041(c) of ERISA; (4) the institution by the PBGC of proceedings to terminate a
Benefit Plan; (5) any event or condition which is reasonably likely to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; (6) the partial or
complete withdrawal of a Borrower or any ERISA Affiliate from a Multiemployer
Plan; or (7) the cessation of operations which results in the termination of
employment of twenty percent (20.0%) of Benefit Plan participants who are
employees of a Borrower and its ERISA Affiliates.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of Illinois or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"Unused Line Fee" has the meaning specified in Section 3.6.
"Unused Letter of Credit Subfacility" means an amount equal to
the lesser of $100,000,000 minus the aggregate maximum undrawn face amount of
all outstanding Letters of Credit and the amount of unpaid reimbursement
obligations with respect to all Letters of Credit.
"Voting Stock" means securities, ownership interests or
membership interests of any class or classes of a business entity, the holders
of which are ordinarily, in the absence of contingencies, (a) entitled to elect
a majority of the corporate directors (or Persons performing similar functions),
if such entity is a corporation, (b) entitled to cast a majority of the votes on
the general business matters of such entity, or (c) entitled to act as the sole
general partner or sole manager, or entitled to elect the manager or managing
general partner of such entity.
1.2 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements. If
any "Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms used in
this Agreement, then the Borrowers, the Collateral Agent and the Lenders agree
to enter into negotiations in order to amend such provisions of this Agreement
so as to equitably reflect such Accounting Changes with the desired result that
the criteria for evaluating the Borrowers' financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Majority Lenders to any required
amendments of such provisions shall be sufficient to bind all of the Lenders.
"Accounting Changes" means (a) changes in accounting principles required by the
promulgation of any rule, regulation,
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pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or any successor thereto or
any agency with similar functions), or (b) changes in accounting principles
concurred in by the Borrowers' certified public accountants. If the Borrowers
and Majority Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. Until the Borrowers and Majority
Lenders agree upon the required amendments, all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with this Agreement shall be prepared, delivered and made without
regard to the underlying Accounting Change.
1.3 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein. Any
references herein to exhibits, schedules, sections or articles are references to
exhibits, schedules, sections or articles of this Agreement, unless otherwise
specified. Wherever appropriate in the context, terms used herein in the
singular also include the plural, and vice versa, and each masculine, feminine,
or neuter pronoun shall also include the other genders.
1.4 Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" shall mean "from and including" and the words "to" and "until"
shall each mean "to but excluding". Periods of days referred to in this
Agreement shall be counted in calendar days unless Business Days are expressly
prescribed and references in this Agreement to months and years shall be to
calendar months and calendar years unless otherwise specified. Unless otherwise
expressly provided for in this Agreement, if any time period provided for herein
would otherwise end on a day other than a Business Day, such time period shall
be extended until the next succeeding Business Day.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions
of this Agreement, the Lenders severally agree to make available a credit
facility for the Borrowers' use from time to time during the term of this
Agreement, comprised of a revolving line of credit consisting of revolving loans
and letters of credit up to the Maximum Revolver Amount, as described in
Sections 2.2 and 2.3.
2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction
of the conditions precedent set forth in Article 9, each Lender severally
agrees, upon each Borrower's request from time to time, to make revolving loans
(the "Revolving Loans") to such Borrower, in an aggregate
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amount not to exceed such Lender's Pro Rata Share of Availability at such time.
The Lenders, however, in their discretion, may elect (any such election being
made by all of the Lenders) to make Revolving Loans or participate (as provided
for in Section 2.3(f)) in the L/C Credit Support provided through the Collateral
Agent to the issuers of Letters of Credit, in excess of Availability on one or
more occasions, but if they do so, neither the Collateral Agent nor the Lenders
shall be deemed thereby to have changed the limits of the Maximum Revolver
Amount, or to be obligated to exceed such limits on any other occasion. If at
any time the Aggregate Revolver Outstandings exceed the Maximum Revolver Amount,
the Lenders may refuse to make or otherwise restrict the making of Revolving
Loans, on such terms as the Lenders determine, until any such excess has been
eliminated, subject to the Collateral Agent's authority, in its discretion, to
make Collateral Agent Advances pursuant to the terms of Section 2.2(i).
(b) Notice of Borrowing. Whenever a Borrower desires to borrow
Revolving Loans under this Section 2.2, such Borrower shall deliver to the
Collateral Agent a written request substantially in the form of Exhibit D hereto
(a "Notice of Borrowing") signed by an authorized officer of such Borrower, no
later than (i) 10:00 a.m. (Chicago, Illinois time) on the requested Funding
Date, in the case of requests for Reference Rate Loans, or (ii) 10:00 a.m.
(Chicago, Illinois time) three (3) Business Days in advance of the requested
Funding Date, in the case of requests for LIBOR Loans. The Notice of Borrowing
shall, with respect to any Revolving Loans requested, specify (i) the requested
Funding Date (which shall be a Business Day), (ii) the aggregate amount of the
requested Revolving Loans, (iii) whether the Revolving Loans requested are to be
Reference Rate Loans or LIBOR Loans, (iv) if the requested Revolving Loans are
to be LIBOR Loans, the requested Interest Period, and (v) the account to which
the proceeds of such Revolving Loans are to be transferred, which account shall
be one of the accounts specified by the applicable Borrower pursuant to the
first sentence of Section 2.2(c). With respect to any request for Revolving
Loans that are Reference Rate Loans, in lieu of delivering the above-described
Notice of Borrowing the applicable Borrower may give the Collateral Agent
telephonic notice of such request by the required time; provided, however, that
such telephonic notice shall be confirmed in writing by delivery to the
Collateral Agent (A) immediately of a telecopy of a Notice of Borrowing which
has been signed by an authorized officer of the applicable Borrower, and (B)
promptly of a Notice of Borrowing containing the original signature of an
authorized officer of the applicable Borrower mailed by such Borrower to the
Collateral Agent via United States mail on the date such notice is given. In the
event that the terms of any confirmatory Notice of Borrowing referred to in the
proviso contained in the immediately preceding sentence shall conflict with the
telephonic notice with respect to which it was delivered, the terms of such
telephonic notice shall govern. Notwithstanding anything in this Section 2.2(b)
to the contrary, any Revolving Loans to be made to the Borrowers on the Closing
Date shall initially be Reference Rate Loans.
(c) Reliance upon Authority. Schedule 2.2 sets forth (i) the
accounts to which the Collateral Agent is authorized to transfer the proceeds of
the Revolving Loans requested by each Borrower pursuant to this Section 2.2, and
(ii) the names of the officers authorized to request Revolving Loans on behalf
of such Borrower. On or prior to the Closing Date, the Borrowers shall provide
the Collateral Agent with specimen signatures of each such officer. The
Collateral
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Agent shall be entitled to rely conclusively on such officer's authority to
request Revolving Loans on behalf of the applicable Borrower, the proceeds of
which are to be transferred to any of the accounts specified by such Borrower
pursuant to the immediately preceding sentence, until the Collateral Agent
receives written notice from any such authorized officer to the contrary. The
Collateral Agent shall have no duty to verify the identity of any individual
representing himself as one of the officers authorized by a Borrower to make
such requests on its behalf.
(d) No Liability. The Collateral Agent shall not incur any
liability to the Borrowers as a result of acting upon any notice referred to in
Sections 2.2(b) and (c), which notice the Collateral Agent believes in good
faith to have been given by an officer duly authorized by a Borrower to request
Revolving Loans on its behalf or for otherwise acting in good faith under this
Section 2.2, and the crediting of Revolving Loans to a Borrower's deposit
account, or transmittal to such Person as a Borrower shall direct, shall
conclusively establish the obligation of the Borrowers to repay such Revolving
Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the applicable Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Collateral Agent's Election. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.2(b) for Reference Rate Loans, the
Collateral Agent shall elect, in its discretion, (i) to have the terms of
Section 2.2(g) apply to such requested Borrowing, or (ii) to request BABC to
make a Swing Loan pursuant to the terms of Section 2.2(h) in the amount of the
requested Borrowing; provided, however, that if BABC declines in its sole
discretion to make a Swing Loan pursuant to Section 2.2(h), the Collateral Agent
shall elect to have the terms of Section 2.2(g) apply to such requested
Borrowing.
(g) Making of Revolving Loans. (i) In the event that the
Collateral Agent shall elect to have the terms of Section 2.2(g) apply to a
requested Borrowing as described in Section 2.2(f), then promptly after receipt
of a Notice of Borrowing pursuant to Section 2.2(b), the Collateral Agent shall
notify the Lenders by telecopy, telephone or other similar form of transmission,
of the requested Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to the Collateral Agent in
same day funds, to such account of the Collateral Agent as the Collateral Agent
may designate, not later than 12:00 Noon (Chicago, Illinois time) on the Funding
Date applicable thereto. After the Collateral Agent's receipt of the proceeds of
such Revolving Loans, upon satisfaction of the applicable conditions precedent
set forth in Article 9, the Collateral Agent shall make the proceeds of such
Revolving Loans available to the applicable Borrower on the applicable Funding
Date by transferring same day funds equal to the proceeds of such Revolving
Loans received by the Collateral Agent to the account of such Borrower,
designated in writing by such Borrower; provided, however, that the amount of
Revolving Loans so made on any date shall in no event exceed the amount of
Availability on such date.
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(ii) On any Funding Date in respect of a Borrowing, the
Collateral Agent shall be entitled to assume that each Lender has made the
amount of such Lender's Revolving Loan available to the Collateral Agent on such
Funding Date, unless such Lender shall have notified the Collateral Agent to the
contrary. The Collateral Agent, in its sole discretion, based upon such
assumption, may make available to the applicable Borrower a corresponding amount
on such Funding Date. If such corresponding amount had not in fact been made
available to the Collateral Agent by any Lender, such Lender and the Borrowers
severally agree to repay to the Collateral Agent forthwith, on demand, such
corresponding amount, together with interest thereon for each day during the
period commencing on the date such amount is made available to the applicable
Borrower and ending on the date such amount is repaid to the Collateral Agent,
at (1) in the case of a Borrower, the interest rate applicable from time to time
to such Borrowing, and (2) in the case of a Lender, the Federal Funds Rate. If
such Lender repays to the Collateral Agent such corresponding amount, such
amount so repaid shall constitute a Revolving Loan to the applicable Borrower,
and if both such Lender and the applicable Borrower shall have repaid such
corresponding amount, the Collateral Agent shall promptly return to such
Borrower such corresponding amount in same day funds. The failure of any Lender
to make any Revolving Loan on any Funding Date (any such Lender, prior to the
cure of such failure, being hereinafter referred to as a "Defaulting Lender")
shall not relieve any other Lender of its obligation, if any, hereunder to make
its Revolving Loan on such Funding Date, but no Lender shall be responsible for
such failure of any such Defaulting Lender.
(iii) In the event that a Defaulting Lender fails to fund its
Pro Rata Share of any Borrowing requested or deemed requested by a Borrower,
which such Defaulting Lender is obligated to fund under the terms of this
Agreement (the funded portion of such Borrowing being hereinafter referred to as
a "Non Pro Rata Loan"), until such Defaulting Lender's cure of such failure, the
proceeds of all amounts thereafter repaid to the Collateral Agent by such
Borrower and otherwise required to be applied to such Defaulting Lender's share
of all other Obligations owing by such Borrower pursuant to the terms of this
Agreement shall be advanced to such Borrower by the Collateral Agent on behalf
of such Defaulting Lender to cure, in full or in part, such failure by such
Defaulting Lender, but shall nevertheless be deemed to have been paid to such
Defaulting Lender in satisfaction of such other Obligations. Notwithstanding
anything in this Agreement to the contrary:
(A) the foregoing provisions of this Section 2.2(g)(iii) shall
apply only with respect to the proceeds of payments of Obligations and
shall not affect the conversion or continuation of Loans pursuant to
Section 3.2;
(B) any such Defaulting Lender shall be deemed to have cured
its failure to fund its Pro Rata Share of any Borrowing at such time as
an amount equal to such Defaulting Lender's original Pro Rata Share of
the requested principal portion of such Borrowing is fully funded to
the applicable Borrower, whether made by such Lender itself or by
operation of the terms of this Section 2.2(g)(iii), and whether or not
the Non Pro Rata Loan with respect thereto has been repaid, converted
or continued;
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(C) amounts advanced to a Borrower to cure, in full or in
part, any such Defaulting Lender's failure to fund its Pro Rata Share
of any Borrowing ("Cure Loans") shall bear interest at the rate
applicable to the Loans which are part of such Borrowing;
(D) until any such Defaulting Lender's cure of the failure to
fund its Pro Rata Share of any Borrowing, for purposes of voting or
consenting to matters with respect to this Agreement or the other Loan
Documents requiring the consent of all of the Lenders, the Majority
Lenders, or the Required Lenders, such Defaulting Lender shall be
deemed not to be a "Lender" and its Commitment shall be deemed to be
zero; and
(E) until any such Defaulting Lender's cure of the failure to
fund its Pro Rata Share of any Borrowing, (1) such Lender shall not be
entitled to any portion of the Unused Line Fee, and (2) the Unused Line
Fee shall accrue in favor of the Lenders which have funded their
respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing Lenders ratably based upon their
relative Commitments, and shall be calculated based upon the average
amount by which the aggregate Commitments of such performing Lenders
exceeds the sum of such performing Lenders' interests in the
outstanding Revolving Loans and the undrawn face amount of all
outstanding Letters of Credit.
The terms of this Section 2.2(g)(iii) shall not be construed to increase or
otherwise affect the Commitment of any other Lender, to relieve or excuse the
performance by either Borrower of any of its duties or obligations hereunder, or
to release any Defaulting Lender of any liability to either Borrower for its
failure to fund its Pro Rata Share of any Borrowing.
(h) Making of Swing Loans. In the event the Collateral Agent
shall elect, with the consent of BABC, to have the terms of this Section 2.2(h)
apply to a requested Borrowing as described in Section 2.2(f), BABC shall make a
Revolving Loan in the amount of such Borrowing (any such Revolving Loan made
solely by BABC pursuant to this Section 2.2(h) being referred to as a "Swing
Loan" and such Revolving Loans being referred to collectively as "Swing Loans")
available to the applicable Borrower on the Funding Date applicable thereto by
transferring same day funds to an account of such Borrower, designated in
writing by such Borrower. Each Swing Loan shall be a Reference Rate Loan,
subject to all the terms and conditions applicable to other Reference Rate Loans
except that all payments thereon shall be payable to BABC solely for its own
account (and for the account of the holder of any participation interest with
respect to the applicable Revolving Loan created pursuant to subsection (ii) of
Section 2.2(j)). The Collateral Agent shall not request BABC to make any Swing
Loan if the Collateral Agent shall have received written notice from any Lender
that one or more of the applicable conditions precedent set forth in Article 9
will not be satisfied on the requested Funding Date for the applicable
Borrowing, or if the requested Borrowing would exceed the amount of Availability
on the Funding Date, or if the sum of all outstanding Swing Loans at such time
would exceed $10,000,000. BABC shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Article 9 have been
satisfied
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or the requested Borrowing would exceed the amount of Availability on the
Funding Date applicable thereto prior to making, in its sole discretion, any
Swing Loan.
(i) Collateral Agent Advances. (1) Subject to the limitations
set forth in the provisos contained in this Section 2.2(i), during an Activation
Period the Collateral Agent is hereby authorized by the Borrowers and the
Lenders, from time to time in the Collateral Agent's discretion, (A) during the
existence of a Default or an Event of Default of which the Collateral Agent has
been notified by the Borrowers or a Lender, or (B) at any time that the
Collateral Agent has been notified by the Borrowers or a Lender that any of the
other applicable conditions precedent set forth in Article 9 have not been
satisfied, to make Revolving Loans to a Borrower on behalf of the Lenders which
the Collateral Agent, in its reasonable business judgment, deems necessary or
desirable (a) to preserve or protect the Collateral, or any portion thereof, (b)
to enhance the likelihood of, or maximize the amount of, repayment of the Loans
and other Obligations, or (c) to pay any other amount chargeable to such
Borrower pursuant to the terms of this Agreement, including, without limitation,
costs, fees and expenses as described in Section 14.6 (any of the advances
described in this Section 2.2(i) being hereinafter referred to as "Collateral
Agent Advances"); provided, that (A) the Collateral Agent shall give the Lenders
notice of any such Collateral Agent Advance prior to or on the date of such
Collateral Agent Advance, (B) Required Lenders may at any time revoke the
Collateral Agent's authorization contained in this Section 2.2(i) to make
Collateral Agent Advances, any such revocation to be in writing and to become
effective upon the Collateral Agent's receipt thereof; and (C) the Collateral
Agent shall not, without the consent of all of the Lenders, make Collateral
Agent Advances which would cause (x) Aggregate Revolving Outstandings to exceed
(I) the Borrowing Base minus the reserves set forth in clause (b) of the
definition of Maximum Revolver Amount by more than $500,000 or (II) the amount
of the Revolver Facility, or (y) the aggregate outstanding Collateral Agent
Advances (computed without regard to whether Settlement has been made with
respect to a Collateral Agent Advance under Section 2.2(j)) to exceed
$5,000,000.
(2) The Collateral Agent Advances shall be repayable on demand
and secured by the Collateral, shall constitute Revolving Loans and Obligations
hereunder, and shall bear interest at the rate applicable to the Revolving Loans
from time to time. The Collateral Agent shall notify each Lender and the
applicable Borrower in writing of each such Collateral Agent Advance, which
notice shall include a description of the purpose of such Collateral Agent
Advance.
(j) Settlement. The Collateral Agent and the Lenders hereby
agree that, except in the case of Loans consisting of Swing Loans or Collateral
Agent Advances, each Lender's funded portion of the Loans is intended to be
equal at all times to such Lender's Pro Rata Share of the outstanding Loans. The
Collateral Agent and the Lenders agree (which agreement shall not be for the
benefit of or enforceable by the Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Swing Loans, Collateral Agent Advances and other Loans shall take
place on a periodic basis in accordance with the following provisions:
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(1) The Collateral Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more frequent basis
if so determined by the Collateral Agent, with respect to (A) each outstanding
Swing Loan, (B) each outstanding Collateral Agent Advance, and (C) payments
received, by notifying the other Lenders by telecopy, telephone or other similar
form of transmission, of such requested Settlement, no later than 1:00 p.m.
(Chicago, Illinois time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than BABC, in the case of Swing Loans)
shall make the amount of such Lender's Pro Rata Share of the outstanding
principal amount of the Swing Loans and Collateral Agent Advances with respect
to which Settlement is requested available to the Collateral Agent, for itself
or for the account of BABC, in same day funds, to such account of the Collateral
Agent as the Collateral Agent may designate, on the Settlement Date applicable
thereto, regardless of whether the applicable conditions precedent set forth in
Article 9 have then been satisfied. Such amounts made available to the
Collateral Agent shall be applied against the amounts of the applicable Swing
Loan or Collateral Agent Advance and, together with the portion of such Swing
Loan or Collateral Agent Advance representing BABC's Pro Rata Share thereof,
shall constitute Loans of such Lenders. If any such amount is not made available
to the Collateral Agent by any Lender on the Settlement Date applicable thereto,
the Collateral Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after the Settlement Date and thereafter at the
Interest Rate then applicable to the Loans with respect to which Settlement is
to be made.
(2) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Collateral Agent (whether before or
after the occurrence of a Default or an Event of Default and regardless of
whether the Collateral Agent has requested a Settlement with respect to a Swing
Loan or Collateral Agent Advance, but without duplication of amounts funded
under Section 2.2(j)(1) above), each other Lender shall irrevocably and
unconditionally purchase and receive from BABC or the Collateral Agent, as
applicable, without recourse or warranty, an undivided interest and
participation in such Swing Loan or Collateral Agent Advance to the extent of
such Lender's Pro Rata Share thereof by paying to the Collateral Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of such Swing Loan or
Collateral Agent Advance. If such amount is not in fact made available to the
Collateral Agent by any Lender, the Collateral Agent shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Federal Funds Rate for the first three (3) days from and after such demand
and thereafter at the Interest Rate then applicable to the Loans in which the
participation is to be purchased.
(3) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Swing Loan or
Collateral Agent Advance pursuant to subsection (2) above, the Collateral Agent
shall promptly distribute to such Lender at its address provided pursuant to
Section 13.11, such Lender's Pro Rata Share of all payments of principal and
interest and all proceeds of Collateral received by the Collateral Agent in
respect of such Swing Loan or Collateral Agent Advance.
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(4) If any payments are received by the Collateral Agent
which, in accordance with the terms of this Agreement would be applied to the
reduction of the Revolving Loans, and no Swing Loans or Collateral Agent
Advances are then outstanding, the Collateral Agent may pay over such amounts to
BABC for application to BABC's other outstanding Revolving Loans. If, as of any
Settlement Date, payments received since the then immediately preceding
Settlement Date have been applied to BABC's Revolving Loans other than Swing
Loans and Collateral Agent Advances, as provided for in the immediately
preceding sentence, then BABC shall pay to the Collateral Agent, for the
accounts of the Lenders, to be applied to the outstanding Revolving Loans of
such Lenders, an amount such that each Lender shall have outstanding, as of such
Settlement Date, after giving effect to such payments, its Pro Rata Share of
such Revolving Loans; provided, that the Collateral Agent may net payments due
from BABC pursuant to this sentence against payments due to BABC pursuant to
Section 2.2(j)(1) on the applicable Settlement Date, and require either BABC or
the other Lenders, as applicable, to make only the amount of the payment due
after such netting. As of each Settlement Date, each of (x) BABC with respect to
Swing Loans, (y) the Collateral Agent with respect to Collateral Agent Advances,
and (z) each Lender with respect to the Loans other than Swing Loans and
Collateral Agent Advances, shall be entitled to interest payable under this
Agreement at the applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by BABC, the Collateral Agent or
such Lender since the immediately preceding Settlement Date.
(k) Notation. The Collateral Agent shall record in the
Register the principal amount of the Revolving Loans owing to each Lender,
including the Swing Loans owing to BABC, and the Collateral Agent Advances owing
to the Collateral Agent, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Revolving Loans in its books and
records, including computer records, such books and records constituting
rebuttably presumptive evidence, absent manifest error, of the accuracy of the
information contained therein.
2.3 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrowers herein set forth, the Collateral Agent agrees to (1)
cause Letters of Credit to be issued by Lenders under this Agreement (although
no Lender is committed under this Agreement to act as an issuer of any Letter of
Credit hereunder) or (2) provide credit support or enhancement or otherwise
confirm payment (any such credit support, enhancement or payment confirmation
being referred to as "L/C Credit Support") to Lender Affiliates which issue
Letters of Credit for the respective accounts of the Borrowers in accordance
with this Section 2.3 from time to time during the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Collateral Agent
shall not have any obligation to cause any Letter of Credit to be issued by a
Lender or to provide L/C Credit Support for any Letter of Credit at any time if:
(1) the maximum undrawn face amount of the Letter of Credit is greater than the
Unused Letter of Credit Subfacility at such time; (2) the maximum
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undrawn face amount of the Letter of Credit and all commissions, fees, and
charges due from the applicable Borrower in connection with the opening thereof,
are greater than Availability at such time; (3) such Letter of Credit is a
Foreign Subsidiary Letter of Credit and after the issuance thereof, the maximum
undrawn face amount of all outstanding Foreign Subsidiary Letters of Credit
would exceed $35,000,000; or (4) such Letter of Credit has an expiration date
later than thirty (30) days prior to the Stated Termination Date, or more than
one (1) year from the date of issuance.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 9, the
obligation of the Collateral Agent to cause any Letter of Credit to be issued by
a Lender or to provide L/C Credit Support for any Letter of Credit is subject to
the following conditions precedent having been satisfied in a manner reasonably
satisfactory to the Collateral Agent:
(1) the applicable Borrower shall have delivered to the
proposed issuer of such Letter of Credit, at such times and in such
manner as such proposed issuer may prescribe, an application in form
and substance satisfactory to such proposed issuer for the issuance of
the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to the Collateral Agent and such
proposed issuer; and
(2) as of the date of issuance, no order of any court,
arbitrator or Public Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of
the type and in the amount of the proposed Letter of Credit, and no
law, rule or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law) from
any Public Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such
Letter of Credit refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Letter of Credit. The applicable Borrower
shall give the Collateral Agent three (3) Business Days' prior written
notice, containing the original signature of an authorized officer of
such Borrower, of such Borrower's request for the issuance of a Letter
of Credit or the provision of L/C Credit Support for a Letter of
Credit. Such notice shall be irrevocable and shall specify the issuing
bank (which shall be a Lender or a Lender Affiliate), the original face
amount of the Letter of Credit, the effective date (which date shall be
a Business Day) of issuance of such Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws, the date
on which such Letter of Credit is to expire (which date shall be a
Business Day), the purpose for which such Letter of Credit is to be
issued, and the beneficiary of such Letter of Credit. The applicable
Borrower shall attach to such notice the form of the proposed Letter of
Credit.
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(2) Responsibilities of the Collateral Agent; Issuance. The
Collateral Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the Letter of
Credit set forth in the notice from the applicable Borrower pursuant to
Section 2.3(d)(1), (i) the amount of the Unused Letter of Credit
Subfacility and (ii) the amount of Availability, as of such date. If
(A) (i) the undrawn face amount of the proposed Letter of Credit is not
greater than the Unused Letter of Credit Subfacility and (ii) the
issuance of such proposed Letter of Credit and all commissions, fees,
and charges due from the applicable Borrower in connection with the
opening thereof, would not cause Availability to be exceeded and (B)
the Collateral Agent has received a certificate from such Borrower
stating that the applicable conditions set forth in Article 9 have been
satisfied, the Collateral Agent shall cause such Letter of Credit to be
issued on such proposed effective date of issuance.
(3) Notice of Issuance. The Collateral Agent shall give each
Lender written notice on each Settlement Date of all Letters of Credit
issued since the preceding Settlement Date.
(4) No Extensions or Amendment. No Letter of Credit shall be
extended or amended unless the requirements of this Section 2.3(d) are
met as though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrowers
agree to reimburse the issuer for any draw under any Letter of Credit,
and the Collateral Agent, for the account of the Lenders, upon any
payment pursuant to any L/C Credit Support, immediately upon demand,
and to pay the issuer of the Letter of Credit the amount of all other
Obligations and other amounts payable to such issuer under or in
connection with any Letter of Credit immediately when due, irrespective
of any claim, set-off, defense or other right which a Borrower may have
at any time against such issuer or any other Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations. In
the event that the issuer of any Letter of Credit honors a draw under
such Letter of Credit, or the Collateral Agent shall have made any
payment pursuant to any L/C Credit Support, and the Borrowers shall not
have repaid such amount to the issuer of such Letter of Credit or the
Collateral Agent, as applicable, pursuant to Section 2.3(e)(1), the
Collateral Agent shall, upon receiving notice of such failure, notify
each Lender of such failure, and each Lender shall unconditionally pay
to the Collateral Agent, for the account of such issuer or the
Collateral Agent, as applicable, as and when provided hereinbelow, an
amount equal to such Lender's Pro Rata Share of the amount of such
payment in Dollars and in same day funds. If the Collateral Agent so
notifies the Lenders prior to 1:00 p.m. (Chicago, Illinois time) on any
Business Day, each Lender shall make available to the Collateral Agent
the amount of such payment, as provided in the immediately preceding
sentence, on such
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Business Day. Such amounts paid by the Lenders to the Collateral Agent
shall constitute Revolving Loans which shall be deemed to have been
requested by the applicable Borrower pursuant to Section 2.2 as set
forth in Section 4.4.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance of
any Letter of Credit in accordance with Section 2.3(d), each Lender
shall be deemed to have irrevocably and unconditionally purchased and
received, without recourse or warranty, an undivided interest and
participation in such Letter of Credit (if issued by a Lender) or the
L/C Credit Support provided through the Collateral Agent to such issuer
in connection with the issuance of such Letter of Credit, as
applicable, equal to such Lender's Pro Rata Share of the face amount of
such Letter of Credit or the amount of such L/C Credit Support
(including, without limitation, all obligations of the Borrowers with
respect thereto, and any security therefor or guaranty pertaining
thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
Collateral Agent receives a payment from a Borrower on account of
reimbursement obligations in respect of a Letter of Credit or L/C
Credit Support as to which the Collateral Agent has previously received
for the account of the issuer thereof payment from a Lender pursuant to
Section 2.3(e)(2), the Collateral Agent shall promptly pay to such
Lender such Lender's Pro Rata Share of such payment from such Borrower
in Dollars. Each such payment shall be made by the Collateral Agent on
the Business Day on which the Collateral Agent receives immediately
available funds pursuant to the immediately preceding sentence, if
received prior to 10:00 a.m. (Chicago, Illinois time) on such Business
Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any Lender, the
Collateral Agent shall furnish to such Lender copies of any Letter of
Credit, the reimbursement agreement executed in connection therewith,
any application for any Letter of Credit and any L/C Credit Support
provided through the Collateral Agent in connection with the issuance
of any Letter of Credit, and such other documentation as may reasonably
be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Collateral Agent with respect to any Letter of
Credit or with respect to any L/C Credit Support provided through the
Collateral Agent with respect to a Letter of Credit, and the
obligations of the Borrowers to make payments to the Collateral Agent,
for the account of the Lenders, shall be irrevocable, not subject to
any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement (assuming,
in the case of the obligations of the Lenders to make such payments,
that the Collateral Agent has provided L/C Credit Support for such
Letter of Credit in accordance with the terms of Section 2.3(d)),
including, without limitation, any of the following circumstances:
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(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or
other right which a Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Collateral Agent,
the issuer of such Letter of Credit, or any other Person,
whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transactions between a
Borrower or any other Person and the beneficiary named in any
Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents; or
(v) the occurrence of any Default or Event of
Default.
Nothing in this Section 2.3(f) shall be deemed a waiver by either Borrower of
any claim such Borrower may have at any time against the issuer of a Letter of
Credit under any agreement with such issuer or under applicable law for such
issuer's (1) failure to make payment under a Letter of Credit, or (2) payment
under a Letter of Credit on the basis of a nonconforming demand.
(g) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of a Borrower received by the Collateral Agent with
respect to a Letter of Credit or L/C Credit Support provided for any Letter of
Credit (or any guaranty by a Borrower or reimbursement obligation of a Borrower
relating thereto) and distributed by the Collateral Agent to the Lenders on
account of their respective participations therein, is thereafter set aside,
avoided or recovered from the Collateral Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon
demand by the Collateral Agent, pay to the Collateral Agent their respective Pro
Rata Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Collateral Agent upon the amount
required to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrowers agree to pay to the
Collateral Agent, for the account of the Lenders, for each Letter of
Credit (in the case of a Letter of Credit issued by a Lender) or for
the L/C Credit Support provided with respect to each Letter of Credit,
in each case for the account of the Lenders, the Letter of Credit Fee
specified in, and in accordance with the terms of, Section 3.7.
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(2) Issuer Fees and Charges. The Borrowers shall pay to issuer
of any Letter of Credit, or to the Collateral Agent, for the account of
the issuer of any such Letter of Credit, solely for such issuer's
account, such fees and other charges as are charged by such issuer for
letters of credit issued by it, including, without limitation, its
standard fees for issuing, administering, amending, renewing, paying
and canceling letters of credit and all other fees associated with
issuing or servicing letters of credit, as and when assessed.
(i) Indemnification; Exoneration.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.3, the Borrowers hereby agree to
protect, indemnify, pay and save the Lenders and the Collateral Agent
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Lender or the Collateral Agent may incur or
be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit or the provision of any L/C Credit Support in
connection therewith. The agreements contained in this Section
2.3(i)(1) shall survive the payment in full of the Obligations.
(2) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders and the Collateral Agent, each Borrower assumes
all risks of the acts and omissions of, or misuse of any of the Letters
of Credit by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, the Lenders and
the Collateral Agent shall not be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for
and issuance of and presentation of drafts with respect to any of the
Letters of Credit, even if it should prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (C) the failure of
the beneficiary of any Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document
required in order make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (H) any consequences arising from causes beyond the control
of the Lenders or the Collateral Agent, including, without limitation,
any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto Public Authority. None of the foregoing
shall affect, impair or prevent the vesting of any rights or powers of
the Collateral Agent or any Lender under this Section 2.3(i).
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(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, no action taken
or omitted by the Collateral Agent or any Lender under or in connection
with any of the Letters of Credit or any related certificates, if taken
or omitted in good faith, shall put the Collateral Agent or any Lender
under any resulting liability to either Borrower or relieve either
Borrower of any of its obligations hereunder to any such Person.
(4) Nothing in this Section 2.3(i) shall obligate the
Borrowers to indemnify the Collateral Agent or any Lender for any
liabilities resulting from the Collateral Agent's or such Lender's, as
applicable, gross negligence or willful misconduct.
(j) Supporting Letter of Credit; Cash Collateral.
(i) If, notwithstanding the provisions of Section 2.3(b) and
Section 11.1, any Letter of Credit is outstanding upon the termination of this
Agreement, then upon such termination the Borrowers shall cause the termination
of such Letter of Credit. If, at the Collateral Agent's election, any such
Letter of Credit remains outstanding, then the Borrowers shall deposit with the
Collateral Agent, for the ratable benefit of the Collateral Agent, the Agents
and the Lenders, with respect to each Letter of Credit then outstanding, as the
Collateral Agent shall specify, either (A) a standby letter of credit (a
"Supporting Letter of Credit") in form and substance reasonably satisfactory to
the Collateral Agent, issued by an issuer reasonably satisfactory to the
Collateral Agent in an amount equal to the greatest amount for which such Letter
of Credit may be drawn, plus any fees and expenses associated with such Letter
of Credit, under which Supporting Letter of Credit the Collateral Agent is
entitled to draw amounts necessary to reimburse the Collateral Agent and the
Lenders for payments made by the Collateral Agent and the Lenders under such
Letter of Credit or under any L/C Credit Support provided through the Collateral
Agent with respect thereto and any fees and expenses associated with such Letter
of Credit, or (B) cash in amounts necessary to reimburse the Collateral Agent
and the Lenders for payments made by the Collateral Agent or the Lenders under
such Letter of Credit or under any L/C Credit Support provided through the
Collateral Agent with respect thereto, and any fees and expenses associated with
such Letter of Credit. Such Supporting Letter of Credit or deposit of cash shall
be held by the Collateral Agent, for the ratable benefit of the Collateral
Agent, the Agents and the Lenders, as security for, and to provide for the
payment of, the aggregate undrawn face amount of such Letters of Credit
remaining outstanding.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid
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when due) from the date made until paid in full in cash at a rate determined by
reference to the Reference Rate or the LIBO Rate and Sections 3.1(a)(1) or (2),
as applicable, but not to exceed the Maximum Rate described in Section 3.4.
Subject to the provisions of Section 3.2, any of the Loans may be converted
into, or continued as, Reference Rate Loans or LIBOR Loans in the manner
provided in Section 3.2. If at any time Loans are outstanding with respect to
which notice has not been delivered to the Collateral Agent in accordance with
the terms of this Agreement specifying the basis for determining the interest
rate applicable thereto, then those Loans shall be Reference Rate Loans and
shall bear interest at a rate determined by reference to the Reference Rate
until notice to the contrary has been given to the Collateral Agent and such
notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(1) For all Obligations other than LIBOR Loans, including all
Loans which are Reference Rate Loans, at a fluctuating per annum rate
equal to the Applicable Reference Rate Margin plus the Reference Rate;
and
(2) For LIBOR Loans, at a per annum rate equal to the
Applicable LIBOR Margin plus the LIBO Rate determined for the
applicable Interest Period.
The Applicable Reference Rate Margin, the Applicable LIBOR Margin and the
Applicable L/C Fee Margin will be one-quarter of one percent (0.25%), one and
three-quarters percent (1.75%) and one and three-quarters percent (1.75%),
respectively, as of the Closing Date. Thereafter, the Applicable Margins will be
adjusted (up or down) on a quarterly basis as determined by the applicable
Interest Coverage Ratio (determined as of (i) the last day of each fiscal
quarter during the 1999 Fiscal Year for the period commencing on the first day
of such Fiscal Year and ending on such last day of such fiscal quarter, and (ii)
the last day of each fiscal quarter thereafter, for the four fiscal quarters
ending on such day). Such adjustments shall be effective, on a retroactive
basis, as of the first day of the fiscal quarter immediately following the
fiscal quarter for which such Interest Coverage Ratio shall have been
determined, commencing on July 1, 1999, following the Collateral Agent's receipt
of the applicable quarterly unaudited Financial Statements demonstrating the
basis for an adjustment. Concurrently with the delivery of such Financial
Statements, Imation (for itself and as agent for Enterprises) shall deliver to
the Collateral Agent and the Lenders a certificate, signed by its chief
financial officer, its treasurer or any of its assistant treasurers, setting
forth in reasonable detail the basis for the continuance of, or any change in,
the Applicable Margins. Failure to timely deliver such Financial Statements
shall, in addition to any other remedy provided for in this Agreement, result in
an increase in the Applicable Margins to the highest level set forth in the
foregoing grid, effective for each day on which such Financial Statements shall
not have been delivered on a timely basis. If a Default or an Event of Default
shall have occurred or be continuing at the time any reduction in the Applicable
Margins is to be implemented, that reduction shall be deferred until the date on
which such Default or Event of Default is waived or cured. Adjustments in
Applicable Margins will be determined by reference to the following grids:
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If Interest Level of
Coverage Ratio is: Applicable Margins:
----------------- ------------------
greater than or
equal to 4.5 to 1.0 Level I
greater than or
equal to 3.5 to 1.0,
but less than 4.5 to 1.0 Level II
greater than or
equal to 2.5 to 1.0,
but less than 3.5 to 1.0 Level III
greater than or equal to
1.5 to 1.0, but less than
2.5 to 1.0 Level IV
less than 1.5 to 1.0 Level V
Applicable Margins
---------------------------------------------------
Level I Level II Level III Level IV Level V
------- -------- --------- -------- -------
Applicable Reference 0.0% 0.0% 0.25% 0.5% 0.75%
Rate Margin
Applicable LIBOR 1.25% 1.5% 1.75% 2.0% 2.25%
Margin
Applicable L/C Fee 1.25% 1.5% 1.75% 2.0% 2.25%
Margin
Each change in the Reference Rate shall be reflected in the interest
rate described in clause 3.1(a)(1) above as of the effective date of
such change. All interest charges shall be computed on the basis of a
year of 360 days and actual days elapsed. Except as otherwise provided
herein, interest accrued on each Loan shall be payable in arrears on
the first day of each month hereafter.
(b) Default Rate. Without limiting any of the foregoing, (i)
if any of the Obligations owed hereunder are not paid when due (whether
by acceleration or otherwise), then such unpaid Obligations shall bear
interest at the Default Rate applicable thereto until so paid; and (ii)
if any Default or Event of Default occurs and the Majority
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Lenders in their discretion so elect, then, while any such Default or
Event of Default is outstanding, all of the Obligations shall bear
interest at the Default Rate applicable thereto.
3.2 Conversion or Continuation. (a) Subject to the provisions
of Section 3.3, each Borrower shall have the option (i) to convert all or any
part of its outstanding Revolving Loans, in a minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount, from Reference Rate
Loans to LIBOR Loans; (ii) to convert all or any part of its outstanding
Revolving Loans from LIBOR Loans to Reference Rate Loans on the expiration of
the Interest Period applicable thereto; and (iii) upon the expiration of any
Interest Period applicable to any outstanding LIBOR Loan, to continue all or any
portion of such LIBOR Loan equal to $1,000,000 and integral multiples of
$1,000,000 in excess of that amount as a LIBOR Loan, as applicable; provided,
however, that no outstanding Loans may be converted into, or continued as, LIBOR
Loans when any Default or Event of Default has occurred and is continuing.
(b) Whenever a Borrower elects to convert or continue Loans
under this Section 3.2, such Borrower shall deliver to the Collateral Agent a
written notice substantially in the form of that attached hereto as Exhibit E (a
"Notice of Conversion/ Continuation"), signed by an authorized officer of such
Borrower (i) no later than 10:00 a.m. (Chicago, Illinois time) two (2) Business
Days in advance of the requested conversion date, in the case of a conversion
into Reference Rate Loans, and (ii) no later than 10:00 a.m (Chicago, Illinois
time) three (3) Business Days in advance of the requested conversion or
continuation date, in the case of a conversion into, or continuation of, LIBOR
Loans. The Notice of Conversion/Continuation shall specify (1) the conversion or
continuation date (which shall be a Business Day), (2) the amount and type of
the Loans to be converted or continued, (3) the nature of the requested
conversion or continuation, and (4) in the case of a conversion into, or
continuation of, LIBOR Loans, the requested Interest Period. Promptly after
receipt of a Notice of Conversion/Continuation pursuant to this Section 3.2(b),
the Collateral Agent shall notify the Lenders by telecopy, telephone or other
similar form of transmission, of the requested conversion or continuation. In
the event that a Borrower should fail to provide a Notice of
Conversion/Continuation with respect to any LIBOR Loans as provided above, such
Loans shall, on the last day of the Interest Period with respect to such Loans,
convert to Reference Rate Loans.
(c) The officers of a Borrower authorized to request Revolving
Loans on behalf of such Borrower shall also be authorized to request a
conversion or continuation on behalf of such Borrower. The Collateral Agent
shall be entitled to rely on such officers' authority until the Collateral Agent
is notified to the contrary in writing pursuant to Section 2.2(c). The
Collateral Agent shall have no duty to verify the identity of any individual
representing himself as one of the officers authorized to make such request on
behalf of a Borrower. The Collateral Agent shall incur no liability to either
Borrower in acting upon any notice referred to in this Section 3.2, which notice
the Collateral Agent
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believes in good faith to have been given by an officer authorized to make such
requests on behalf of the applicable Borrower, or for otherwise acting in good
faith under this Section 3.2 and, upon such conversion or continuation by the
Collateral Agent and the Lenders in accordance with this Agreement, such
Borrower shall have effected the conversion or continuation of the applicable
Loans hereunder.
(d) Any Notice of Conversion/Continuation for conversion to,
or continuation of, Loans made pursuant to this Section 3.2 shall be irrevocable
and the applicable Borrower shall be bound to convert or continue in accordance
therewith.
3.3 Special Provisions Governing LIBOR Loans. Notwithstanding
any other provisions to the contrary contained in this Agreement, the following
provisions shall govern with respect to LIBOR Loans as to the matters covered:
(a) Amount of LIBOR Loans. Each election of, continuation of
or conversion to LIBOR Loans shall be in a minimum amount of $1,000,000 and in
integral multiples of $1,000,000 in excess of that amount.
(b) Determination of Interest Period. By giving notice as set
forth in Section 3.2(b), a Borrower shall have the option, subject to the other
provisions of this Section 3.3, to specify whether the Interest Period for such
LIBOR Loan shall be a one (1), two (2), or three (3) month period. The
determination of Interest Periods shall be subject to the following provisions:
(i) 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.
(ii) If any Interest Period would otherwise expire on a day
which is not a Business Day, the Interest Period shall be extended to
expire on the next succeeding Business Day; provided, however, that if
the next succeeding Business Day occurs in the following calendar
month, then such Interest Period shall expire on the immediately
preceding Business Day.
(iii) A Borrower may not select an Interest Period for any
LIBOR Loan which expires later than the Stated Termination Date.
(iv) There shall be no more than four (4) Interest Periods in
effect at any one time.
(c) Determination of Interest Rate. As soon as practicable
after 10:00 a.m. (Chicago, Illinois time) on the LIBOR Interest Rate
Determination Date, the Collateral Agent shall determine (which determination
shall, absent manifest error, be presumptively correct) the Interest Rate for
the LIBOR Loans for which an Interest Rate is then
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being determined and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the applicable Borrower. In the event that on
any LIBOR Interest Rate Determination Date the Collateral Agent shall have
determined, either independently or upon notice from a Lender (which
determination shall, absent manifest error, be presumptively correct and binding
upon all parties) that:
(i) adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the LIBO Rate then
being determined is to be fixed; or
(ii) the LIBO Rate for the relevant Interest Period for such
Loans will not adequately reflect the cost to the Required Lenders of
making, funding or maintaining their LIBOR Loans for such Interest
Period, the Collateral Agent shall forthwith so notify the applicable
Borrower and the Lenders, whereupon until the Collateral Agent shall
notify the applicable Borrower and the Lenders that the circumstances
causing such suspension no longer exist:
(A) each LIBOR Loan will automatically, on the last day
of the then existing Interest Period therefor,
convert into a Reference Rate Loan; and
(B) the obligation of the Lenders to make, or to convert
Loans into, LIBOR Loans shall be suspended.
(d) Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Borrowers and the Collateral Agent
that the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other Public Authority
asserts that it is unlawful, for any Lender to perform its obligations hereunder
to make LIBOR Loans or to fund or maintain LIBOR Loans hereunder, (i) the
obligation of the Lenders to make, or to convert Loans into or to continue Loans
as, LIBOR Loans shall be suspended until the Collateral Agent shall notify the
Borrowers and the Lenders that the circumstances causing such suspension no
longer exist and (ii) the Borrowers shall on the termination of the Interest
Period then applicable thereto, or on such earlier date required by law, prepay
in full all LIBOR Loans then outstanding together with accrued interest thereon,
or convert all such LIBOR Loans into Reference Rate Loans in accordance with
Section 3.2.
(e) Increased Costs. If, after the date hereof due to either
(i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the LIBOR Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other Public
Authority (whether or not having the force of law), there shall be any increase
in the cost to any Lender of agreeing to make or making, funding or maintaining
LIBOR Loans, then the Borrowers agree that they shall, from time to time, upon
demand by such Lender, pay to such Lender additional amounts sufficient to
compensate such
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Lender for such increased cost. Such demand shall be made in a certificate of
the applicable Lender which shall set forth in reasonable detail the amount
payable by the Borrowers, and the manner in which such amount was calculated,
which demand, absent manifest error, shall be rebuttably presumptive evidence of
the correctness of such amount.
(f) Compensation. In addition to such amounts as are required
to be paid by the Borrowers pursuant to the other Sections of this Article 3,
the Borrowers agree to compensate any Lender for all losses, expenses and
liabilities, including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain such Lender's LIBOR Loans to the Borrowers,
which such Lender may sustain (i) if for any reason a funding of any LIBOR Loans
does not occur on a date specified therefor in a Notice of Borrowing or Notice
of Conversion/Continuation, or a successive Interest Period does not commence
after notice therefor is given pursuant to Section 3.2, (ii) if any voluntary or
mandatory prepayment of any LIBOR Loans occurs for any reason on a date which is
not the last scheduled day of an Interest Period, or (iii) as a consequence of
any required conversion of LIBOR Loans to Reference Rate Loans as a result of
any of the events indicated in Section 3.3(d).
(g) Booking of LIBOR Loans. The Lenders may make, carry or
transfer LIBOR Loans at, to, or for the account of, any of their respective
branch offices or the office of any of their respective affiliates; provided,
that the Lenders shall not transfer LIBOR Loans to, or for the account of, any
such offices, if such transfer would result in increased costs pursuant to
Section 3.4(e) immediately following such transfer. To the extent reasonably
possible, a Lender shall designate an alternative branch or office of such
Lender with respect to LIBOR Loans to reduce any liability of the Borrowers to
such Lender under Section 3.3(e), Section 4.7 or Section 14.15, or to avoid the
unavailability of LIBOR Loans under Section 3.3(d), so long as such designation
is not disadvantageous to such Lender.
(h) LIBOR Loans After Event of Default. Unless the Majority
Lenders shall otherwise agree, after the occurrence of and during the
continuance of any Event of Default, the Borrowers may not borrow Revolving
Loans as LIBOR Loans or elect to have any Loans continued as, or converted to,
LIBOR Loans after the expiration of any Interest Period then in effect for such
Loans.
(i) Substitution of Lender. Upon the receipt by the Borrowers
of a claim for compensation by any Lender under Section 3.3(e), 4.7 or 14.15, or
notice from a Lender under Section 3.3(d) that it is unable to make LIBOR Loans,
the Borrowers shall have the right, without prejudice to such Lender's rights
with respect to its claim under Section 3.3(e), 4.7 or 14.15, if applicable, to
substitute for such Lender an existing Lender or another financial institution
reasonably acceptable to the Collateral Agent, to acquire and assume the
Obligations owing to and the Commitment of such Lender, for a cash
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purchase price equal to the outstanding Loans, accrued interest, fees and
expenses owing to such Lender. Such purchase shall be effected by the execution
by such Lender and the replacement Lender of an Assignment and Acceptance and
shall otherwise be made in the manner set forth in Section 12.3.
3.4 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate permissible for corporate
borrowers under applicable law for loans of the type provided for hereunder (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain at
the Maximum Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the
Obligations under this Agreement, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of interest
which would, but for this Section 3.4, have been paid or accrued if the interest
rates otherwise set forth in this Agreement had at all times been in effect,
then the Borrowers shall, to the extent permitted by applicable law, pay the
Collateral Agent, for the account of the Lenders, an amount equal to the
difference between (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect or (ii) the
amount of interest which would have accrued had the interest rates otherwise set
forth in this Agreement, at all times, been in effect and (b) the amount of
interest actually paid or accrued under this Agreement. In the event that a
court determines that the Collateral Agent and/or any Lender has received
interest and other charges hereunder in excess of the Maximum Rate, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce, the Obligations other than interest, in the inverse order of maturity,
and if there are no Obligations outstanding, the Collateral Agent and/or such
Lender shall refund to the Borrowers such excess.
3.5 Agent's Fee. The Borrowers will pay the Collateral Agent,
for its sole account, an annual fee (the "Collateral Agent's Fee") in the amount
of $100,000, on the Closing Date and on each Anniversary Date. Each Collateral
Agent's Fee shall be fully earned by the Collateral Agent on such date on which
it is payable, and shall be financed by the Lenders as Revolving Loans.
3.6 Unused Line Fee. The Borrowers shall pay to the Collateral
Agent, for the ratable account of the Lenders in accordance with their Pro Rata
Shares, an unused line fee (the "Unused Line Fee") equal to three-eighths of one
percent (0.375%) per annum on the average daily amount by which the amount of
the Revolver Facility at such time exceeded the Aggregate Revolver Outstandings,
payable on the first day of each month for the immediately preceding month and
on the Termination Date for the period from the last date for which the Unused
Line Fee was paid to and including the Termination Date. The Unused Line Fee
shall be computed on the basis of a 360-day year for the actual
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number of days elapsed. As provided for in Section 5.9(c), all payments received
by the Collateral Agent on account of Accounts or as proceeds of other
Collateral shall be deemed to be credited to the applicable Borrower's loan
account immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 3.6.
3.7 Letter of Credit Fee. The Borrowers will pay the
Collateral Agent, for the account of the Lenders, for each Letter of Credit, a
fee (the "Letter of Credit Fee") equal to the Applicable L/C Fee Margin then in
effect times the undrawn face amount of each such Letter of Credit issued for a
Borrower's account at such Borrower's request, plus all out-of-pocket costs,
fees and expenses incurred by the Collateral Agent in connection with the
application for issuance of or amendment to any Letter of Credit, which costs,
fees and expenses could include a "fronting fee" required to be paid by the
Collateral Agent to such issuer for the assumption of the settlement risk in
connection with the issuance of such Letter of Credit. The Letter of Credit Fee
shall be payable in advance (a) upon the issuance of each Letter of Credit for
the number of days remaining in the month during which such Letter of Credit was
issued and (b) thereafter, monthly, on the first day of each month during which
each such Letter of Credit remains outstanding. The Letter of Credit Fee shall
be computed on the basis of a 360-day year for the actual number of days
elapsed.
3.8 Audit Fees. The Borrowers shall pay to the Collateral
Agent, solely for its own account, all costs and fees reasonably incurred by the
Collateral Agent's internal auditors in connection with audits of the Borrowers
performed by the Collateral Agent during the term of this Agreement; provided,
however, that such audits shall not be performed in excess of twice during any
twelve (12) month period; and provided, further, that such audits may be
performed at any time during the existence of an Event of Default. The
Collateral Agent's auditors shall be billed at a rate of $600 per day per
auditor plus reasonably incurred out-of-pocket expenses (including travel
expenses).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at
any time, and reborrow subject to the terms of this Agreement; provided,
however, that with respect to any LIBOR Loans prepaid by a Borrower prior to the
expiration date of the Interest Period applicable thereto, the Borrowers agree
to pay to the Lenders the amounts described in Section 3.3(f). In addition, and
without limiting the generality of the foregoing, the Borrowers shall pay to the
Collateral Agent, for the account of the Lenders, on demand, the amount by which
the Aggregate Revolver Outstandings exceed the Maximum Revolver Amount.
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4.2 Reduction or Termination of Revolver Facility. (a) The
Borrowers may reduce the Revolver Facility on a one-time basis in an amount up
to $25,000,000 (which amount shall be an integral multiple of $5,000,000), upon
at least five (5) Business Days' notice to the Collateral Agent and the Lenders,
upon the payment of Revolving Loans or cancellation of outstanding Letters of
Credit to the extent required so that the Aggregate Revolver Outstandings shall
not exceed the Maximum Revolver Amount following such reduction. Any such
reduction in the Revolver Facility shall reduce each Lender's Commitment by an
amount equal to such Lender's Pro Rata Share of such reduction.
(b) The Borrowers may terminate the Revolver Facility in
whole, but not in part, upon at least thirty (30) Business Days', and not more
than forty five (45) Business Days', notice to the Collateral Agent and the
Lenders of the intent to terminate the Revolver Facility, and (3) Business Days
notice of the actual date of termination, upon (a) the payment in full of all
outstanding Revolving Loans, together with accrued interest thereon, and the
cancellation of all outstanding Letters of Credit, and (b) with respect to any
LIBOR Loans prepaid in connection with such termination prior to the expiration
date of the Interest Period applicable thereto, the payment of the amounts
described in Section 3.3(f).
4.3 Place and Form of Payments; Extension of Time. All
payments of principal, interest and other sums due to the Collateral Agent or
the Lenders shall be made at the Collateral Agent's address set forth in or
specified pursuant to Section 14.7. Except for proceeds received directly by the
Collateral Agent, all such payments shall be made in immediately available
funds. If any payment of principal, interest or any other sum to be made
hereunder becomes due and payable on a day other than a Business Day, the due
date of such payment shall be extended to the next succeeding Business Day and
interest thereon (if any) shall be payable at the applicable Interest Rate
during such extension.
4.4 Payments as Revolving Loans. All payments of principal,
interest, reimbursement obligations in connection with Letters of Credit, fees
and other sums payable hereunder, including all reimbursement for expenses
pursuant to Section 14.6, may, at the option of the Collateral Agent, in its
sole discretion, subject only to the terms of this Section 4.4, be paid from the
proceeds of, or charged to the Borrowers' account as, Revolving Loans made
hereunder, whether made following a request by the applicable Borrower pursuant
to Section 2.2 or a deemed request as provided in this Section 4.4; provided,
however, that so long as no Event of Default is outstanding, the Collateral
Agent shall give the Borrowers notice prior to so charging the Borrowers'
account for any items other than interest, Letter of Credit reimbursements, the
Collateral Agent Fee, Unused Line Fee, Letter of Credit Fees, legal fees or
audit expenses. Each Borrower hereby irrevocably authorizes the Lenders to make
Revolving Loans (including Swing Loans by BABC or Collateral Agent Advances by
the Collateral Agent), or to have the Borrowers' account charged with Revolving
Loans, upon notice from the Collateral Agent
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as described in the next succeeding sentence, for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees and other sums payable hereunder, including reimbursing expenses
pursuant to Section 14.6, and agrees that all such Revolving Loans so made shall
be Reference Rate Loans deemed to have been requested by such Borrower pursuant
to Section 2.2, as of the date of the aforementioned notice. The Collateral
Agent shall request Revolving Loans on behalf of a Borrower as described in the
immediately preceding sentence by notifying the Lenders (or BABC, in the case of
a Swing Loan) by telecopy, telephone or other similar form of transmission, of
the amount and Funding Date of the requested Borrowing and that such Borrowing
is being requested on such Borrower's behalf pursuant to this Section 4.4;
provided, however, that, subject to the terms of Section 2.3(f), the Collateral
Agent shall in no event so notify the Lenders if the Collateral Agent shall have
received written notice from any Lender that one or more of the applicable
conditions precedent contained in Article 9 will not be satisfied on the
requested Funding Date for the applicable Borrowing. On the requested Funding
Date, as applicable, the Lenders will make the requested Revolving Loans in
accordance with the procedures and subject to the conditions specified in
Section 2.2, or the Collateral Agent will charge the Borrowers' account as set
forth herein, as determined by the Collateral Agent.
4.5 Apportionment, Application and Reversal of Payments.
Unless otherwise specified herein, aggregate principal and interest payments
shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Loans to which such payments relate held by each
Lender) and payments of fees shall, as applicable (and unless otherwise
specified herein), be apportioned ratably among the Lenders. Following an
Activation Event, unless otherwise specified herein, all payments received with
respect to a Borrower shall be remitted to the Collateral Agent and all such
payments not constituting payment of specific fees, and all proceeds of Accounts
or other Collateral received by the Collateral Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any fees, expense
reimbursements or indemnities then due to the Collateral Agent or the Co-Agents
from such Borrower; second, to pay any fees, expense reimbursements or
indemnities then due to the Lenders from such Borrower; third, to pay interest
due in respect of the Swing Loans and Collateral Agent Advances to such
Borrower; fourth, to pay or prepay principal of the Swing Loans and Collateral
Agent Advances to such Borrower; fifth, to pay interest due in respect of all
Revolving Loans to such Borrower (other than the Swing Loans and Collateral
Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit issued for the account of such Borrower; sixth, to pay or prepay
principal of the Revolving Loans to such Borrower (other than the Swing Loans
and Collateral Agent Advances) and to pay, prepay or provide cash collateral in
respect of outstanding Letters of Credit issued for the account of such
Borrower, or any unpaid reimbursement obligations in respect thereof, as
applicable; and seventh, to the payment of any other Obligation due to the
Collateral Agent, the Agents or any Lender by such Borrower. Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by the
applicable Borrower, or unless an Event of Default is outstanding, neither the
Collateral Agent nor any Lender
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shall apply any payments which it receives to any LIBOR Loan, except on the
expiration date of the Interest Period applicable to any such LIBOR Loan. In the
event that the Collateral Agent or any Lender receives a payment when no Event
of Default is outstanding and the only Loans outstanding are LIBOR Loans the
Interest Period(s) for which have not expired, unless directed by the Borrowers
to apply such payment to the LIBOR Loans, the payment shall either (x) be
retained by (or turned over by the applicable Lender to) the Collateral Agent
and held as cash collateral for the Obligations (with interest credited to the
Borrowers on such cash collateral at the Federal Funds Rate), to be applied to
the repayment of any Obligations which become due, or any such LIBOR Loans on
the last day of their respective Interest Periods or (y) turned over to the
Borrowers. The Collateral Agent shall promptly distribute to each Lender,
pursuant to the applicable wire transfer instructions set forth in Section
13.11, or pursuant to such other instructions as such Lender may deliver to the
Collateral Agent in writing, such funds as it may be entitled to receive, on the
next succeeding Settlement Date. During an Activation Period, the Collateral
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations.
4.6 Indemnity for Returned Payments. If after receipt of any
payment of, or proceeds applied to the payment of, all or any part of the
Obligations, the Collateral Agent or any Lender is for any reason compelled to
surrender such payment or proceeds to any Person, because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible set-off, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continue and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Collateral Agent or such Lender, and each Borrower shall be
liable to pay to the Collateral Agent, and hereby does indemnify the Collateral
Agent and the Lenders and hold the Collateral Agent and the Lenders harmless
for, the amount of such payment or proceeds surrendered. The provisions of this
Section 4.9 shall be and remain effective notwithstanding any contrary action
which may have been taken by the Collateral Agent or any Lender in reliance upon
such payment or application of proceeds, and any such contrary action so taken
shall be without prejudice to the Collateral Agent's and the Lenders' rights
under this Agreement and shall be deemed to have been conditioned upon such
payment or application of proceeds having become final and irrevocable. The
provisions of this Section 4.9 shall survive the termination of this Agreement.
4.7 Increased Capital. If any Lender determines that
compliance by such Lender with any guideline or request issued after the date
hereof by any central bank or other Public Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender, or any corporation controlling such Lender, and
such Lender reasonably determines that the amount of such capital is increased
by or based upon its Commitment or its making or maintaining Loans hereunder, or
its commitment to participate (as provided for in Section
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2.3(f)) in any Letter of Credit or any L/C Credit Support provided through the
Collateral Agent in connection with the issuance of any Letter of Credit, or to
otherwise extend credit to the Borrowers hereunder, and other commitments of
this type, then, upon demand by such Lender, the Borrowers agree to immediately
pay to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender in the light of such circumstances,
to the extent that such Lender reasonably determines such increase in capital to
be allocable to such Lender's commitment to participate in any Letter of Credit
or L/C Credit Support or commitment to make Loans hereunder. Such demand shall
be in the form of a certificate of the applicable Lender which shall set forth
in reasonable detail the amount payable by the Borrowers, and the manner in
which such amount was calculated, which demand, absent manifest error, shall be
rebuttably presumptive evidence of the correctness of such amount.
4.8 Register; Collateral Agent's and Lenders' Books and
Records; Monthly Statements. Each Borrower agrees that the Register and each
Lender's books and records showing the Obligations and the transactions pursuant
to this Agreement and the other Loan Documents shall be admissible in any action
or proceeding arising therefrom, and shall, absent manifest error, constitute
rebuttably presumptive proof thereof, irrespective of whether any Obligation is
also evidenced by a promissory note or other instrument. The Collateral Agent
will provide to the Borrowers a monthly statement of Loans, payments, and other
transactions pursuant to this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 4.8 and
corrections of errors discovered by the Collateral Agent), unless the Borrowers
notify the Collateral Agent in writing to the contrary within ninety (90) days
after such statement is rendered. In the event a timely written notice of
objections is given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the Borrowers.
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest. (a) As security for all
Obligations, each Borrower hereby grants to the Collateral Agent, for the
ratable benefit of the Collateral Agent, the Co-Agents and the Lenders, a
continuing security interest in, lien on, assignment of, and right of set-off
against all of the following property of such Borrower, whether now owned or
existing or hereafter acquired or arising and regardless of where located:
(i) all Accounts, letters of credit, chattel paper,
instruments, notes, investment property, documents, and documents of
title;
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(ii) General Intangibles;
(iii) Inventory;
(iv) Equipment;
(v) all moneys, Securities and other property of any kind of
such Borrower in the possession or under the control of the Collateral
Agent or any Lender, any assignee of or participant in the Obligations,
or a bailee of any such party or such party's affiliates;
(vi) all of such Borrower's deposit accounts, credits, and
balances with and other claims against the Collateral Agent or any
Lender or any of its affiliates or any other financial institution with
which such Borrower maintains deposits;
(vii) all books, records and other property relating to or
referring to any of the foregoing, including, without limitation, all
books, records, ledger cards, data processing records, computer soft
▇▇▇▇ and other property and General Intangibles at any time evidencing
or relating to any of the foregoing; and
(viii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to all
or any of the foregoing.
All of the foregoing, together with the Real Estate described in Section 5.1(b)
and all other property in which the Collateral Agent or any Lender may at any
time be granted a Lien, is herein collectively referred to as the "Collateral".
Notwithstanding the foregoing, (a) any security interest or lien granted in the
stock of any Foreign Subsidiary of either Borrower is limited to 65% of the
outstanding capital stock of any such Foreign Subsidiary, and (b) no lien or
security interest is granted on the Corporate Campus Assets.
(b) As additional security for the Obligations, each Borrower
shall simultaneously herewith execute and deliver to the Collateral Agent
Mortgages to grant to the Collateral Agent, for the ratable benefit of the
Collateral Agent, the Co-Agents and the Lenders, continuing and perfected
mortgage liens on the Real Estate identified on Schedule 5.1(b) (which Real
Estate shall not include the Borrowers' Corporate Campus Assets). In addition,
if Imation's Real Estate in Kearneysville, West Virginia is not sold or
otherwise disposed of prior to March 31, 1999, Imation shall promptly execute
and deliver to the Collateral Agent a Mortgage granting to the Collateral Agent,
for the ratable benefit of the Collateral Agent, the Co-Agents and the Lenders,
a continuing and perfected mortgage lien on such Real Estate located in
Kearneysville, West Virginia.
(c) All of the Obligations shall be secured by all of the
Collateral.
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5.2 Perfection and Protection of Security Interest. Each
Borrower shall, at its expense, perform all steps reasonably requested by the
Collateral Agent at any time to perfect, maintain, protect, and enforce the
Collateral Agent's Liens, including, without limitation: (a) executing and
recording of the Mortgages and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Collateral Agent; (b) delivering to the Collateral Agent the originals of all
instruments, documents, and chattel paper, and all other Collateral of which the
Collateral Agent determines it should have physical possession in order to
perfect and protect the Collateral Agent's security interest therein, duly
endorsed or assigned to the Collateral Agent without restriction; (c) delivering
to the Collateral Agent warehouse receipts covering any portion of the
Collateral located in warehouses and for which warehouse receipts are issued;
(d) transferring Inventory to warehouses reasonably designated by the
Collateral Agent; (e) placing notations on such Borrower's books of account to
disclose the Collateral Agent's security interest; (f) delivering to the
Collateral Agent all letters of credit on which such Borrower is named
beneficiary; and (g) taking such other steps as are reasonably deemed necessary
or desirable by the Collateral Agent to maintain and protect the Collateral
Agent's Liens. To the extent permitted by applicable law, the Collateral Agent
may file, without the applicable Borrower's signature, one or more financing
statements disclosing the Collateral Agent's Liens, including, without
limitation, by electronic means with or without a signature as permitted or
required by applicable law or filing procedures. Each Borrower agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement.
If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any of a Borrower's agents or processors, then
such Borrower shall notify the Collateral Agent thereof and shall notify such
Person of the Collateral Agent's security interest in such Collateral and, upon
the Collateral Agent's request, instruct such Person to hold all such Collateral
for the Collateral Agent's account subject to the Collateral Agent's
instructions. If at any time any Collateral is located on any premises that are
not owned by a Borrower, then such Borrower shall obtain written waivers, in
form and substance reasonably satisfactory to the Collateral Agent, of all
present and future Liens to which the owner or lessor or any mortgagee of such
premises may be entitled to assert against the Collateral.
From time to time, each Borrower shall, upon the Collateral
Agent's reasonable request, execute and deliver confirmatory written instruments
pledging to the Collateral Agent, for the ratable benefit of the Collateral
Agent, the Agents and the Lenders, the Collateral, but a Borrower's failure to
do so shall not affect or limit the Collateral Agent's security interest or the
Collateral Agent's other rights in and to the Collateral. So long as this
Agreement is in effect and until all Obligations have been fully satisfied, the
Collateral Agent's Liens shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of calculating the
Maximum Revolver Amount or as the basis for any advance, loan, extension of
credit, or other financial accommodation).
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5.3 Location of Collateral. Each Borrower represents and
warrants to the Collateral Agent and the Lenders that: (a) Schedule 5.3 includes
a correct and complete list of such Borrower's chief executive office, the
location of its books and records, the locations of the Collateral, and the
locations of all of its other places of business; and (b) Schedule 5.3 correctly
identifies any of such facilities and locations that are not owned by such
Borrower and sets forth the names of the owners and lessors or sublessors of,
and, to the best of such Borrower's knowledge, the holders of any mortgages on,
such facilities and locations. Each Borrower covenants and agrees that it will
not (i) maintain any Collateral at any location other than those listed on
Schedule 5.3, (ii) otherwise change or add to any of such locations, or (iii)
change the location of its chief executive office from the location identified
in Schedule 5.3, unless it gives the Collateral Agent at least thirty (30) days'
prior written notice thereof and executes any and all financing statements and
other documents that the Collateral Agent requests in connection therewith.
5.4 Title to, Liens on, and Sale and Use of Collateral. Each
Borrower represents and warrants to the Collateral Agent and the Lenders and
agrees with the Collateral Agent and the Lenders that: (a) all of such
Borrower's Collateral is and will continue to be owned by such Borrower free and
clear of all Liens whatsoever, except for Permitted Liens; (b) the Collateral
Agent's Liens in the Collateral will not be subject to any prior Lien except for
those Permitted Liens, if any, specifically identified on Schedule 7.2; (c) such
Borrower will use, store, and maintain the Collateral with all reasonable care
and will use the Collateral for lawful purposes only; and (d) such Borrower will
not, without the Collateral Agent's prior written approval, sell, or dispose of
or permit the sale or disposition of any of the Collateral, except for sales of
Inventory in the ordinary course of business and as permitted by Sections 5.11
and 8.9. The inclusion of proceeds in the Collateral shall not be deemed to
constitute the Collateral Agent's or any Lender's consent to any sale or other
disposition of the Collateral except as expressly permitted herein.
5.5 Appraisals. Whenever a Default or Event of Default exists,
and at such other times not more frequently than once a year as the Collateral
Agent requests, the Borrowers shall, at their expense and upon the Collateral
Agent's request, provide the Collateral Agent with appraisals or updates thereof
of any or all of the Collateral from an appraiser, and prepared on a basis,
reasonably satisfactory to the Collateral Agent.
5.6 Access and Examination; Confidentiality. (a) The
Collateral Agent, accompanied by any Lender which so elects, may at all
reasonable times during regular business hours (and at any time when a Default
or Event of Default exists) have access to, examine, audit, make extracts from
or copies of and inspect any or all of each Borrower's records, files, and books
of account and the Collateral, and discuss each Borrower's affairs with such
Borrower's officers and management. Each Borrower will deliver to the Collateral
Agent any instrument necessary for the Collateral Agent to obtain records from
any service bureau maintaining records for such Borrower. The Collateral Agent
may, and at the direction of the Majority Lenders shall, at any time when a
Default or Event of
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Default exists, and at the Borrowers' expense, make copies of all of each
Borrower's books and records, or require each Borrower to deliver such copies to
the Collateral Agent. The Collateral Agent may, without expense to the
Collateral Agent, use such of each Borrower's personnel, supplies, and premises
as may be reasonably necessary for maintaining or enforcing the Collateral
Agent's Liens.
(b) Each Borrower agrees that the Collateral Agent and each
Lender may use such Borrower's name in advertising and promotional material and
in conjunction therewith disclose the general terms of this Agreement, subject
to such Borrower's prior consent for uses other than in a traditional tombstone,
which consent shall not be unreasonably withheld or delayed. The Collateral
Agent and each Lender agree to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information provided to
the Collateral Agent or such Lender by or on behalf of such Borrower, under this
Agreement or any other Loan Document, and neither the Collateral Agent, nor such
Lender nor any of their respective affiliates shall use any such information
other than in connection with or in enforcement of this Agreement and the other
Loan Documents, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Collateral Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Borrowers, provided that such
source is not bound by a confidentiality agreement with the applicable Borrower
known to the Collateral Agent or such Lender; provided, however, that the
Collateral Agent and any Lender may disclose such information (A) at the request
or pursuant to any requirement of any Public Authority to which the Collateral
Agent or such Lender is subject or in connection with an examination of the
Collateral Agent or such Lender by any such Public Authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance with
the provisions of any applicable requirement of law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which the
Collateral Agent, any Lender or their respective affiliates may be party; (E) to
the extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (F) to the Collateral Agent's or
such Lender's independent auditors, accountants, attorneys and other
professional advisors; (G) to any affiliate of the Collateral Agent or such
Lender, or to any Participating Lender or assignee under any Assignment and
Acceptance, actual or potential, provided that such affiliate, Participating
Lender or assignee agrees to keep such information confidential to the same
extent required of the Collateral Agent and the Lenders hereunder; and (H) as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which the applicable Borrower is party or is deemed party
with the Collateral Agent or such Lender.
5.7 Collateral Reporting. The Borrowers will provide the
Collateral Agent with the following documents with respect to the Collateral at
the following times in form reasonably satisfactory to the Collateral Agent: (a)
a Borrowing Base Certificate, a consolidating aging of accounts receivable
reconciled to the Borrowers' general ledger, a
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summary perpetual inventory report by product type and by operating division,
and a consolidating calculation of ineligible Accounts and Inventory, in each
case on a monthly basis, by the twentieth (20th) day of each calendar month for
the then immediately preceding calendar month, provided, that in the event that
Borrowing Base Availability shall be less than $60,000,000, a Borrowing Base
Certificate (which need not include an update of the calculation of ineligible
Accounts and Inventory), such aging report and inventory report shall be
provided on a weekly basis, by the third Business Day of each week for the then
immediately preceding week; (b) upon the Collateral Agent's reasonable request,
copies of invoices, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents, purchase orders,
invoices and delivery documents for Inventory and Equipment acquired by the
Borrowers; (c) such other reports as to the Collateral as the Collateral Agent
or any Lender shall reasonably request from time to time; and (d) with the
delivery of each of the foregoing, a certificate of each Borrower executed by an
officer thereof certifying as to the accuracy and completeness of the foregoing.
If any of a Borrower's records or reports of the Collateral are prepared by an
accounting service or other agent, such Borrower hereby authorizes such service
or agent to deliver such records, reports, and related documents to the
Collateral Agent, for distribution to the Lenders.
5.8 Accounts. (a) Each Borrower hereby represents and warrants
to the Collateral Agent and the Lenders that: (i) each existing Account
represents, and each future Account will represent, a bona fide sale or lease
and delivery of goods by such Borrower, or rendition of services by such
Borrower, in the ordinary course of such Borrower's business; (ii) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Collateral Agent, without any offset,
deduction, defense, or counterclaim known to such Borrower and not disclosed to
the Collateral Agent and the Lenders pursuant to this Agreement; (iii) no
payment will be received with respect to any Account, and no credit, discount,
or extension, or agreement therefor will be granted on any Account, except as
reported to the Collateral Agent and the Lenders on a Borrowing Base Certificate
or other report delivered pursuant to this Agreement; (iv) each copy of an
invoice delivered to the Collateral Agent by such Borrower will be a genuine
copy of the original invoice sent to the Account Debtor named therein; and (v)
all goods described in each invoice will have been delivered to the Account
Debtor and all services of such Borrower described in each invoice will have
been performed.
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(b) Neither Borrower shall redate any invoice or sale (other
than such redatings made in the ordinary course of such Borrower's business) or
make sales on extended dating beyond that customary in such Borrower's business
or extend or modify any Account. If a Borrower becomes aware of any matter which
may materially affect the collectibility of any Account in excess of $250,000,
including information regarding the Account Debtor's creditworthiness, such
Borrower will promptly so advise the Collateral Agent.
(c) Neither Borrower shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without the Collateral Agent's written consent. If the
Collateral Agent consents to the acceptance of any such instrument, it shall be
considered as evidence of the Account and not payment thereof and the applicable
Borrower will promptly deliver such instrument to the Collateral Agent
appropriately endorsed, regardless of the form of presentment, demand, notice of
dishonor, protest, and notice of protest with respect thereto.
(d) Each Borrower shall notify the Collateral Agent promptly
of all disputes and claims with Account Debtors and settle or adjust them at no
expense to the Collateral Agent or any Lender, but no discount, credit or
allowance shall be granted to any Account Debtor without the Collateral Agent's
consent, except for discounts, credits and allowances made or given in the
ordinary course of the applicable Borrower's business when no Event of Default
exists hereunder. Each Borrower shall send the Collateral Agent a copy of each
credit memorandum in excess of $250,000 as soon as issued. The Collateral Agent
may, and at the direction of the Majority Lenders shall, at all times when an
Event of Default exists hereunder, settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which the Collateral Agent or
the Majority Lenders, as applicable, shall consider advisable and, in all cases,
the Collateral Agent will credit the applicable Borrower's loan account with
only the net amounts received by the Collateral Agent in payment of any
Accounts.
(e) If an Account Debtor returns any Inventory to a Borrower
when no Event of Default exists, then such Borrower shall promptly determine the
reason for such return and shall issue a credit memorandum to the Account Debtor
in the appropriate amount. Each Borrower shall immediately report to the
Collateral Agent any return involving an amount in excess of $250,000. Each such
report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns
Inventory to a Borrower when an Event of Default exists, such Borrower shall:
(i) hold the returned Inventory in trust for the Collateral Agent; (ii)
segregate all returned Inventory from all of its other property; (iii) dispose
of the returned Inventory solely according to the Collateral Agent's written
instructions; and (iv) not issue any credits or allowances with respect thereto
without the Collateral Agent's prior written consent. All returned Inventory
shall be subject to the Collateral Agent's Liens thereon.
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Whenever any Inventory is returned, the related Account shall be deemed
ineligible to the extent of the return and the Maximum Revolver Amount shall be
adjusted accordingly (to the extent necessary).
5.9 Collection of Accounts; Payments. (a) The Borrowers have
established a lock-box service and lock-box accounts (the "Lock-Box Accounts")
for collections of Accounts. Each Lock-Box Account shall be established at a
bank (each such bank, a "Lock-Box Bank") reasonably acceptable to the Collateral
Agent and pursuant to documentation reasonably acceptable to the Collateral
Agent which directs the Lock-Box Bank to transfer all collected funds in the
Lock-Box Account to the Concentration Account. The Borrowers shall not establish
any new Lock-Box Accounts without prior notice to the Collateral Agent, and any
such new Lock-Box Account shall be subject to an agreement reasonably
satisfactory to the Collateral Agent directing the Lock-Box Bank to transfer all
collected funds in such Lock-Box Account to the Concentration Account. The
applicable Borrower shall instruct all Account Debtors to make all payments
directly to the address or addresses established for such service. If,
notwithstanding such instructions, a Borrower receives any proceeds of Accounts,
it shall receive such payments as the Collateral Agent's and the Lenders'
trustee, and shall immediately deliver such payments to the Collateral Agent in
their original form duly endorsed in blank or deposit them into a Lock-Box
Account established for such Borrower or into the Concentration Account. All
collections received in any such Lock-Box Account or directly by a Borrower, the
Collateral Agent or any Lender, and all funds in any Payment Account or other
account to which such collections are deposited, shall be subject to a security
interest in favor of the Collateral Agent.
The Borrowers have established an account with Bank of America
(Acct. # ▇▇▇▇▇-▇▇▇▇▇) into which all collected funds from each Lock-Box Account
are directed to be deposited (the "Concentration Account"). On or before the
Closing Date, the Borrowers, Bank of America and the Collateral Agent shall have
entered into a tri-party blocked account agreement, in form and substance
satisfactory to the Collateral Agent, providing, among other things, that (i)
all items of payment deposited in the Concentration Account are subject to a
security interest in favor of the Collateral Agent, for the benefit of itself
and the Lenders, and (ii) from and after the date that Bank of America shall
receive a notice (an "Activation Notice") from the Collateral Agent, which
Activation Notice may be given by the Collateral Agent at any time at which (and
shall be given by the Collateral Agent at the request of the Majority Lenders at
any time at which) (x) a Default or Event of Default is outstanding or (y)
Borrowing Base Availability is less than $40,000,000 (any of the foregoing being
referred to as an "Activation Event"), until the receipt by Bank of America of a
"De-Activation Notice" (as hereinafter defined), Bank of America shall forward
all amounts received in the Concentration Account to or at the direction of the
Collateral Agent on a daily basis. Upon the request of the Borrowers at a time
when no Activation Event exists and upon the direction of the Majority Lenders,
the Collateral Agent shall give Bank of America notice (a "De-Activation
Notice") that it may, until receipt of a subsequent Activation Notice, send
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amounts in the Concentration Account at the direction of the Borrowers. The
giving of a De-Activation Notice shall not preclude the Collateral Agent from
giving a subsequent Activation Notice. A period from the giving of an Activation
Notice until the giving of a De-Activation Notice, if any, with respect to such
Activation Notice is referred to herein as an "Activation Period".
Until the Collateral Agent notifies the Borrowers to the
contrary, each Borrower shall make collections of all Accounts and shall cause
all payments on the Accounts to be made to a Lock-Box Account or the
Concentration Account. The Collateral Agent or the Collateral Agent's designee
may, at any time during the continuance of an Event of Default, notify obligors
that the Accounts have been assigned to the Collateral Agent and of the
Collateral Agent's security interest therein, and may collect them directly and
charge the collection costs and expenses to the applicable Borrower's loan
account as a Revolving Loan as described in Section 4.4. At the Collateral
Agent's request, each Borrower shall execute and deliver to the Collateral Agent
such documents as the Collateral Agent shall require to grant the Collateral
Agent access to any post office box in which collections of Accounts are
received.
(b) If, during an Activation Period, sales of Inventory are
made for cash, the applicable Borrower shall immediately deliver to the
Collateral Agent or deposit into a Lock-Box Account or the Concentration Account
the identical checks, cash, or other forms of payment which such Borrower
receives.
(c) All payments received by the Collateral Agent on account
of Accounts or as proceeds of other Collateral during an Activation Period will
be the Collateral Agent's sole property and will be credited to the applicable
Borrower's loan account (conditional upon final collection) after allowing one
(1) Business Day for collection; provided, however, that for purposes of (1)
determining Availability, (2) calculating the Unused Line Fee pursuant to
Section 3.5, and (3) calculating the amount of interest to be distributed by the
Collateral Agent to the Lenders (but not the amount of interest payable by the
Borrowers), such payments shall be deemed to be credited to the applicable
Borrower's loan account immediately upon receipt.
5.10 Inventory. Each Borrower represents and warrants to the
Collateral Agent and the Lenders and agrees with the Collateral Agent and the
Lenders that all of the Inventory is and will be held for sale or lease, or to
be furnished in connection with the rendition of services, in the ordinary
course of such Borrower's business, and is and will be fit for such purposes.
Each Borrower will keep the Inventory in good and marketable condition, at its
own expense. Neither Borrower will, without prior written notice to the
Collateral Agent, acquire or accept any Inventory on approval, or Inventory on
consignment, valued in excess of $5,000,000 in the aggregate. Each Borrower
agrees that all Inventory will be produced in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations, and orders
thereunder. Each Borrower will conduct a physical count of the Inventory at
least once each Fiscal Year, and at such other
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times as the Collateral Agent reasonably requests, and shall promptly supply the
Lenders with a copy of such count accompanied by a report of the value of such
inventory (determined on a first-in-first-out basis and valued at the lower of
cost or market value). Neither Borrower will sell any Inventory on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis; provided, that the Borrowers may sell
Inventory on a consignment basis, provided that the value of such Inventory
shall at no time exceed $5,000,000 in the aggregate.
5.11 Equipment. Each Borrower represents and warrants to the
Collateral Agent and the Lenders and agrees with the Collateral Agent and the
Lenders that all of such Borrower's Equipment is and will be used or held for
use in such Borrower's business. Each Borrower shall keep and maintain such
Borrower's Equipment in good operating condition and repair (ordinary wear and
tear excepted) and shall make all necessary replacements thereof. Each Borrower
shall promptly inform the Collateral Agent of any material additions to or
deletions from such Borrower's Equipment. Neither Borrower shall permit any
Appraised Equipment to become a fixture to real property or an accession to
other personal property, unless the Collateral Agent has a valid, perfected, and
first priority Lien in such real or personal property. Neither Borrower will,
without the Collateral Agent's prior written consent, alter or remove any
identifying symbol or number on the Equipment. In the event that either Borrower
shall sell, lease as a lessor, or otherwise dispose of any of the Equipment,
such Borrower shall notify the Collateral Agent of sale or other disposition of
any item of Equipment having an orderly liquidation value greater than
$1,000,000, or of Equipment having an orderly liquidation value greater than
$5,000,000 in the aggregate during any Fiscal Year, within thirty (30) days
following the date of such sale; provided, that in the event or any such sale or
other disposition following an Activation Event, the applicable Borrower shall
immediately deliver all of the cash proceeds of any such sale, transfer or
disposition to the Collateral Agent, which proceeds shall be applied to the
repayment of the Obligations.
5.12 Right to Cure. The Collateral Agent may, in its
discretion and at any time, and shall, at the direction of the Majority Lenders,
for the applicable Borrower's account and at such Borrower's expense, pay any
amount or do any act required of such Borrower hereunder or requested by the
Collateral Agent to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Collateral Agent's Liens therein, and which such Borrower
fails to pay or do, including, without limitation, payment of any judgment
against such Borrower, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord's claim, and any other Lien upon or
with respect to the Collateral. All payments that the Collateral Agent makes
under this Section 5.12 and all out-of-pocket costs and expenses that the
Collateral Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the applicable Borrower's loan account as a
Revolving Loan as described in Section 4.4. Any payment made or other action
taken by the Collateral Agent under this Section 5.13 shall be without prejudice
to any right to assert an Event of Default hereunder and to proceed thereafter
as herein provided.
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5.13 Power of Attorney. Each Borrower hereby appoints the
Collateral Agent and the Collateral Agent's designees as such Borrower's
attorney, with power: (a) during an Activation Period, to endorse such
Borrower's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Collateral Agent's or any Lender's
possession; (b) to sign such Borrower's name on any invoice, ▇▇▇▇ of lading,
warehouse receipt or other document of title relating to any Collateral, on
drafts against customers, on assignments of Accounts, on notices of assignment,
financing statements and other public records; (c) to notify the post office
authorities, when an Event of Default exists, to change the address for delivery
of such Borrower's mail to an address designated by the Collateral Agent and to
receive, open and dispose of all mail addressed to such Borrower; (d) to send
requests for verification of accounts to customers or account debtors; and (e)
to do all things necessary to carry out this Agreement. Each Borrower ratifies
and approves all acts of such attorney, other than those constituting gross
negligence or willful misconduct. None of the Lenders or the Collateral Agent
nor the attorneys will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law. This power, being coupled with an interest,
is irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
5.14 The Collateral Agent's and Lenders' Rights, Duties and
Liabilities. Each Borrower assumes all responsibility and liability arising from
or relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Collateral Agent or any
Lender to take any steps to perfect the Collateral Agent's Liens or to collect
or realize upon the Collateral, nor shall loss of or damage to the Collateral
release the applicable Borrower from any of the Obligations. During the
continuance of any Event of Default, the Collateral Agent may, and at the
direction of the Majority Lenders shall, without notice to or consent from the
applicable Borrower, ▇▇▇ upon or otherwise collect, extend the time for payment
of, modify or amend the terms of, compromise or settle for cash, credit, or
otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of such Borrower for the Obligations or under
this Agreement or any other agreement now or hereafter existing between the
Collateral Agent and/or any Lender and such Borrower.
5.15 Pledge of Stock of Foreign Subsidiaries. On or prior to
February 26, 1999, the Borrowers shall have pledged to the Collateral Agent, for
the benefit of itself and the Lenders, 65% of the capital stock of each of the
Foreign Subsidiaries identified on Schedule 5.15, pursuant to pledge agreements
and related documentation (including legal opinions) reasonably satisfactory to
the Collateral Agent. If after the Closing Date, the Collateral Agent, in its
own reasonable discretion or at the direction of the Majority Lenders, shall
request the pledge of the stock of any additional Foreign Subsidiary which is a
Material Subsidiary, the Borrowers shall pledge to the Collateral Agent, for the
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benefit of itself and the Lenders, 65% of the capital stock of each such Foreign
Subsidiary so requested, pursuant to pledge agreements and related documentation
(including legal opinions) reasonably satisfactory to the Collateral Agent;
provided, however, that neither Borrower shall be obligated to cause any Foreign
Subsidiary to pledge any capital stock of another Foreign Subsidiary.
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records. Each Borrower shall maintain, at all
times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions sufficient to prepare
financial statements in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section
6.2(a). Each Borrower shall, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves for all
taxes and proper provision for depreciation and amortization of property and bad
debts, all in accordance with GAAP. Each Borrower shall maintain at all times
books and records pertaining to the Collateral in such detail, form and scope as
the Collateral Agent or any Lender shall reasonably require, including, but not
limited to, records of (a) all payments received and all credits and extensions
granted with respect to the Accounts; (b) the return, rejection, repossession,
stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all
other dealings affecting the Collateral.
6.2 Financial Information. The Borrowers shall promptly
furnish to each Lender all such financial information as the Collateral Agent or
any Lender shall reasonably request, and notify its auditors and accountants
that the Collateral Agent, on behalf of the Lenders, is authorized while an
Event of Default is outstanding to obtain such information directly from them.
Without limiting the foregoing, Imation and its Subsidiaries will furnish to the
Collateral Agent, in sufficient copies for distribution by the Collateral Agent
to each Lender, in such detail as the Collateral Agent or the Lenders shall
reasonably request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated audited
balance sheets, and statements of income and expense, cash flow and of
stockholders' equity for Imation and its consolidated Subsidiaries for such
Fiscal Year, and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable detail,
fairly presenting the financial position and the results of operations of
Imation and its consolidated Subsidiaries as at the date thereof and for the
Fiscal Year then ended, and prepared in accordance with GAAP. Such statements
shall be examined in accordance with generally accepted auditing standards by
and accompanied by a report thereon unqualified as to scope of independent
certified public accountants selected by the
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Borrowers and reasonably satisfactory to the Collateral Agent. The Borrowers,
simultaneously with retaining such independent public accountants to conduct
such annual audit, shall send a letter to such accountants, with a copy to the
Collateral Agent and the Lenders, notifying such accountants that one of the
primary purposes for retaining such accountants' services and having audited
financial statements prepared by them is for use by the Collateral Agent and the
Lenders. Each Borrower hereby authorizes the Collateral Agent to communicate
directly with its certified public accountants and, by this provision,
authorizes those accountants to disclose to the Collateral Agent any and all
financial statements and other supporting financial documents and schedules
relating to such Borrower and to discuss directly with the Collateral Agent the
finances and affairs of such Borrower; provided, that the Borrowers shall be
permitted to be present during any such discussions between the Collateral Agent
and such accountants when no Event of Default is outstanding.
(b) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a Fiscal Year, consolidated unaudited balance sheets of
Imation and its consolidated Subsidiaries as at the end of such quarter, and
consolidated unaudited statements of income and expense and cash flow for
Imation and its consolidated Subsidiaries for such quarter and for the period
from the beginning of the Fiscal Year to the end of such quarter, together with
the accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and results of operations of Imation and its consolidated
Subsidiaries as at the date thereof and for such periods, prepared in accordance
with GAAP applied consistently with the audited Financial Statements required to
be delivered pursuant to Section 6.2(a). Such statements shall be certified by
the chief financial officer, the treasurer or any assistant treasurer of Imation
as fairly presenting the financial position and results of operations of Imation
and its subsidiaries as of the date thereof and for such periods, subject to
normal year-end adjustments.
(c) As soon as available, but in any event not later than
thirty (30) days after the end of each month, consolidated unaudited balance
sheets of Imation and its consolidated Subsidiaries as at the end of such month,
and consolidated unaudited statements of income and expense for Imation and its
consolidated Subsidiaries for such month and for the period from the beginning
of the Fiscal Year to the end of such month, all in reasonable detail, fairly
presenting the financial position and results of operation of Imation and its
consolidated Subsidiaries as at the date thereof and for such periods, and
prepared substantially in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section
6.2(a). Such statements shall be certified by the chief financial officer, the
treasurer or any assistant treasurer of Imation as fairly presenting the
financial position and results of operations of Imation and its subsidiaries as
of the date thereof and for such periods, subject to normal year-end
adjustments, and in the case of the statements for each month other than the
last month of a quarter, subject to normal quarterly adjustments.
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(d) With each of the audited Financial Statements delivered
pursuant to Section 6.2(a), a report from the independent certified public
accountants that examined such statements indicating that while their audit was
not directed primarily toward obtaining knowledge of such noncompliance, except
as described in such report, in connection with conducting their audit, nothing
came to their attention that caused them to believe that the Borrowers failed to
comply with Section 8.21 or 8.22 of this Agreement.
(e) With each of the annual audited and quarterly unaudited
Financial Statements delivered pursuant to Sections 6.2(a) and 6.2(b), a
certificate of the chief executive officer, the chief financial officer, the
treasurer or any assistant treasurer of Imation (each such certificate, a
"Compliance Certificate") (i) setting forth in reasonable detail the
calculations required to establish that the Borrowers were in compliance with
its covenants set forth in Sections 8.22 and 8.23 during the period covered in
such Financial Statements and as at the end thereof, and (ii) stating that,
except as explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are correct and complete as at the date of such
certificate as if made at such time, (B) the Borrowers are, at the date of such
certificate, in compliance with all of their covenants and agreements in this
Agreement and the other Loan Documents, and (C) no Default or Event of Default
then exists or existed during the period covered by such Financial Statements.
If such certificate discloses that a representation or warranty is not correct
or complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrowers have taken or propose to take with respect thereto.
(f) Prior to, but no more than ninety (90) days prior to, the
beginning of each Fiscal Year, consolidated projected balance sheets, statements
of income and expense, and statements of cash flow for Imation and its
consolidated Subsidiaries as at the end of and for each month of such Fiscal
Year and the next succeeding Fiscal Year.
(g) Within thirty (30) days after the end of each calendar
month, a report of (1) all Restricted Investments as of the end of such calendar
month, and (2) all investments in and loans or other advances outstanding to
Subsidiaries as of the end of such calendar month, and of all Distributions and
loan repayments received from Subsidiaries during such month, in detail, form
and substance reasonably satisfactory to the Collateral Agent.
(h) Promptly after their preparation, copies of any all proxy
statements, financial statements, reports filed by Imation or any of its
Subsidiaries with the Securities and Exchange Commission, and of all reports
which Imation makes available to its stockholders or public debt holders.
(i) Upon the request of the Collateral Agent and/or any
Lender, a copy of each tax return filed by each Borrower or by any Subsidiary of
a Borrower.
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(j) Such additional information as the Collateral Agent and/or
any Lender may from time to time reasonably request regarding the financial and
business affairs of each Borrower or any Subsidiary, including, without
limitation, projections of future operations on both a consolidated and
consolidating basis.
6.3 Notices to the Lenders. The Borrowers shall notify the
Collateral Agent, in writing, in sufficient copies for distribution by the
Collateral Agent to each Lender, of the following matters at the following
times:
(a) Promptly after an Authorized Officer becoming aware
thereof, any Default or Event of Default.
(b) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, the assertion by the holder of any capital stock of a
Borrower or of any Debt owing by a Borrower in an outstanding principal amount
in excess of $2,000,000 that a default exists with respect thereto or that such
Borrower is not in compliance with the terms thereof, or the threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance.
(c) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, any material adverse change in a Borrower's or any
Subsidiary's property, business, operations, or condition (financial or
otherwise).
(d) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, any pending or threatened action, suit, proceeding, or
counterclaim by any Person, or any pending or threatened investigation by a
Public Authority, which may materially and adversely affect the Collateral, the
repayment of the Obligations, the Collateral Agent's or any Lender's rights
under the Loan Documents, or a Borrower's or any Subsidiary's property,
business, operations, or condition (financial or otherwise).
(e) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, any pending or threatened strike, work stoppage,
material unfair labor practice claim, or other material labor dispute affecting
a Borrower or any Subsidiary.
(f) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, any violation of any law, statute, regulation, or
ordinance of Public Authority applicable to a Borrower, or its properties which
may materially and adversely affect the Collateral, the repayment of the
Obligations, the Collateral Agent's or any Lender's rights under the Loan
Documents, or such Borrower's property, business, operations, or condition
(financial or otherwise).
(g) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, any violation by a Borrower of any Environmental Law or,
immediately upon its receipt thereof, any notice that a Borrower receives
asserting that such Borrower is not in
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compliance with any Environmental Law or that its compliance is being
investigated by a Public Authority, in any such case to the extent such
violation or non-compliance could reasonably be expected to result in a Material
Environmental Event.
(h) Within three (3) Business Days after receipt thereof by
any Authorized Officer, any notice that a Borrower is or may be liable to any
Person as a result of the Release or threatened Release of any Contaminant or
that a Borrower is subject to investigation by any Public Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant, in any such case, to the extent that any such
Release or threatened Release could reasonably be expected to result in a
Material Environmental Event.
(i) Within three (3) Business Days after an Authorized Officer
becoming aware thereof, the imposition of any Environmental Lien against any
property of a Borrower.
(j) Any change in a Borrower's name, state of incorporation,
or form of organization, trade names or styles under which such Borrower will
sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto.
(k) Within ten (10) Business Days after a Borrower or any
ERISA Affiliate knows or has reason to know, that a Termination Event or a
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) which could reasonably be expected to result in material liability to the
Borrowers has occurred, and, when known, any action taken or threatened by the
IRS, the DOL or the PBGC with respect thereto.
(l) Within ten (10) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by a Borrower or any ERISA
Affiliate from the IRS with respect to such request; and upon the request of the
Collateral Agent, each annual report (form 5500 series), including Schedule B
thereto, filed with respect to each Benefit Plan.
(m) Within ten (10) Business Days after receipt thereof by a
Borrower or any ERISA Affiliate, copies of the following: (i) upon the request
of the Collateral Agent, each actuarial report for any Benefit Plan or
Multiemployer Plan and annual report for any Multiemployer Plan; (ii) any
notices of the PBGC's intention to terminate a Benefit Plan or to have a trustee
appointed to administer such Benefit Plan; (iii) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Code; or (iv) any notice from a Multiemployer Plan
regarding the imposition of withdrawal liability.
(n) Within ten (10) Business Days after the occurrence
thereof: (i) upon the request of the Collateral Agent, any increases in the
benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to
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which a Borrower or any ERISA Affiliate was not previously contributing; or (ii)
any failure by a Borrower or any ERISA Affiliate to make a required installment
or any other required payment under Section 412 of the Code on or before the due
date for such installment or payment.
(o) Within ten (10) Business Days after a Borrower or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multiemployer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
For purposes of subsections (k) through (o) above, each Borrower and any ERISA
Affiliate shall be deemed to know all facts known by the Administrator of any
Plan of which such Borrower or any ERISA Affiliate is the plan sponsor.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail, and shall set forth the action that the applicable
Borrower and any ERISA Affiliate, as applicable, has taken or proposes to take
with respect thereto.
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Collateral Agent
and the Lenders, that:
7.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents. Each Borrower has the corporate power and
authority to execute, deliver and perform this Agreement and other Loan
Documents, to incur the Obligations, and to grant to the Collateral Agent Liens
upon and security interests in the Collateral. Each Borrower has taken all
necessary corporate action (including, without limitation, obtaining approval of
its stockholders) to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents. No consent, approval, or authorization
of, or declaration or filing with, any Public Authority, and no consent of any
other Person, is required in connection with a Borrower's execution, delivery,
and performance of this Agreement and the other Loan Documents, except for those
already duly obtained. Each of this Agreement and the other Loan Documents to
which it is a party has been duly executed and delivered by each Borrower, and
constitutes the legal, valid and binding obligation of such Borrower,
enforceable against it in accordance with its terms. Neither Borrower's
execution, delivery, and performance of this Agreement and the other Loan
Documents does or will conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or imposition of any Lien
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upon the property of such Borrower by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, or instrument to which such
Borrower is a party or which is binding upon it, (b) any judgment, law, statute,
rule or governmental regulation applicable to such Borrower or (c) the
Certificate or Articles of Incorporation or By-laws of such Borrower.
7.2 Validity and Priority of Security Interest. The provisions
of this Agreement, the Mortgages, and the other Loan Documents create legal and
valid Liens on all the Collateral in favor of the Collateral Agent, for the
ratable benefit of the Collateral Agent, the Agents and the Lenders, and such
Liens constitute perfected and continuing Liens on all the Collateral, in the
case of personal property, to the extent a security interest can be perfected by
the filing of UCC-1 financing statements in all applicable states, having
priority over all other Liens on the Collateral other than Permitted Liens,
securing all the Obligations, and enforceable against each Borrower and all
third parties.
7.3 Organization and Qualification. Each Borrower (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the State of Delaware, (b) is qualified to do business as a foreign
corporation and is in good standing in the States indicated on Schedule 7.3,
which are the only states in which qualification is necessary in order for it to
own or lease its property and conduct its business, and (c) has all requisite
power and authority to conduct its business and to own its property.
7.4 Corporate Name; Prior Transactions. Neither Borrower has,
since July 1, 1996, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business, except as set forth on Schedule 7.4.
7.5 Subsidiaries and Other Affiliates. Schedule 7.5 is a
correct and complete list of the name and relationship to each Borrower of each
and all of such Borrower's Subsidiaries and other Affiliates. Each Subsidiary is
(a) duly incorporated and organized and validly existing in good standing under
the laws of its state or country of incorporation set forth on Schedule 7.5, and
(b) qualified to do business as a foreign corporation and in good standing in
the states set forth opposite its name on Schedule 7.5, which are the only
states in which such qualification is necessary in order for it to own or lease
its property and conduct its business.
7.6 Financial Statements and Projections. (a) Imation has
delivered to the Lenders the audited balance sheet and related statements of
income, retained earnings, changes in financial position, and changes in
stockholders equity for Imation and its Subsidiaries as of December 31, 1997 and
for the Fiscal Year then ended, accompanied by the report thereon of Imation's
independent certified public accountants, Pricewaterhouse Coopers LLP. Imation
has also delivered to the Collateral Agent and the
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Lenders the unaudited balance sheet and related statements of income and changes
in financial position for Imation and its Subsidiaries as of September 30, 1998
and for the three fiscal quarters then ended. Such financial statements are
attached hereto as Exhibit B-1. All such financial statements have been prepared
in accordance with GAAP and present accurately and fairly the financial position
of Imation and its Subsidiaries as at the dates thereof and results of
operations for the periods then ended.
(b) The Latest Projections represent Imation's best estimate
of the future financial performance of Imation and its Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which Imation believes are fair and
reasonable in light of current and reasonably fore seeable business conditions.
(c) The pro forma consolidated balance sheet of Imation and
its Subsidiaries as at December 31, 1998, attached hereto as Exhibit B-3,
presents fairly and accurately the financial condition of Imation and its
Subsidiaries as at such date as if the Closing Date had been such date and the
Loans anticipated to be made on such date and Letters of Credit anticipated to
be issued on such date had been made or issued, and such balance sheet has been
prepared in accordance with GAAP.
7.7 Solvency. Each Borrower is Solvent prior to and after
giving effect to the making of the Revolving Loans to be made on the Closing
Date, the issuance of the Letters of Credit to be issued on the Closing Date,
and shall remain Solvent during the term of this Agreement.
7.8 Debt. After the making of the Revolving Loans to be made
on the Closing Date, each Borrower has no Debt, except Debt permitted by Section
8.13.
7.9 Title to Property. With respect to those locations listed
as Premises owned by each Borrower on Schedule 7.10, the applicable Borrower has
good and marketable title in fee simple to such Premises, and the applicable
Borrower has good, indefeasible, and merchantable title to all of its other
property (including, without limitation, the assets reflected on the December
31, 1997 Financial Statements delivered to the Collateral Agent and the Lenders,
except as disposed of in the ordinary course of business since the date thereof
or as otherwise expressly permitted hereby), free of all Liens except Permitted
Liens.
7.10 Real Estate; Leases. Schedule 7.10 sets forth a correct
and complete list of all Real Estate owned by each Borrower as of the Closing
Date, all leases and subleases of real property, and all leases and subleases of
personal property with annual rentals in excess of $1,000,000, by each Borrower
as lessee or sublessee, and all leases and subleases of real or personal
property by each Borrower as lessor, lessee, sublessor or sublessee. Each of
such leases and subleases is valid and enforceable in accordance with
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its terms and is in full force and effect, and no default by either Borrower or,
to the best of the Borrowers' knowledge, any other party to any such lease or
sublease exists.
7.11 Proprietary Rights. To the best of each Borrower's
knowledge, none of the Proprietary Rights infringes on or conflicts with any
other Person's property, and no other Person's property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights constitute all of
the property of such type necessary to the current and anticipated future
conduct of each Borrower's business. No license or consent from any third party
with respect to any of the Proprietary Rights would be required for the
Collateral Agent to prepare for sale or sell, lease or distribute any of the
Collateral pursuant to Section 10.2.
7.12 Trade Names. All trade names or styles under which each
Borrower will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on Schedule 7.4.
7.13 Litigation. Except as set forth on Schedule 7.13, there
is no pending or (to the best of each Borrower's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any Public
Authority, or any basis for any of the foregoing, which could reasonably be
expected to materially and adversely affect the Collateral, the repayment of the
Obligations, the Collateral Agent's or any Lender's rights under the Loan
Documents, or a Borrower's property, business, operations, or condition
(financial or otherwise).
7.14 Restrictive Agreements. Neither Borrower is a party to
any contract or agreement, or is subject to any charter or other corporate
restriction, which affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which materially and adversely affects
or, insofar as such Borrower can reasonably foresee, could reasonably be
expected to materially and adversely affect, such Borrower's property, business,
operations, or condition (financial or otherwise), or would in any respect
materially and adversely affect the Collateral, the repayment of the
Obligations, the Collateral Agent's or any Lender's rights under the Loan
Documents, or a Borrower's property, business, operations, or condition
(financial or otherwise).
7.15 Labor Disputes. Except as set forth on Schedule 7.15, (a)
there is no collective bargaining agreement or other labor contract covering
employees of a Borrower, (b) no such collective bargaining agreement or other
labor contract is scheduled to expire during the term of this Agreement and (c)
no union or other labor organization is seeking to organize, or to be recognized
as, a collective bargaining unit of employees of a Borrower or for any similar
purpose, and (d) there is no pending or (to the best of each Borrower's
knowledge) threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting a Borrower, or any
of its employees.
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7.16 Environmental Laws. Except as otherwise disclosed on
Schedule 7.16 and except as to matters which would not constitute Material
Environmental Events:
(a) Each Borrower has complied, and to the best knowledge of
any Authorized Officer, with respect to the Real Estate, each
Borrower's predecessors in interest has complied, in all material
respects with all Environmental Laws and health and safety laws
applicable to its property and business, and neither Borrower nor any
of its present property or operations, or to the best knowledge of any
Authorized Officer, its past property or operations, are subject to any
order from or agreement with any Public Authority or private Person
respecting (i) compliance with any Environmental Law, or (ii) any
potential liabilities and costs or remedial action arising from the
Release or threatened Release of a Contaminant.
(b) Each Borrower has obtained all environmental, health and
safety permits necessary for its operation, and all such permits are in
good standing and each Borrower is in material compliance with all
terms and conditions of such permits.
(c) Neither Borrower nor, to the best knowledge of any
Authorized Officer, any of its predecessors in interest with respect to
the Real Estate, has generated, handled, used, stored or disposed of
any hazardous or toxic waste or substance, as defined pursuant to 40
CFR Part 261, on or off its property (whether or not owned by it), nor
has either Borrower filed any notice with any Public Authority
indicating such generation, handling, use, storage or disposal.
(d) Neither Borrower has material contingent liability with
respect to non-compliance with any Environmental Laws or any Release or
threatened Release of a Contaminant or the generation, handling, use,
storage, or disposal of hazardous or toxic wastes or substances.
(e) Neither Borrower, nor to the best knowledge of any
Authorized Officer, any of its predecessors in interest with respect to
the Real Estate, has received any summons, complaint, order or similar
notice that it is not in compliance with, or that any Public Authority
is investigating its compliance with, any Environmental Laws or that it
is or may be liable to any other Person as a result of a Release or
threatened Release of a Contaminant.
(f) To the best knowledge of any Authorized Officer, none of
the present or past operations of either Borrower is the subject of any
investigation by any Public Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a
Contaminant.
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(g) There is not now, nor to the best knowledge of any
Authorized Officer has there ever been, on or in the Premises:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos containing material, or
(iii) any polychlorinated biphenyls (PCB) used in
hydraulic oils, electrical transformers or other equipment.
(h) Neither Borrower has filed any notice under any applicable
Environmental Law reporting a Release of a Contaminant into the
environment.
(i) Neither Borrower has entered into any negotiations or
agreements with any Person (including, without limitation, the prior
owner of its property) relating to any remedial action in response to
the Release of a Contaminant or environmentally related claim on
property owned or operated by a Borrower.
(j) All asbestos containing material which is on or part of
the Premises (excluding any raw materials used in the manufacture of
products or products themselves) is in good repair according to the
current standards and practices governing such material, and its
presence or condition does not violate any applicable Environmental
Law.
(k) None of the products manufactured, distributed or sold by
either Borrower contains asbestos containing material.
(l) No Environmental Lien has attached to any property of
either Borrower or any Subsidiary.
7.17 No Violation of Law. Neither Borrower is in violation of
any law, statute, regulation, ordinance, judgment, order, or decree applicable
to it which violation would in any respect materially and adversely affect the
Collateral, the repayment of the Obligations, the Collateral Agent's or any
Lender's rights under the Loan Documents, or a Borrower's property, business,
operations, or condition (financial or otherwise).
7.18 No Default. Neither Borrower is in default with respect
to any note, indenture, loan agreement, mortgage, lease, deed, or other
agreement to which a Borrower is a party or by which it is bound, which default
would materially and adversely affect the Collateral, the repayment of the
Obligations, the Collateral Agent's or any Lender's rights under the Loan
Documents, or a Borrower's property, business, opera tions, or condition
(financial or otherwise).
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7.19 ERISA. (a) Neither Borrower nor any ERISA Affiliate
maintains or contributes to any Benefit Plan or Multiemployer Plan other than
those listed on Schedule 7.19.
(b) No Benefit Plan or Multiemployer Plan has been terminated
or partially terminated or is insolvent or in reorganization, nor have any
proceedings been instituted to terminate or reorganize any Benefit Plan or
Multiemployer Plan.
(c) Neither Borrower nor any ERISA Affiliate has incurred any
material withdrawal liability to any Benefit Plan pursuant to Title IV of ERISA
which has not been satisfied.
(d) Neither Borrower nor any ERISA Affiliate has incurred any
liability to the PBGC under Title IV of ERISA with respect to any Benefit Plan
which remains outstanding other than the payment of premiums, and there are no
premium payments which have become due which are unpaid.
(e) No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code),
whether or not waived.
(f) Except as provided on Schedule 7.19, neither Borrower nor
any ERISA Affiliate maintains or contributes to any employer welfare benefit
plan within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Section 601
of ERISA.
(g) Neither Borrower nor any ERISA Affiliate has failed to
make a required installment with respect to a Benefit Plan under subsection (m)
of Section 412 of the Code or any other payment required under Section 412 of
the Code on or before the due date for such installment or other payment.
(h) Neither Borrower nor any ERISA Affiliate is required to
provide security to a Benefit Plan under Section 401(a)(29) of the Code due to a
Benefit Plan amendment that results in an increase in current liability for the
plan year.
(i) Each Borrower has given to the Collateral Agent copies of
each Benefit Plan and related trust agreement (including all amendments to such
Plan and trust) in existence or committed to as of the date hereof.
(j) Neither Borrower nor any ERISA Affiliate would reasonably
be expected to have any liability under Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA.
7.20 Taxes. Each Borrower has filed all tax returns and other
reports which it was required by law to file on or prior to the date hereof and
has paid all taxes,
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assessments, fees, and other governmental charges, and penalties and interest,
if any, against it or its property, income, or franchise, that are due and
payable.
7.21 Investment Company Act, etc. Neither Borrower is an
"investment company" nor an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (15 U.S.C. ss. 80(a)(l), et seq.),
nor is a Borrower subject to any other state or federal regulation limiting its
ability to incur Debt. The making of the Revolving Loans and other financial
accommodations hereunder by the Collateral Agent and the Lenders, the
application of the proceeds and repayment thereof by the Borrowers and the con
summation of the other transactions contemplated by this Agreement and the Loan
Documents do not violate any provisions of such laws or any rule, regulation or
order issued by the Securities and Exchange Commission or other Public Authority
thereunder.
7.22 Public Utility Holding Company. Neither Borrower is a
"holding company" or a "subsidiary company" of a "holding company" or an
Affiliate of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
7.23 Margin Stock. None of the Revolving Loans or the other
financial accommodations hereunder will be used, directly or indirectly, for the
purpose of purchas ing or carrying any "margin stock" (as that term is defined
in Regulation U of the Federal Reserve Board), for the purpose of reducing or
retiring any Debt or other Person's indebtedness which was originally incurred
to purchase or carry any margin stock, or for any other purpose which might
cause any such loan or other financial accommodation to be considered a "purpose
credit" within the meaning of Regulation U or X of the Federal Reserve Board.
Neither Borrower will take nor permit any Collateral Agent acting on its behalf
to take any action which might cause any transaction, obligation or right
created by this Agreement, or any document or instrument delivered pursuant
hereto, to violate any regulation of the Federal Reserve Board. Not more than
25% of the assets (determined by value) of either Borrower, or of Imation and
its Subsidiaries on a consolidated basis, constitutes Margin Stock.
7.24 Broker's Fees. No broker or finder is entitled to receive
compensation for services rendered with respect to the transactions described in
this Agreement.
7.25 No Material Adverse Change. No material adverse change
has occurred in property, business operations, or conditions (financial or
otherwise) of either Borrower or any of its Subsidiaries since September 30,
1998.
7.26 Disclosure. Neither this Agreement nor any document or
statement furnished to the Collateral Agent or any Lender by or on behalf of a
Borrower hereunder
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contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
7.27 Bank Accounts. Schedule 7.27 contains a complete and
accurate list of all bank accounts maintained by each Borrower with any bank or
other financial institution, including each Lock-Box Account.
7.28 Fiscal Years. Each Borrower maintains a Fiscal Year based
upon the calendar year.
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Collateral Agent and each
Lender that, so long as any of the Obligations remain outstanding or this
Agreement is in effect:
8.1 Taxes and Other Obligations. Each Borrower shall (a) file
when due all federal tax returns and all other material tax returns and other
reports, which it is required to file, (b) pay, or provide for the payment, when
due, of all taxes, fees, assessments and other governmental charges against it
or upon its property, income and franchises, make all required withholding and
other tax deposits, and establish adequate reserves for the payment of all such
items, and provide to the Collateral Agent and the Lenders, upon request,
satisfactory evidence of its timely compliance with the foregoing and (c) pay
when due all claims of materialmen, mechanics, carriers, warehousemen, landlords
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; provided,
however, that the Borrowers need not pay any tax, fee, assessment, governmental
charge, or Debt, or discharge any other obligation, that either of them is
contesting in good faith by appropriate proceedings diligently pursued, and for
which adequate reserves are maintained, so long as no Lien, other than a
Permitted Lien, results from such non-payment.
8.2 Corporate Existence and Good Standing. Each Borrower shall
maintain its corporate existence and its qualification and good standing in all
states necessary to conduct its business and own its property, and shall obtain
and maintain all licenses, permits, franchises and governmental authorizations
necessary to conduct its business and own its property.
8.3 Compliance with Law and Agreements. Each Borrower shall
comply in all material respects with the terms and provisions of each judgment,
and each material law, statute, rule, and governmental regulation applicable to
it, and each material contract,
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mortgage, lien, lease, indenture, order, instrument, agreement, or document to
which it is a party or by which it is bound.
8.4 Maintenance of Property. Each Borrower shall maintain all
of its property necessary and useful in its business in good operating condition
and repair, ordinary wear and tear excepted.
8.5 Insurance. Each Borrower shall maintain, with financially
sound and reputable insurers or re-insurers, insurance against loss or damage by
fire with extended coverage; theft, burglary, pilferage and loss in transit;
public liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, as the Collateral Agent or
the Majority Lenders, shall reasonably specify, in amounts, and under policies
reasonably acceptable to the Collateral Agent and the Majority Lenders (it being
understood that such insurance may be maintained with an Affiliate of the
Borrowers). Without limiting the foregoing, each Borrower shall also maintain
flood insurance, in the event of a designation of the area in which any Real
Estate is located as "flood prone" or a "flood risk area," as defined by the
Flood Disaster Protection Act of 1973, in an amount to be reasonably determined
by the Collateral Agent, and shall comply with the additional requirements of
the National Flood Insurance Program as set forth in said Act.
Each Borrower shall cause the Collateral Agent, for the
ratable benefit of the Collateral Agent, the Agents and the Lenders, to be named
in each such policy as secured party or mortgagee and loss payee or additional
insured, in a manner reasonably acceptable to the Collateral Agent. Each policy
of insurance shall contain a clause or endorsement requiring the insurer to give
not less than thirty (30) days' prior written notice to the Collateral Agent in
the event of cancellation of the policy for any reason whatsoever and a clause
or endorsement stating that the interest of the Collateral Agent shall not be
impaired or invalidated by any act or neglect of the applicable Borrower or the
owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Borrowers when due,
and certificates of insurance and, if requested by the Collateral Agent or any
Lender, photocopies of the policies shall be delivered to the Collateral Agent,
in each case in sufficient quantity for distribution by the Collateral Agent to
each of the Lenders. If the Borrowers fail to procure such insurance or to pay
the premiums therefor when due, the Collateral Agent may, and at the direction
of the Majority Lenders shall, do so from the proceeds of Revolving Loans as
described in Section 4.4.
Each Borrower shall promptly notify the Collateral Agent and
the Lenders of any loss, damage, or destruction to the Collateral or arising
from its use, in any such case involving an amount in excess of $1,000,000,
whether or not covered by insurance. During an Activation Period, the Collateral
Agent is hereby authorized to collect all insurance proceeds directly. After
deducting from such proceeds the expenses, if any,
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incurred by the Collateral Agent in the collection or handling thereof, the
Collateral Agent shall apply such proceeds to the reduction of the Obligations.
Without limiting the foregoing, in case of any loss, damage or destruction
during an Activation Period with respect to any of the Equipment or Real Estate
(other than the Corporate Campus Assets), including any improvements, the
Collateral Agent is authorized to collect all insurance proceeds payable in
connection therewith and apply them at the option of the Majority Lenders, to
the reduction of any of the Obligations then due hereunder. So long as no Event
of Default exists, the applicable Borrower shall be permitted, at its option, to
use any such insurance proceeds, or any part thereof, to replace, or to repair,
restore or rebuild, the lost, damaged or destroyed property. If the lost,
damaged or destroyed property is to be replaced, repaired, restored or rebuilt,
such replacement, repair, restoration or rebuilding shall be done with materials
and workmanship of substantially as good a quality as existed before such loss,
damage or destruction, and the applicable Borrower shall commence the work of
replacement, repair, restoration or rebuilding as soon as practicable and
proceed diligently with it until completion.
8.6 Condemnation. Each Borrower shall, immediately upon
learning of the institution of any proceeding for the condemnation or other
taking of any of its property, notify the Collateral Agent and the Lenders of
the pendency of such proceeding, and agrees that the Collateral Agent may
participate in any such proceeding, and such Borrower from time to time will
deliver to the Collateral Agent all instruments reasonably requested by the
Collateral Agent to permit such participation. During an Activation Period, the
Collateral Agent is authorized to collect the proceeds of any condemnation claim
or award and apply them, at the direction of the Majority Lenders, to the
reduction of any of the Obligations then due. So long as no Event of Default
exists, the applicable Borrower shall be permitted, at its option, to use any
such proceeds, or any part thereof, to replace, repair or restore the condemned
property. If the condemned property is to be replaced, repaired, restored or
rebuilt, such replacement, repair, restoration or rebuilding shall be done with
materials and workmanship of substantially as good a quality as existed before
such loss, damage or destruction, and the applicable Borrower shall commence the
work of replacement, repair, restoration or rebuilding as soon as practicable
and proceed diligently with it until completion.
8.7 Environmental Laws. (a) Each Borrower shall comply in all
material respects with all Environmental Laws applicable to it, including,
without limitation, those relating to the generation, handling, use, storage,
and disposal of hazardous and toxic wastes and substances, the failure to comply
with which could reasonably be expected to result in a Material Environmental
Event. Each Borrower shall take prompt and appropriate action to respond to any
non-compliance with Environmental Laws which could reasonably be expected to
result in a Material Environmental Event, and shall regularly report to the
Collateral Agent and the Lenders on such response.
(b) The Collateral Agent and its agents and representatives
will have the right, in the Collateral Agent's reasonable discretion, to enter
and visit any Real Estate for
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the purposes of observing the Real Estate, taking and removing soil or
groundwater samples, and conducting tests on any part of such Real Estate during
normal business hours. The Collateral Agent is under no duty, however, to visit
or observe any Real Estate or to conduct tests, and any such acts by the
Collateral Agent will be solely for the purposes of protecting the Collateral
Agent's and the Lenders' credit exposure to the Borrowers, their interest in the
Collateral and preserving their rights under this Agreement and the other Loan
Documents. No site visit, observation or testing by the Collateral Agent will
result in a waiver of any Event of Default or Default. In no event will any site
visit, observation or testing by the Collateral Agent be a representation that
any Contaminants are or are not present in, on or under any Real Estate, or that
there has been or will be compliance or noncompliance with any Environmental Law
or any other applicable law. Neither Borrower nor any other Person is entitled
to rely on any site visit, observation or testing by the Collateral Agent. The
Collateral Agent owes no duty of care to protect either Borrower or any other
Person against, or to inform either Borrower or any other Person of, any
Contaminant, Release, noncompliance with any Environmental Law or any other
adverse condition affecting any Real Estate. The Collateral Agent shall disclose
to the Borrowers any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Collateral Agent. Each
Borrower understands and agrees that the Collateral Agent makes no warranty or
representation to such Borrower or any other Person regarding the truth,
accuracy or completeness of any such report or findings that may be disclosed.
Each Borrower also understands that, depending on the results of any site visit,
observation or testing by the Collateral Agent and disclosed to the Borrower,
such Borrower may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific, and
are to be evaluated by such Borrower without advice or assistance from the
Collateral Agent. In each instance, the Collateral Agent will give the
applicable Borrower reasonable notice before entering its Real Estate for
purposes of this Section 8.7(b). The Collateral Agent will make reasonable
efforts to avoid interfering with the Borrowers' use of any Real Estate.
8.8 ERISA. Each Borrower shall, and shall cause each of its
ERISA Affiliates to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Code, all regulations and
interpretations promulgated thereunder, and all other applicable laws and
regulations.
8.9 Mergers, Consolidations and Sales. Neither Borrower shall
enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for (a) sales of Inventory in the ordinary course of its
business, (b) licenses and sublicenses of Proprietary Rights, (c) dispositions
of Equipment expressly permitted by Section 5.11, (d) mergers with and into such
Borrower in connection with Permitted Acquisitions, (e) a transfer of the
Corporate Campus Assets permitted under Section 8.18 or 8.19(b). and (f) other
dispositions of assets the net
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proceeds of which do not exceed $25,000,000 in the aggregate during the term of
this Agreement.
8.10 Distributions; Capital Change. Neither Borrower shall (a)
directly or indirectly declare or make, or incur any liability to make, any
Distribution, or (b) make any change in its capital structure which could
adversely affect the repayment of the Obliga tions; provided, however, that (x)
Enterprises may make Distributions to Imation and (y) Imation shall be permitted
to make acquisitions of its capital stock, provided that (i) no Default or Event
of Default is outstanding, and (ii) prior to and immediately following any such
acquisition, Borrowing Base Availability shall be at least $50,000,000.
8.11 Transactions Affecting Collateral or Obligations. Neither
Borrower shall enter into any transaction which materially and adversely affects
the Collateral or a Borrower's ability to repay the Obligations.
8.12 Guaranties. Neither Borrower shall make, issue, or become
liable on any Guaranty, except (a) Foreign Subsidiary Guaranties; provided, that
the aggregate amount of Debt guaranteed by such Foreign Subsidiary Guaranties
may not exceed $75,000,000 at any time outstanding; (b) Guaranties of the
obligations of any Subsidiary holding the Corporate Campus Assets in connection
with the financing of the Corporate Campus Assets; (c) Guaranties of the
obligations of other Subsidiaries; provided that the aggregate amount of Debt
guaranteed by such Guaranties may not exceed $5,000,000 at any time outstanding;
or (d) Guaranties in favor of the Collateral Agent.
8.13 Debt. Neither Borrower shall incur or maintain any Debt,
other than: (a) the Obligations; (b) Debt incurred to finance the purchase of
Equipment constituting Capital Expenditures; (c) Guaranties permitted by Section
8.12; (d) other Debt existing on the Closing Date and reflected on Schedule
8.13; (e) Debt assumed as part of a Permitted Acquisition; (f) Debt secured by
Liens described in clauses (j), (k) and (l) of the definition of "Permitted
Liens"; provided that the proceeds of any Debt secured by Liens described in
such clause (k) shall be used by the Borrowers for general corporate purposes;
and (g) other Debt not exceeding $1,000,000 at any time outstanding..
8.14 Transactions with Affiliates. Except as set forth below,
neither Borrower shall sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), except actual
expenses incurred and approved in advance in writing by the Collateral Agent and
the Majority Lenders, to any Affiliate, or lend or advance money or property to
any Affiliate, or invest in (by capital contribution or otherwise) or purchase
or repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate, other than Foreign Affiliate Guaranties.
Notwithstanding the foregoing, each Borrower and its Subsidiaries may engage in
transactions in the ordinary
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course of business, in amounts and upon terms fully disclosed to the Collateral
Agent and the Lenders, and no less favorable to such Borrower and its
Subsidiaries than would obtain in a comparable arm's-length transaction with a
third party who is not an Affiliate, including sales to or purchases from
Foreign Subsidiaries which may include a transfer pricing element, and may make
loans to (including, as part of such loans, the amounts of any receivable from
such Foreign Subsidiaries not paid within 45 days of the due date, net of any
unapplied credits owed to such Foreign Subsidiaries) and investments in Foreign
Subsidiaries (in addition to Foreign Affiliate Guaranties) in an amount not to
exceed $75,000,000 in the aggregate after the Closing Date (net of any loan
repayments and Distributions made by Foreign Subsidiaries to either Borrower
after the Closing Date), the amount of such loans to and investments in Foreign
Subsidiaries being $577,173,221 as of November 30, 1998 as set forth in Schedule
8.14.
8.15 Investment Banking and Finder's Fees. Neither Borrower
shall pay or agree to pay, or reimburse any other party with respect to, any
investment banking or similar or related fee, underwriter's fee, finder's fee,
or broker's fee to any Person in connection with this Agreement. Each Borrower
shall defend and indemnify the Collateral Agent and the Lenders against and hold
them harmless from all claims of any Person for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the
Collateral Agent and/or any Lender in connection therewith.
8.16 Business Conducted. Neither Borrower shall engage,
directly or indirectly, in any line of business other than the businesses in
which such Borrower is engaged on the Closing Date or businesses reasonably
related thereto.
8.17 Liens. Neither Borrower shall create, incur, assume, or
permit to exist any Lien on any property now owned or hereafter acquired by any
of them, except Permitted Liens.
8.18 Sale and Leaseback Transactions. Neither Borrower shall,
directly or indirectly, enter into any arrangement with any Person providing for
such Borrower to lease or rent property that such Borrower has or will sell or
otherwise transfer to such Person; provided, that the Borrowers may enter into
one or more sale and leaseback transactions with respect to the Corporate Campus
Assets, on terms otherwise permitted under this Agreement, provided that the
proceeds of any such sale and leaseback transaction shall be used by the
Borrowers for general corporate purposes.
8.19 New Subsidiaries. (a) The Borrowers shall not permit the
aggregate assets (excluding the Corporate Campus Assets) of their non-Foreign
Subsidiaries (other than Enterprises or any Subsidiary acquired in a Permitted
Acquisition), to exceed $5,000,000 for any Subsidiary or $10,000,000 in the
aggregate for all such Subsidiaries. If either Borrower through a Permitted
Acquisition or otherwise acquires or creates a new Subsidiary (other than a
Foreign Subsidiary or a Subsidiary created to hold the Corporate
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Campus Assets), the Borrowers agree, at the request of Majority Lenders, to
enter into an amendment to this Agreement to add references to such Subsidiary
in the representations and warranties, covenants and Events of Default, to
pledge the stock of such Subsidiary to the Collateral Agent for the benefit of
itself and the Lenders, and to cause such Subsidiary to execute a Guaranty and
security agreement as described in clause (c) of the definition of Permitted
Acquisition, all as reasonably deemed appropriate by Majority Lenders.
(b) Imation may create one or more Subsidiaries, or may permit
its existing Subsidiary, Imation Funding Corp., to hold the Corporate Campus
Assets; provided that the stock of each such Subsidiary shall be pledged to the
Collateral Agent for the benefit of itself and the Lenders; and provided
further, that any such pledge of such stock shall include an agreement by the
Collateral Agent to release any such stock which is to be sold to a third party
investor so long as the proceeds of such sale are to be distributed to Imation.
Imation agrees that it shall cause any such Subsidiary to distribute to Imation
the net proceeds of any sale, lease or financing of any part of the Corporate
Campus Assets, or of any sale or issuance of any of the stock or other ownership
interests of such Subsidiary, and Imation shall use the proceeds of any such
distribution for general corporate purposes.
8.20 Restricted Investments. Neither Borrower shall make any
Restricted Investment, except for investments in (a) direct obligations of the
United States of America, or any agency thereof, or obligations guaranteed by
the United States of America, provided that such obligations mature within one
year from the date of acquisition thereof; (b) certificates of deposit maturing
within one year from the date of acquisition, bankers' acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a Lender or Lender Affiliate or with a bank or trust company organized
under the laws of the United States or any state thereof having capital and
surplus aggregating at least $100,000,000; (c) commercial paper given the
highest rating by a national credit rating agency and maturing not more than 270
days from the date of creation thereof; (d) investments in Hummer Winblad
Venture Partners L.P., Hummer Winblad Venture Partners II, L.P., 21st Century
Internet Fund, L.P. and ▇▇▇▇▇▇▇ IV, L.P. in an aggregate amount up to
$8,000,000; (e) investments in other venture capital or investment funds in an
amount not to exceed $1,500,000 per fiscal year; (f) Securities or other
investment property distributed to either Borrower from funds described in
clause (d) or (e) above; (g) investments in money market funds that invest
primarily in assets described in clauses (a), (b) and (c) above; and (h) notes
received in connection with the disposition of assets permitted by this
Agreement, in the aggregate amount not to exceed $2,000,000 at any time
outstanding; provided, that any of the Restricted Investments described above
shall be pledged to the Collateral Agent, in a manner reasonably satisfactory to
the Collateral Agent, within 30 days after acquisition thereof. The dollar
amounts referenced in clauses (d) and (e) above shall be determined on the
Borrowers' cost basis.
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8.21 Minimum Borrowing Base Availability. The Borrowers will
maintain Borrowing Base Availability of not less than $20,000,000.
8.22 Adjusted Tangible Net Worth. The Borrowers will maintain
Adjusted Tangible Net Worth of not less $450,000,000; provided, that to the
extent Adjusted Tangible Net Worth has been reduced by a one-time noncash asset
write-off relating to the Borrowers' foreign Subsidiaries, such amount shall be
added back in an amount not to exceed $50,000,000 in computing Adjusted Tangible
Net Worth for purposes of this covenant.
8.23 Fiscal Year. The Borrowers will not change their Fiscal
Year from a Fiscal Year based upon the calendar year.
8.24 Further Assurances. The Borrowers shall execute and
deliver, or cause to be executed and delivered, to the Collateral Agent and/or
the Lenders such documents and agreements, and shall take or cause to be taken
such actions, as the Collateral Agent may, from time to time, reasonably request
to carry out the terms and conditions of this Agreement and the other Loan
Documents.
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the Closing
Date. The obligation of the Lenders to make the initial Revolving Loans on the
Closing Date, the obligation of the Collateral Agent to cause to be issued or
provide L/C Credit Support for any Letter of Credit on the Closing Date, and the
obligation of the Lenders to participate in Letters of Credit issued on the
Closing Date, or in L/C Credit Support for any Letters of Credit issued on the
Closing Date, are subject to the following conditions precedent having been
satisfied in a manner reasonably satisfactory to the Collateral Agent and the
Lenders:
(a) Each Borrower shall have performed and complied with all
covenants, agreements and conditions contained herein which are
required to be performed or complied with by such Borrower before or on
the Closing Date.
(b) The Collateral Agent and the Lenders shall have received a
certificate dated the Closing Date and signed by the President or a
Vice President and the Chief Financial Officer or Treasurer of each
Borrower certifying that the conditions specified in Section 9.1(a)
have been fulfilled.
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(c) The Collateral Agent and the Lenders shall have received
all items on the List of Closing Documents attached hereto as Exhibit C
which are not elsewhere identified in this Article 9, other than those
items specified on such List of Closing Documents as being deliverable
after the Closing Date, such items to be in form and substance
satisfactory to the Collateral Agent and the Lenders, and to be
executed by all parties thereto when the nature of such items so
requires.
(d) The Collateral Agent and the Lenders shall be satisfied
with the result of their due diligence with respect to the
environmental condition of each Borrower's Real Estate and previously
owned property, including, without limitation, the results and
information contained in the Collateral Agent's form "Environmental
Questionnaire" completed by each Borrower.
(e) All proceedings taken in connection with the execution of
this Agreement, all other Loan Documents and all documents and papers
relating thereto shall be reasonably satisfactory to the Collateral
Agent and the Lenders. The Collateral Agent shall have received copies
of such documents and papers as the Collateral Agent and the Lenders
may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to the Collateral Agent and the
Lenders.
(f) The Borrowers shall have paid all fees required to be paid
under the terms of the Fee Letter and the Commitment Fee Letter.
The acceptance by each Borrower of any Loans made on the Closing Date shall be
deemed to be a representation and warranty made by such Borrower to the effect
that all of the conditions to the making of such Loans set forth in Section
9.1(a) have been satisfied, with the same effect as delivery to the Collateral
Agent and the Lenders of a certificate signed by the president and chief
financial officer of such Borrower, dated the Closing Date, to such effect.
Execution and delivery to the Collateral Agent by a Lender of a counterpart of
this Agreement and the making of its initial extension of credit pursuant to
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent set forth in this Section 9.1 have been fulfilled to the
satisfaction of such Lender and (ii) the decision of such Lender to execute and
deliver to the Collateral Agent an executed counterpart of this Agreement was
made by such Lender independently and without reliance on the Collateral Agent
or any other Lender as to the satisfaction of any condition precedent set forth
in this Section 9.1.
9.2 Conditions Precedent to Each Loan. The obligation of the
Lenders to make each Loan, including the initial Revolving Loans on the Closing
Date, and the obligation of the Collateral Agent to cause to be issued or to
provide L/C Credit Support for any Letter of Credit and the obligation of the
Lenders to participate in Letters of
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Credit or L/C Credit Support for Letters of Credit, shall be subject to the
further conditions precedent that on the date of any such extension of credit;
(a) the following statements shall be true, and the acceptance
by each Borrower of any extension of credit shall be deemed to be a
statement to the effect set forth in clauses (i) and (ii), with the
same effect as the delivery to the Collateral Agent and the Lenders of
a certificate signed by the president and chief financial officer of
such Borrower, dated the date of such extension of credit, stating
that:
(i) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of
credit as though made on and as of such date, other than any
such representation or warranty that relates to a specified
prior date and except to the extent the Collateral Agent and
the Lenders have been notified by a Borrower that any
representation or warranty is not correct and the Majority
Lenders have explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes
a Default or an Event of Default; and
(b) the Collateral Agent and the Lenders shall have received
such other approvals, opinions or documents as they may reasonably
request;
(c) no order, judgment or decree of any Public Authority and
no law, rule or regulation applicable to any Lender shall purport by
its terms to enjoin, restrain or otherwise prohibit the making of the
Loan to be made by such Lender; and
(d) Since September 30, 1998, no material adverse change shall
have occurred with respect to the business, operations, assets or
condition (financial or otherwise) of either Borrower, or of Imation
and its Subsidiaries taken as a whole;
provided, however, that the foregoing conditions precedent are not conditions to
each Lender participating in or reimbursing BABC or the Collateral Agent for
such Lender's Pro Rata Share of any Swing Loan or Collateral Agent Advance as
provided in Sections 2.2(h), (i) and (j).
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ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default. It shall constitute an event of
default ("Event of Default") if any one or more of the following shall occur for
any reason:
(a) any failure to pay the principal of or interest on any of
the Obligations when due, whether upon demand or otherwise; or any
failure to pay any fees hereunder or other Obligations within five (5)
days of when due, whether upon demand or otherwise;
(b) any representation or warranty made by a Borrower in this
Agreement, any of the other Loan Documents, any Financial Statement, or
any certificate furnished by a Borrower or any Subsidiary at any time
to the Collateral Agent or any Lender shall prove to be untrue in any
material respect as of the date on which made;
(c) any failure by a Borrower to comply with any of the
covenants set forth in Sections 5.9, 8.5, or 8.9 - 8.23;
(d) any failure by a Borrower to deliver any of the reports,
Financial Statements, certificates or notices required to be delivered
under Sections 5.7, 6.2 or 6.3 within three (3) Business Days of when
due;
(e) any failure by a Borrower to comply with any of the other
covenants and agreements contained in this Agreement, the Mortgages or
any of the other Loan Documents, for more than (i) twenty (20) days
after notice of such failure by the Collateral Agent to such Borrower,
(ii) thirty (30) days after the date that an Authorized Officer of such
Borrower discovers such failure, or (iii) if such failure shall have
existed for more than forty-five (45) days, five (5) days after the
earlier of (A) written notice thereof from the Collateral Agent to such
Borrower or (B) discovery of such failure by an Authorized Officer of
such Borrower; provided, however, that no such grace period shall
apply, and an Event of Default shall exist promptly upon such failure
to comply, if such failure to comply may not, in the Majority Lenders'
reasonable determination, be cured by the applicable Borrower during
such grace period; or if any such Loan Document shall terminate (other
than in accordance with its terms or the terms hereof or with the
written consent of the Majority Lenders) or become void or
unenforceable without the written consent of the Majority Lenders;
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(f) default shall occur with respect to any Debt of either
Borrower (other than the Obligations) or any Material Subsidiary in an
outstanding principal amount in excess of $2,000,000 or under any
agreement or instru ment under or pursuant to which any such Debt may
have been issued, created, assumed, or guaranteed by a Borrower or any
Material Subsidiary and such default shall continue for more than the
period of grace, if any, therein specified, if the effect thereof (with
or without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to accelerate,
the maturity of any such Debt; or any such Debt shall be declared due
and payable or be required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof;
(g) a Borrower or any Material Subsidiary shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an
answer or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for any
other relief under the Bankruptcy Code, or under any other bankruptcy
or insolvency act or law, state or federal, now or hereafter existing,
or consent to, approve of, or acquiesce in, any such petition, action
or proceeding; (ii) apply for or acquiesce in the appointment of a
receiver, assignee, liquidator, sequestrator, custodian, trustee or
similar officer for it or for all or any material part of its property;
(iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(h) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of a Borrower's or any Material Subsidiary's debts or for
any other relief under the Bankruptcy Code, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and either (i) such petition, action or proceeding shall not
have been dismissed within a period of forty five (45) days after its
commencement or (ii) an order for relief against such Borrower or any
Material Subsidiary shall have been entered in such proceeding;
(i) a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for a Borrower or any Material Subsidiary or
for all or any material part of its property shall be appointed; or a
warrant of attachment, execution or similar process shall be issued
against any material part of the property of a Borrower or any Material
Subsidiary;
(j) a Borrower or any Material Subsidiary shall file a
certificate of dissolution under applicable state law or shall be
liquidated, dissolved or wound-up or shall commence or have commenced
against it any action or
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proceeding for dissolution, winding-up or liquidation, or shall take
any corporate action in furtherance thereof;
(k) all or any material part of the property of a Borrower or
any Material Subsidiary shall be nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or control of
such property or of a Borrower or any Material Subsidiary shall be
assumed by any Public Authority or any court of competent jurisdiction
at the instance of any Public Authority, except where contested in good
faith by proper proceedings diligently pursued where a stay of
enforcement is in effect;
(l) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(m) one or more judgments or orders for the payment of money
aggregating in excess of $2,000,000 (whether or not covered by
insurance) shall be rendered against a Borrower and either (i)
enforcement proceedings shall have been commenced by any creditor upon
any such judgment or order, or (ii) there shall be any period of 10
consecutive days during which such judgment remains unpaid or a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(n) any loss, theft, damage or destruction of any item or
items of Collateral occurs which (i) materially and adversely affects
the operation of a Borrower's business; or (ii) is material in amount
and is not adequately covered by insurance;
(o) any Termination Event occurs which the Collateral Agent
reasonably believes could subject a Borrower or any ERISA Affiliate to
a liability in excess of $2,000,000;
(p) the plan administrator of any Plan applies under Section
412(d) of the Code for a waiver of the minimum funding standards of
Section 412(a) of the Code and the Collateral Agent believes that the
substantial business hardship upon which the application for such
waiver is based could subject either a Borrower or any ERISA Affiliate
to a liability in excess of $2,000,000;
(q) for any reason other than the failure of the Collateral
Agent to take any action available to it to maintain perfection of the
Collateral Agent's Liens, pursuant to the Loan Documents, any Loan
Document ceases to be in full force and effect or any Lien with respect
to any material portion of the Collateral intended to be secured
thereby ceases to be, or is not, valid, perfected and prior to
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all other Liens (other than Permitted Liens) or is terminated, revoked
or declared void.
10.2 Remedies. (a) If a Default or an Event of Default exists,
the Collateral Agent may, in its discretion, or, at the direction of the
Majority Lenders, shall, without notice to or demand on the Borrowers, do one or
more of the following at any time or times and in any order: (i) reduce the
Maximum Revolver Amount, the amount of the Revolver Facility or the advance
rates against Eligible Accounts and/or Eligible Inventory used in computing the
Maximum Revolver Amount, or reduce or increase one or more of the other elements
used in computing the Maximum Revolver Amount; (ii) restrict the amount of or
refuse to make Revolving Loans; and (iii) restrict or refuse to arrange for or
provide Letters of Credit or L/C Credit Support. If an Event of Default exists,
the Collateral Agent may, in its discretion, or shall, at the direction of the
Majority Lenders, without notice to or demand on the Borrowers, do one or more
of the following, in addition to the actions described in the preceding
sentence, at any time or times and in any order: (i) terminate the Commitments
and this Agreement and (ii) declare any or all Obligations to be immediately due
and payable; provided, however, that upon the occurrence of any Event of Default
described in Sections 10.1(g), 10.1(h), 10.1(i), or 10.1(j), the Commitments
shall automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or demand of any
kind.
(b) If an Event of Default exists: (i) the Collateral Agent
shall have, in addition to all other rights, the rights and remedies of a
secured party under the UCC; (ii) the Collateral Agent may, at any time, take
possession of the Collateral and keep it on the premises of the Borrowers, at no
cost to the Collateral Agent or any Lender, or remove any part of it to such
other place or places as the Collateral Agent may desire, or each Borrower
shall, upon the Collateral Agent's demand, at such Borrower's cost, assemble the
Collateral and make it available to the Collateral Agent at a place reasonably
convenient to the Collateral Agent; and (iii) the Collateral Agent may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Collateral Agent deems
advisable, in its sole discretion, and may, if the Collateral Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at
the time and place of sale or of such postponed or adjourned sale without giving
a new notice of sale. Without in any way requiring notice to be given in the
following manner, each Borrower agrees that any notice by the Collateral Agent
of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, shall constitute reasonable
notice to such Borrower if such notice is mailed by registered or certified
mail, return receipt requested, postage prepaid, or is delivered personally
against receipt, at least ten (10) days prior to such action to such Borrower's
address specified in or pursuant to Section 14.7. If any Collateral is sold on
terms other than payment in full at the time of sale, no credit shall be given
against the Obligations until the Collateral Agent or the Lenders receive
payment, and if the buyer defaults in any deferred or installment payment, the
Collateral Agent may
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resell the Collateral without further notice to the Borrowers. In the event the
Collateral Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (b) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (c) any requirement that
the Collateral Agent retain possession and not dispose of any Collateral until
after trial or final judgment. Each Borrower agrees that the Collateral Agent
has no obligation to preserve rights to the Collateral or ▇▇▇▇▇▇▇▇ any
Collateral for the benefit of any Person. The Collateral Agent is hereby granted
a license or other right to use, without charge, each Borrower's labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and each Borrower's rights under all
licenses and all franchise agreements shall inure to the Collateral Agent's
benefit. The proceeds of sale shall be applied first to all expenses of sale,
including attorneys' fees, and second, in whatever order the Majority Lenders
shall elect, to all Obligations. The Collateral Agent will return any excess to
the applicable Borrower or such other Person as shall be legally entitled
thereto and each Borrower shall remain liable for any deficiency.
(c) If an Event of Default exists, each Borrower hereby waives
all rights to notice and hearing prior to the exercise by the Collateral Agent
of the Collateral Agent's rights to repossess the Collateral without judicial
process or to replevy, attach or levy upon the Collateral without notice or
hearing.
ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination. The term of this Agreement shall
end on the Stated Termination Date. The Majority Lenders may terminate this
Agreement without notice at any time while an Event of Default is outstanding.
Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including, without limitation, all unpaid principal
and accrued interest) shall become immediately due and payable and the Borrowers
shall cause the termination of any outstanding Letters of Credit.
Notwithstanding the termination of this Agreement, until all Obligations are
paid and performed in full in cash, each Borrower shall remain bound by the
terms of this Agreement and shall not be relieved of any of its obligations
hereunder, and the Collateral Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the security
interest of the Collateral Agent, for the ratable benefit of the Collateral
Agent, the Agents and the Lenders, in and all rights and remedies with respect
to all then existing and after-arising Collateral).
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ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers. No act, failure or delay by the
Collateral Agent or the Lenders shall constitute a waiver of any of their rights
and remedies. No single or partial waiver by the Collateral Agent or the Lenders
of any provision of this Agreement or any other Loan Document, or of breach or
default hereunder or thereunder, or of any right or remedy which the Collateral
Agent or the Lenders may have, shall operate as a waiver of any other provision,
breach, default, right or remedy or of the same provision, breach, default,
right or remedy on a future occasion. No waiver by the Collateral Agent or the
Lenders shall affect their rights to require strict performance of this
Agreement.
12.2 Amendments and Waivers. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of the Majority Lenders and the Borrowers, and no termination or waiver of any
provision of this Agreement, or consent to any departure by a Borrower
therefrom, shall in any event be effective without the written concurrence of
the Majority Lenders, which concurrence the Majority Lenders shall have the
right to grant or withhold at their sole discretion. Notwithstanding the
immediately preceding sentence, any amendment, modification or waiver of (a) any
provision of this Agreement, which amendment, modification or waiver provides
for any increase of the Commitments, any extension of the scheduled final
maturity of any of the Revolving Loans, the reduction of the interest rates
applicable to any Loans and/or the amount of fees payable hereunder, the
postponement of the due date for the payment of interest, principal or fees
hereunder, or the forgiveness of any of the Obligations, shall be effective if,
and only if, evidenced by a writing agreed to and signed by all Lenders, and (b)
the definitions of "Majority Lenders," "Pro Rata Share," "Required Lenders,"
"Unused Letter of Credit Subfacility," and the provisions contained in this
Section 12.2 and in Section 13.8, shall be effective if, and only if, evidenced
by a writing agreed to and signed by all Lenders. No amendment, modification,
termination, or waiver of any provision of Article 13 or any other provision
referring to the Collateral Agent shall be effective without the written
concurrence of the Collateral Agent. The Collateral Agent may, but shall have no
obligation to, with the written concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on a Borrower in any case
shall entitle such Borrower to any other or further notice or demand in similar
or other circumstances. Any amendment, modification, waiver or consent effected
in accordance with this Section 12.2 shall be binding on the Collateral Agent,
the Agents and each Lender and, if signed by a Borrower, on such Borrower.
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12.3 Assignments; Participations.
(a) Each Lender shall have the right, with the Collateral
Agent's consent, not to be unreasonably withheld, and so long as no Default or
Event of Default is outstanding, with Imation's consent, not to be unreasonably
withheld at any time to assign to one or more commercial banks or other
financial institutions all or a portion of its Commitment, the Loans owing to it
and its rights and obligations with respect to Letters of Credit and L/C Credit
Support; provided, however, that (i) each such assignment shall be of a
constant, and not a varying percentage of all of the assigning Lender's
corresponding rights and obligations under this Agreement and the assignment
shall apply the same percentage to the Lender's Commitment and Loans, (ii)
unless Imation and the Collateral Agent otherwise agree, the aggregate amount of
the outstanding Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
entered into with respect to such assignment by the assigning Lender and the
assignee, and accepted by the Collateral Agent, in substantially the form of
Exhibit F ("Assignment and Acceptance")) shall in no event be less than
$10,000,000 (except as provided in the second paragraph of this Section 12.3(a))
and integral multiples of $1,000,000 in excess of that amount, except that such
limitation shall not apply to an assignment by any Lender of all of its rights
and obligations under this Agreement or to an assignment to a Lender or an
affiliate of a Lender, (iii) except in the case of an assignment in whole of a
Lender's rights and obligations under this Agreement or an assignment by an
original signatory to this Agreement to another such signatory, immediately
after giving effect to any assignment the aggregate amount of the outstanding
Commitment still held by the assigning Lender in its own name shall in no event
be less than $10,000,000, or no less than $25,000,000 in the case of a Lender
which is also the Collateral Agent or a Co-Agent, and (iv) the parties to each
such assignment shall execute and deliver to the Collateral Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with a processing and recordation fee of $2,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least two (2)
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations (including, but not limited to, the obligation to participate in
Letters of Credit and L/C Credit Support pursuant to Section 2.3(f)) of a Lender
hereunder and (B) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
Notwithstanding the foregoing, neither Co-Agent shall enter
into an Assignment and Acceptance prior to the date 90 days after the Closing
Date (other than in
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connection with an assignment to an affiliate of such Co-Agent), except as
provided in this paragraph. If BABC proposes to enter into an Assignment and
Acceptance with a proposed assignee prior to the date 90 days after the Closing
Date (other than an affiliate of BABC), it shall notify each of the Co-Agents,
and if either or both of the Co-Agents chooses to assign a portion of its
Commitment, then each of BABC and each electing Co-Agent shall enter into an
Assignment and Acceptance with such proposed assignee assigning an amount of its
Commitment equal to the aggregate Commitment amount sought to be purchased by
such proposed assignee divided by the number of electing assignors (including
BABC). The aggregate Commitments assigned to such proposed assignee shall in no
event be less than $10,000,000, but the Commitment assigned by each electing
assignor may be less than that amount.
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of a
Borrower or the performance or observance by a Borrower of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Collateral Agent, such assigning Lender or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Collateral
Agent to take such action as Collateral Agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Collateral Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) The Collateral Agent shall maintain at its address set
forth in Section 14.7 a copy of each Assignment and Acceptance delivered to and
accepted by it and books and records, including computer records, in which it
shall record the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall constitute rebuttably presumptive
evidence, absent manifest error, of the accuracy of the information contained
therein, and the Borrowers, the Collateral Agent and the Lenders may treat each
Person the name of which is recorded in the Register as a Lender
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hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, the Collateral Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit F, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt notice
thereof to the Borrowers.
(e) Each Lender may sell participations in all or any part of
its rights and obligations under this Agreement (including, without limitation,
all or any part of its Commitment, the Loans or its rights in connection with
Letters of Credit, as applicable) to one or more other Persons; provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (iii) the Collateral Agent,
the Borrowers and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement. Notwithstanding anything to the contrary in the foregoing
sentence, any Participating Lender may be given the right to require the Lender
granting such Participating Lender's participation to vote against (1) the
release of all or substantially all of the Collateral, (2) any amendment,
modification or waiver of any provision of Articles 2, 3 or 4 relating to the
principal amount of the Loans or Letters of Credit, the maturity dates of the
Loans, the interest rates borne by the Loans and the amounts of any fees payable
to such Lender under Sections 3.5 through 3.7. No Participating Lender shall be
a "Lender" for any purpose under this Agreement; provided, however, that each
Participating Lender shall have the rights and obligations of a Lender
(including any right to receive payment) under Sections 3.3(e) and (f), 3.6,
3.7, 4.6, 4.7, 12.3(f), 13.5, 13.9, 14.8, 14.9, 14.14 and 14.15; provided,
further, that all requests for any such payments shall be made by any
Participating Lender through the Lender granting such participation. The right
of each Participating Lender to receive payment pursuant to the immediately
preceding sentence shall be limited to the lesser of (i) the amounts actually
incurred by such Participating Lender for which payment is provided under such
Sections and (ii) the amounts that would have been payable under such Sections
to the Lender granting the participation had such participation not been
granted. It is expressly agreed that, in connection with prospective offers for
the sale and transfer of any participation pursuant to this Section 12.3(e), any
Lender may provide to any prospective Participating Lender such information
pertaining to the Borrowers as such Lender may deem appropriate, subject to the
provisions of Section 5.6.
(f) If a Participating Lender shall at any time with a
Borrower's knowledge participate with any Lender in the Loans, such Borrower
hereby grants to such Participating Lender, and such Lender and such
Participating Lender shall have and are hereby given, a continuing Lien on and
security interest in any money, Securities and
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other property of such Borrower in the custody or possession of the
Participating Lender, in cluding the right of set-off, to the extent of the
Participating Lender's participation in the Obligations, and such Participating
Lender shall be deemed to have the same right of set-off to the extent of
Participating Lender's participation in the Obligations under this Agreement as
it would have if it were a direct lender.
(g) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement, in favor of any
Federal Reserve Bank, in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR ss. 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
12.4 Binding Effect; Assignment. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
representatives, successors and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by a Borrower without the prior
written consent of the Collateral Agent and the Lenders. With respect to a
Borrower, successors and assigns shall include, without limitation, any
receiver, trustee or debtor-in-possession of or for such Borrower. The rights
and benefits of any Lender hereunder shall, if such Lender so agrees, inure to
any party acquiring any interest in the Obligations or any part thereof, subject
to the provisions of Section 12.3.
ARTICLE 13
COLLATERAL AGENT; THE AGENTS
13.1 Appointment. (a) Each Lender hereby designates and
appoints BankAmerica Business Credit, Inc. as its Collateral Agent under this
Agreement and the other Loan Documents, and each Lender hereby irrevocably
authorizes the Collateral Agent to take 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. The Collateral Agent agrees to act as such on
the express conditions contained in this Article 13. The provisions of this
Article 13 are solely for the benefit of the Collateral Agent, the Agents and
the Lenders, and neither Borrower shall have any rights as a third party
beneficiary of any of the provisions hereof (other than as expressly set forth
in Section 13.7). In performing its functions and duties under this Agreement,
the Collateral Agent shall act solely as Collateral Agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Borrowers. The Collateral Agent
may perform any of its duties under this Agreement, or under the other Loan
Documents, by or through its agents or employees.
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(b) None of the Lenders identified as an "Agent" shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to Lenders as such. Without limiting the
foregoing, none of the Lenders so identified as an "Agent" shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
13.2 Nature of Duties. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement or
in the other Loan Documents. Except as expressly otherwise provided in this
Agreement, the Collateral Agent shall have and may use its sole discretion with
respect to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions which the Collateral Agent is
expressly entitled to take or assert under this Agreement and the other Loan
Documents, including, without limitation, (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the
Maximum Revolver Amount, (b) the making of Collateral Agent Advances pursuant to
Section 2.2(i), and (c) the exercise of remedies pursuant to Section 10.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
The Collateral 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
other Loan Documents, express or implied, is intended to or shall be construed
to impose upon the Collateral Agent any obligations in respect of this Agreement
or any of the other 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 the Borrowers in connection with the making
and the continuance of the Loans hereunder, and shall make its own appraisal of
the creditworthiness of the Borrowers, and the Collateral Agent shall have no
duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before the date of this Agreement or at any time or
times thereafter. If the Collateral Agent seeks the consent or approval of the
Majority Lenders to the taking or refraining from taking any action hereunder,
the Collateral Agent shall send notice thereof to each Lender. The Collateral
Agent shall promptly notify each Lender (i) any time that the Collateral Agent
becomes aware that an Event of Default has occurred and is continuing and (ii)
any time that the Majority Lenders have instructed the Collateral Agent to act
or refrain from acting pursuant hereto. The Collateral Agent may employ agents,
co-agents and attorneys-in-fact and shall not be responsible to the Lenders or
the Borrowers, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
13.3 Rights, Exculpation, Etc. Neither the Collateral Agent
nor any of its officers, directors, employees or agents shall be liable to any
Lender for any action taken or omitted by it or any of them under this Agreement
or under any of the other Loan Documents, or in connection herewith or
therewith, except that (i) the Collateral Agent
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shall be obligated on the terms set forth herein for performance of its express
obligations under this Agreement; (ii) the Collateral Agent shall not be
entitled to exercise any of the powers granted to it under this Agreement or the
other Loan Documents in any way inconsistent with its express obligations to the
Lenders under this Agreement; and (iii) no Person shall be relieved of any
liability imposed by law for intentional tort. The Collateral Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith pursuant to Section 4.5, and if any such apportionment or distribution is
subsequently determined to have been made in error, the sole recourse of Lender
to whom payment was due but not made shall be to recover from the other Lenders
any payment in excess of the amount to which they are determined to have been
entitled. The Collateral Agent shall not be responsible to any Lender for any
recitals, statements, representations or warranties contained in this Agreement
or for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the other Loan
Documents or any of the transactions contemplated thereby, or for the financial
condition of the Borrowers. The Collateral Agent shall not be required to make
any in quiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of the other Loan
Documents or the financial condition of the Borrowers, or the existence or
possible existence of any Default or Event of Default. The Collateral Agent may
at any time request instructions from the Lenders or Majority Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the other Loan Documents the Collateral Agent is permitted or required to
take or to grant, and if such instructions are promptly requested, the
Collateral 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 the
Lenders or Majority Lenders, as applicable. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Collateral Agent as
a result of the Collateral Agent acting or refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of the Lenders or Majority Lenders, as applicable.
13.4 Reliance. The Collateral Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents or
any telephone message 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 other Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it.
13.5 Indemnification of the Collateral Agent and the Agents by
the Lenders. To the extent that the Collateral Agent or the Agents are not
reimbursed and indemnified by the Borrowers, the Lenders will reimburse and
indemnify the Collateral Agent or the Agents for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements of any
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kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent or the Agents in any way relating to or arising out
of this Agreement or any of the other Loan Documents or any action taken or
omitted by the Collateral Agent or the Agents under this Agreement or any of the
other Loan Documents, in proportion to each Lender's Pro Rata Share, including,
without limitation, Collateral Agent Advances; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from the Collateral Agent's or an Agent's gross
negligence or willful misconduct. The obligations of the Lenders under this
Section 13.5 shall survive the resignation of an Collateral Agent pursuant to
Section 13.7, the payment in full of the Loans and reimbursement obligations
with respect to Letters of Credit, the termination of all outstanding Letters of
Credit and the termination of this Agreement.
13.6 Collateral Agent in Individual Capacity. BABC and its
affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrowers and any of their Subsidiaries and Affiliates as though BABC were not
the Collateral Agent hereunder, and without notice to or the consent of the
other Lenders. The Lenders acknowledge that, pursuant to such activities, BABC
or its affiliates may receive information regarding the Borrowers or their
Subsidiaries or Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrowers or any such Subsidiary or
Affiliate) and acknowledge that the Collateral Agent shall be under no
obligation to provide such information to them. With respect to its Commitment
and the Loans made by it and the Letters of Credit in connection with which it
has purchased a participation interest, BABC shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Collateral Agent.
13.7 Successor Collateral Agent.
(a) The Collateral Agent may resign from the performance of
all of its functions and duties under this Agreement at any time by giving at
least thirty (30) Business Days' prior written notice to the Borrowers and each
Lender. Such resignation shall take effect upon the acceptance by a successor
Collateral Agent of appointment pursuant to clause (b) or (c) below.
(b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Collateral Agent who shall be reasonably satisfactory
to the Borrowers.
(c) If the Majority Lenders agree on a successor Collateral
Agent within such thirty (30) Business Day period, but the Borrowers
unreasonably object to such successor Collateral Agent, then such successor
shall be appointed as Collateral Agent hereunder notwithstanding such objection.
If a successor Collateral Agent shall not have
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been so appointed within such thirty (30) Business Day period because the
Majority Lenders have not agreed on such successor, the retiring Collateral
Agent, with the consent of the Borrowers, shall then appoint a successor
Collateral Agent who shall serve as Collateral Agent until such time, if any, as
the Majority Lenders shall appoint a successor Collateral Agent as provided
above.
(d) Notwithstanding the foregoing, in the event that BABC
assigns all of its Loans to an Affiliate, such Affiliate shall automatically
become the successor Agent hereunder upon the effective date of such assignment.
13.8 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Collateral
Agent, at its option and in its discretion, to release any Collateral Agent's
Lien upon any Collateral or other property of a Borrower upon which the
Collateral Agent has been granted an Collateral Agent's Lien (i) upon the
termination of the Commitments, payment and satisfaction of all Loans and
reimbursement obligations in respect of Letters of Credit and L/C Credit
Support, and the termination of all outstanding Letters of Credit (whether or
not any of such obligations are due) and all other Obligations which have
matured and which the Collateral Agent has been notified in writing are then due
and payable; (ii) constituting property being sold or disposed of if the
applicable Borrower certifies to the Collateral Agent that the sale or
disposition is made in compliance with Section 5.11 or 8.9 or otherwise in
compliance with the Loan Documents (and the Collateral Agent may rely
conclusively on any such certificate, without further inquiry); (iii)
constituting property in which the applicable Borrower owned no interest at the
time the Lien was granted or at any time thereafter; (iv) constituting property
leased to a Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or which will expire imminently and
which has not been, and is not intended by such Borrower to be, renewed or
extended; or (v) in any instance not covered by clauses (i) through (iv), with a
value of less than $250,000 in any instance or series of related instances and,
when aggregated with other Collateral with respect to which a Lien was released
in the same Fiscal Year, with a value of less than $1,000,000. Except as
provided above, the Collateral Agent will not release any of the Collateral
Agent's Liens without the prior authorization of all of the Lenders, nor shall
it release any Guaranty of the Obligations without the prior authorization of
all of the Lenders. Upon request by the Collateral Agent or a Borrower at any
time, the Lenders will confirm in writing the Collateral Agent's authority to
release any Collateral Agent's Liens upon particular types or items of
Collateral or other property pursuant to this Section 13.8(a).
(b) The Collateral Agent is hereby irrevocably authorized by
the Lenders to execute such documents as may be necessary to evidence the
release of the Collateral Agent's Liens upon the Collateral or other property
authorized to be released pursuant to Section 13.8(a); provided, however, that
(i) the Collateral Agent shall not be required to execute any such document on
terms which, in the Collateral Agent's opinion, would
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expose the Collateral 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 (other than those expressly being released) upon (or
obligations of the applicable Borrower in respect of) all interests retained by
such Borrower, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral or other property
securing the Obligations.
(c) The Collateral Agent shall have no obligation whatsoever
to any of the Lenders to assure that the Collateral or other property securing
the Obligations exists or is owned by the applicable Borrower or is cared for,
protected or insured or has been encumbered, or that the Collateral Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the pursuant to this Section 13.8 or pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral or other property securing the Obligations, or any act, omission or
event related thereto, the Collateral Agent may act in any manner it may deem
appropriate, in its sole discretion, given the Collateral Agent's own interest
in the Collateral or other property securing the Obligations in its capacity as
one of the Lenders and that the Collateral Agent shall have no duty or liability
whatsoever to any Agent or Lender as to any of the foregoing.
13.9 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, unless specifically requested
to do so by the Collateral Agent, take or cause to be taken any action to
enforce its rights under this Agreement or against either Borrower, including,
without limitation, the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral or other property securing the Obligations.
(b) Subject to Section 4.8, if, at any time or times any
Lender shall receive (i) by payment, foreclosure, set-off or otherwise, any
proceeds of Collateral or other property securing the Obligations or any
payments with respect to the Obligations of a Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Collateral Agent
pursuant to the terms of this Agreement, or (ii) payments from the Collateral
Agent in excess of such Lender's ratable portion of all such distributions by
the Collateral Agent, such Lender shall promptly (1) turn the same over to the
Collateral Agent, in kind, and with such endorsements as may be required to
negotiate the same to the Collateral Agent, or in same day funds, as applicable,
for the account of all of the Lenders and Agents and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in
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accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
13.10 Agency for Perfection. Each Lender hereby appoints each
other Lender as Collateral Agent for the purpose of perfecting the Lenders'
security interest in assets which, in accordance with Article 9 of the UCC can
be perfected only by possession. Should any Lender (other than the Collateral
Agent) obtain possession of any Collateral or other property securing the
Obligations, such Lender shall notify the Collateral Agent thereof, and,
promptly upon the Collateral Agent's request therefor shall deliver such
Collateral or other property to the Collateral Agent or in accordance with the
Collateral Agent's instructions.
13.11 Payments by Collateral Agent to Lenders. All payments to
be made by the Collateral Agent to the Lenders on or in respect of the
Obligations under this Agreement shall be made by bank wire transfer or internal
transfer of immediately available funds pursuant to the instructions set forth
on Schedule 13.11, or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to the Collateral Agent.
Concurrently with each such payment, the Collateral Agent shall identify whether
such payment (or any portion thereof) represents principal, premium or interest
on the Revolving Loans or otherwise.
13.12 Concerning the Collateral and the Related Loan
Documents. Each Lender authorizes and directs the Collateral Agent to enter into
this Agreement and the other Loan Documents relating to the Collateral or other
property securing the Obligations, for the ratable benefit of the Collateral
Agent, the Agents and the Lenders. Each Lender agrees that any action taken by
the Collateral Agent, Majority Lenders or Required Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral or other property securing the Obligations, and the exercise
by the Collateral Agent, Majority Lenders or Required Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be authorized by and
binding upon all of the Lenders.
13.13 Field Audit Reports; Disclaimers by Lenders. By its
execution and delivery of this Agreement, each Lender
(a) is deemed to have requested that the Collateral Agent
furnish such Lender, promptly after it becomes available, a copy of
each field audit report (each, a "Report" and collectively, "Reports")
prepared by the Collateral Agent pursuant to Section 5.6;
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(b) expressly agrees and acknowledges that neither BABC nor
the Collateral Agent (1) makes any representation or warranty as to the
accuracy of any Report, or (2) shall be liable for any information
contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits, that the Collateral Agent or other party
performing any audit will inspect only specific information regarding
the Borrowers and will rely significantly upon the Borrowers' books and
records, as well as on representations of the Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and agrees not to distribute or use any Report in any
other manner, except to a Participating Lender; and
(e) without limiting the generality of any other
indemnification provisions contained in this Agreement, agrees (1) to
hold BABC and the Collateral Agent harmless from any action such Lender
may take based upon, or the consequences of any conclusion such Lender
may reach as a result of, the information contained in any Report, in
connection with any Loan or other credit accommodations that such
Lender has made or shall make to a Borrower, or in which such Lender
may purchase a participation interest, and (2) to pay, protect,
indemnify, defend and hold BABC and the Collateral Agent harmless from
and against, any claims, actions, proceedings, damages, costs, expenses
and other amounts (including, without limitation, reasonable attorneys'
fees) incurred by BABC and/or the Collateral Agent as the direct or
indirect result of the actions of any third parties which might obtain
all or part of any Report through such Lender.
13.14 Relations Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in the case of the Collateral Agent)
authorized to act for, any other Lender.
13.15 Co-Agents. Neither of the Co-Agents shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
foregoing, neither of the Co-Agents shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied, and will not rely, on either of the Co-Agents in deciding to enter into
this Agreement or in taking or not taking action hereunder.
ARTICLE 14
MISCELLANEOUS
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14.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Collateral Agent's and each Lender's rights and
remedies is not intended to be exclusive, and such rights and remedies are in
addition to and not by way of limitation of any other rights or remedies that
the Collateral Agent and the Lenders may have under the UCC or other applicable
law. The Collateral Agent and the Lenders shall have the right, in their sole
discretion, to determine which rights and remedies are to be exercised and in
which order. The exercise of one right or remedy shall not preclude the exercise
of any others, all of which shall be cumulative. The Collateral Agent and the
Lenders may, without limitation, proceed directly against either Borrower to
collect the Obligations without any prior recourse to the Collateral or other
property securing the Obligations.
14.2 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be is ineffective only to
such extent, without invalidating the remainder of this Agreement.
14.3 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.
(b) THE BORROWERS HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL COURT OF THE NORTHERN DISTRICT OF ILLINOIS AND THE STATE COURTS
OF ILLINOIS LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS AND WAIVE ANY OBJECTION BASED ON
VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND
AGREE THAT ANY DISPUTE CONCERNING THE RELATIONSHIP AMONG THE AGENTS, THE
COLLATERAL AGENT, THE LENDERS AND THE BORROWERS OR THE CONDUCT OF ANY OF THEM IN
CONNECTION WITH THIS AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS
DESCRIBED ABOVE. NOTWITHSTANDING THE FOREGOING: (1) THE COLLATERAL AGENT AND THE
LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST EACH
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE COLLATERAL
AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL , REAL ESTATE, OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
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(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 14.7 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS, OR, AT THE COLLATERAL AGENT'S AND/OR THE LENDERS' OPTION, BY SERVICE UPON
CT CORPORATION, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, WHICH EACH
BORROWER IRREVOCABLY APPOINTS AS SUCH BORROWER'S AGENT FOR THE PURPOSE OF
ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF ILLINOIS. IN ADDITION, THE
COLLATERAL AGENT AND THE LENDERS AGREE TO PROMPTLY FORWARD BY REGISTERED MAIL
ANY PROCESS SO SERVED UPON THE COLLATERAL AGENT TO A BORROWER AT ITS ADDRESS SET
FORTH IN SECTION 14.7. EACH BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS
AFORESAID.
(d) THE BORROWERS, THE COLLATERAL AGENT AND THE LENDERS EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
EITHER OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED, IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE BORROWERS, THE COLLATERAL
AGENT AND THE LENDERS HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT EITHER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 14.3 SHALL AFFECT THE RIGHT OF THE
COLLATERAL AGENT OR THE LENDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE COLLATERAL AGENT OR THE LENDERS TO
BRING ANY ACTION OR PROCEEDING AGAINST A BORROWER OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
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14.4 Survival of Representations and Warranties. All of each
Borrower's representations, and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Collateral Agent or the Lenders or
their respective agents.
14.5 Other Security and Guaranties. Without affecting either
Borrower's obligations hereunder, the Collateral Agent may from time to time:
(a) take from any Person and hold collateral (other than the Collateral) for the
payment of all or any part of the Obligations and exchange, enforce or release
such collateral or any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and release or
substitute any such endorser or guarantor, or any Person who has given any Lien
in any other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of
the Obligations.
14.6 Fees and Expenses. Each Borrower shall pay to the
Collateral Agent, for its benefit and/or the benefit of the Lenders, on demand
all reasonable costs and expenses that the Collateral Agent pays or incurs in
connection with the negotiation, preparation, consummation, administration,
enforcement, and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) reasonable attorneys' and paralegals' fees
(including the reasonably allocated cost of internal counsel) and disbursements
of counsel to the Collateral Agent; (b) reasonable costs and expenses (including
reasonable attorneys' and paralegals' fees (including the reasonably allocated
cost of internal counsel) and disbursements) for any amendment, supplement,
waiver, consent, or subsequent closing in connection with the Loan Documents and
the transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording
the Mortgages, filing financing statements and continuations, and other actions
to perfect, protect, and continue the Collateral Agent's Liens; (e) sums paid or
incurred to pay any amount or take any action required of any Borrower under the
Loan Documents that such Borrower fails to pay or take; (f) costs and expenses
of forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts; and (g) reasonable costs and
expenses of preserving and protecting the Collateral or other property securing
the Obligations. Each Borrower shall pay on demand all costs and expenses
(including reasonable attorneys' and paralegals' fees (including the reasonably
allocated cost of internal counsel) and disbursements) paid or incurred by the
Collateral Agent or any Lender to obtain payment of the Obligations, enforce the
Collateral Agent's Liens, sell or otherwise realize upon the Collateral or other
property securing the Obligations, and otherwise enforce the provisions of the
Loan Documents, or to defend any claims made or threatened against the
Collateral Agent or any Lender arising out of the transactions contemplated
hereby (including without limitation, preparations for and consultations
concerning any such matters), except to the extent arising out of the gross
negligence or willful misconduct of the party seeking payment under this
Section. The foregoing shall not be construed to limit any other provisions of
the Loan Documents
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regarding costs and expenses to be paid by either Borrower. All of the foregoing
costs and expenses shall be charged to the applicable Borrower's loan account as
Revolving Loans as described in Section 4.4.
14.7 Notices. Except as otherwise provided herein, all
notices, demands and requests that any party is required or elects to give to
the other shall be in writing, or by a telecommunications device capable of
creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including, but not limited to, delivery by overnight
mail and courier service, (b) four (4) days after it shall have been mailed by
United States mail, first class, certified or registered, with postage prepaid,
or (c) in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified at the address
set forth on Schedule 14.7, or to such other address as each party may designate
for itself by like notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to the
persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
14.8 Indemnity of the Collateral Agent and the Lenders by the
Borrowers. Each Borrower agrees to (i) reimburse the Collateral Agent and the
Lenders for any costs and expenses (including, without limitation, reasonable
attorneys' and paralegals' fees and expenses, including the reasonably allocated
cost of in-house counsel) incurred by the Collateral Agent or any Lender in
defending any suit brought against it by such Borrower or any other Person in
connection with the transactions contemplated by this Agreement, and (ii)
indemnify and hold the Collateral Agent and the Lenders and their respective
officers, directors, employees, attorneys and agents (collectively, the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, of any kind or nature
whatsoever incurred by the Indemnitees, and any reasonable costs, expenses or
disbursements of the Indemnities, in each case whether direct, indirect or
consequential, as a result of or arising from or relating to any proceeding by
any Person, whether threatened or initiated, asserting any claim for legal or
equitable remedy against any Person under any statute or regulation (including,
without limitation, any federal or state securities or commercial laws or under
any common law or equitable cause or otherwise, including any liability and
costs under Environmental Laws or common law principles arising from or in
connection with the past, present or future operations of such Borrower or its
predecessors in interest, or the past, present or future environmental condition
of such Borrower's property, the presence of asbestos-containing materials at or
on such property, or the Release or threatened Release of any Contaminant from
such property), in any way arising from or in connection with the negotiation,
preparation, execution, delivery, enforcement, performance and administration of
this Agreement or any other document executed in connection herewith, provided
that neither Borrower shall have any obligation hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of any Indemnitee seeking such indemnification. To the extent that the indemnity
set forth in this Section may be
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unenforceable because it is violative of any law or public policy, the
applicable Borrower shall pay the maximum portion which it is permitted to pay
under applicable law. Any Indemnitee will promptly notify the Borrowers of the
commencement of any legal proceeding which may give rise to any indemnified
liability under the foregoing indemnity and shall permit the Borrowers to
participate in the defense of such Indemnitee in any such proceeding. The
foregoing indemnity shall survive the resignation of a Collateral Agent pursuant
to Section 13.7, the payment of the Obligations and the termination of this
Agreement. All of the foregoing fees, costs and expenses shall be part of the
Obligations, payable upon demand, and secured by the Collateral.
14.9 Limitation of Liability. No claim may be made by either
Borrower, any Lender or any other Person against the Collateral Agent, any
Lender or the affiliates, directors, officers, employees, or agents of any of
them, for any special, indirect, consequential or punitive damages in respect of
any claim for breach of contract or any other theory of liability arising out of
or related to the transactions contemplated by this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
each Borrower and each Lender hereby waives, releases and agrees not to ▇▇▇ upon
any claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.
14.10 Waiver of Notices. Unless otherwise expressly provided
herein, each Borrower waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, as well as any and all other notices
to which it might otherwise be entitled. No notice to or demand on either
Borrower which the Collateral Agent or any Lender may elect to give shall
entitle such Borrower to any or further notice or demand in the same, similar or
other circumstances.
14.11 Final Agreement; No Strict Construction. This Agreement
is intended by the Borrowers, the Collateral Agent, the Agents and the Lenders
to be the final, complete, and exclusive expression of the agreement between
them. This Agreement supersedes any and all prior oral or written agreements
relating to the subject matter hereof. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event that an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement
14.12 Counterparts. This Agreement may be executed in any
number of counterparts, and by the Agents, the Collateral Agent, each Lender and
each Borrower in separate counterparts, each of which shall be an original, but
all of which shall together constitute one and the same agreement.
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14.13 Captions. The captions contained in this Agreement are
for convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.
14.14 Right of Set-Off. Whenever an Event of Default exists,
the Collateral Agent and each Lender are hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Collateral Agent
or such Lender or any affiliate of the Collateral Agent or such Lender to or for
the credit or the account of either Borrower against any and all of the
Obligations, whether or not then due and payable. The Collateral Agent and each
Lender agree promptly to notify the applicable Borrower after any such set-off
and application made by the Collateral Agent or such Lender, as applicable,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
14.15 Taxes.
(a) Any and all payments by a Borrower hereunder shall be made
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Collateral Agent,
taxes imposed on its income, and franchise taxes imposed on it, by the United
States of America or any Public Authority of the jurisdiction under the laws of
which such Lender or the Collateral Agent (as the case may be) is organized or
any political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Lender or the Collateral Agent,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 14.15) such Lender or the Collateral Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Borrower shall make such deductions and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents (hereinafter referred to as "Other
Taxes").
(c) Each Borrower will indemnify each Lender and the
Collateral Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 14.15)
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paid by such Lender or the Collateral Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender or the Collateral Agent (as the case may be) makes written
demand therefor. Each Lender shall, at the time of any written demand for
indemnification under this subsection (c), provide to the applicable Borrower a
receipt for, or other evidence of the payment of, the Taxes or Other Taxes for
which indemnification is sought.
(d) Within 30 days after the date of any payment of Taxes, the
applicable Borrower will furnish to the Collateral Agent, at its address
referred to in Section 14.7, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of any payment
hereunder with respect to which a claim for indemnity has been made hereunder,
the applicable Borrower will furnish to the Collateral Agent, at such address, a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Collateral Agent, in either case stating that such payment is
exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreements
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 14.15 shall survive the payment in full of principal
and interest hereunder.
(f) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption from, or
a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Collateral Agent and the Borrowers,
to deliver to the Collateral Agent (with a copy to Imation):
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
before the payment of an interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement, and IRS Form W- 9; and
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(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Each such Lender agrees to promptly notify the Collateral Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(g) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrowers to such Lender, such Lender
agrees to notify the Collateral Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrowers to such Lender. To
the extent of such percentage amount, the Collateral Agent will treat such
Lender's IRS Form 1001 as no longer valid.
(h) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Collateral Agent sells or
assigns all or part of the Obligations of the Borrowers to such Lender, such
Lender agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(i) If any Lender is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Collateral Agent, the
Collateral Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(j) If the IRS or any other Public Authority of the United
States or other jurisdiction asserts a claim that the Collateral Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or was not properly executed, or
because such Lender failed to notify the Collateral Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the
Collateral Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Collateral Agent under this Section, together with all costs and expenses. The
obligation of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of the Collateral Agent.
(k) Notwithstanding the foregoing provisions of this Section
14.15, the Borrowers shall not be required to pay any additional amount to, or
to indemnify any
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Lender pursuant to this Section 14.15 to the extent that (i) the obligation to
withhold or pay any such amount existed on the "Initial Date" (as defined below)
or (ii) the obligation to withhold or pay such amount would not have arisen but
for the failure of such Lender to comply with the provisions of Section
14.15(f). For purposes of this Section 14.15(k), "Initial Date" means (x) in the
case of any Lender that is a signatory hereto, the date of this Agreement, (y)
in the case of any Person which subsequently becomes a Lender hereunder, the
date of the applicable Assignment and Acceptance, and (z) in the case of any
Participating Lender, the date it became a Participation Lender.
14.16 Joint and Several Liability. (a) The liability of the
Borrowers for all amounts due to the Collateral Agent or any Lender under this
Agreement shall be joint and several regardless of which Borrower actually
receives Loans or other extensions of credit hereunder or the amount of such
Loans received or the manner in which the Collateral Agent or such Lender
accounts for such Loans or other extensions of credit on its books and records.
Each Borrower's Obligations with respect to Loans made to it, and each
Borrower's Obligations arising as a result of the joint and several liability of
the Borrowers hereunder, with respect to Loans made to the other Borrower
hereunder, shall be separate and distinct obligations, but all such Obligations
shall be primary obligations of each Borrower.
(b) Each Borrower's Obligations arising as a result of the
joint and several liability of the Borrowers hereunder with respect to Loans or
other extensions of credit made to the other Borrower hereunder shall, to the
fullest extent permitted by law, be unconditional irrespective of (1) the
validity or enforceability, avoidance or subordination of the Obligations of
such other Borrower or of any promissory note or other document evidencing all
or any part of the Obligations of such other Borrower, (2) the absence of any
attempt to collect the Obligations from such other Borrower, any other
guarantor, or any other security therefor, or the absence of any other action to
enforce the same, (3) the waiver, consent, extension, forbearance or granting of
any indulgence by the Collateral Agent or any Lender with respect to any
provision of any instrument evidencing the Obligations of such other Borrower,
or any part thereof, or any other agreement now or hereafter executed by such
other Borrower and delivered to the Collateral Agent or any Lender, (4) the
failure by the Collateral Agent or any Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations of such other Borrower, (5) the Collateral
Agent's or any Lender's election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (6) any borrowing or grant of a security interest by such other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code, (7) the
disallowance of all or any portion of the Collateral Agent's or any Lender's
claim(s) for the repayment of the Obligations of such other Borrower under
Section 502 of the Bankruptcy Code, or (8) any other circumstances which might
constitute a legal or equitable discharge or defense of a guarantor or of such
other Borrower. With respect to each Borrower's Obligations arising as a result
of the joint and several liability of the Borrowers hereunder with respect to
Loans or other extensions of
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credit made to any of the other Borrowers hereunder, such Borrower waives, until
the Obligations shall have been paid in full and the Loan Agreement shall have
been terminated, any right to enforce any right of subrogation or any remedy
which the Collateral Agent or any Lender now or may hereafter have against any
Borrower, any endorser or any guarantor of all or any part of the Obligations,
and any benefit of, and any right to participate in, any security or collateral
given to the Collateral Agent or any Lender to secure payment of the Obligations
or any other liability of the Borrowers to the Collateral Agent or any Lender.
(c) Upon any Event of Default, the Collateral Agent may
proceed directly and at once, without notice, against either Borrower to collect
and recover the full amount, or any portion of the Obligations, without first
proceeding against the other Borrower or any other Person, or against any
security or collateral for the Obligations. Each Borrower consents and agrees
that the Collateral Agent shall be under no obligation to ▇▇▇▇▇▇▇▇ any assets in
favor of such Borrower or against or in payment of any or all of the
Obligations.
14.17 Contribution and Indemnification between the Borrowers.
Each Borrower is obligated to repay the Obligations as joint and several
obligors under this Agreement. To the extent that a Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Loans made to the other Borrower hereunder or other Obligations
incurred directly and primarily by the other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be entitled
to contribution and indemnification from, and be reimbursed by, the other
Borrower in an amount, for such other Borrower, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of both of the Borrowers. As of any date of determination,
the "Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101(32) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act (the "UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act (the "UFCA"), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification and reimbursement under this
section shall be subordinate in right of payment to the prior payment in full of
the Obligations. The provisions of this section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
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14.18 Agency of Imation for Enterprises. Enterprises appoints
Imation as its agent for all purposes relevant to this Agreement, including,
without limitation, the giving and receipt of notices and the execution and
delivery of all documents, instruments and certificates contemplated herein and
all modifications hereto. Any acknowledgment, consent, direction, certification
or other action which might otherwise be valid or effective only if given or
taken by both of the Borrowers or by Enterprises, acting singly, shall be valid
and effective if given or taken only by Imation, whether or not Enterprises
joins therein.
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IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
IMATION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President, Treasurer
IMATION ENTERPRISES CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President, Treasurer
BANKAMERICA BUSINESS CREDIT, INC., as the
Agent and as the Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Vice President
BANKBOSTON, N.A., as a Syndication Agent
and a Co-Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Managing Director
NBD BANK, as a Syndication Agent and a
Co-Agent
By: /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Vice President
S-1
Commitment: BANKAMERICA BUSINESS CREDIT, INC., as a
$75,000,000 Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Vice President
S-2
Commitment: BANKBOSTON, N.A., as a Lender
$50,000,000
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Managing Director
S-3
Commitment: NBD BANK, as a Lender
$50,000,000
By: /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Vice President
S-4
SCHEDULE 14.7
to
Loan and Security Agreement
dated as of December 31, 1998
Notice Addresses
If to the Collateral Agent or to BABC:
BankAmerica Business Credit, Inc.
West Division
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
BankAmerica Business Credit, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
and
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to BankBoston, N.A.:
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mailcode 01-09-08
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
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If to NBD Bank:
NBD Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to either Borrower:
c/o Imation Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
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