TERM LOAN AGREEMENT
Dated as of November 4, 1996
among
DEP CORPORATION, AS BORROWER
CITY NATIONAL BANK, AS CO-AGENT for Lenders
and
FOOTHILL CAPITAL CORPORATION, AS AGENT for Lenders
and Others
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . 2
SECTION 1.1. Certain Defined Terms . . . . . . . . . . . . . . . 2
SECTION 1.2. Computation of Time Periods . . . . . . . . . . . . 14
SECTION 1.3. Accounting Terms. . . . . . . . . . . . . . . . . . 14
ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES. . . . . . . . . . . . . 14
SECTION 2.1. The Advances. . . . . . . . . . . . . . . . . . . . 14
SECTION 2.2. Repayment . . . . . . . . . . . . . . . . . . . . . 14
(a) Monthly Principal Payments . . . . . . . . . . . . . . . . 15
(b) Quarterly Principal Payments . . . . . . . . . . . . . . . 15
(c) Final Principal Payment. . . . . . . . . . . . . . . . . . 16
SECTION 2.3. Optional Prepayments. . . . . . . . . . . . . . . . 16
SECTION 2.4. Mandatory Prepayments . . . . . . . . . . . . . . . 16
(a) Net Cash Proceeds. . . . . . . . . . . . . . . . . . . . . 16
(b) Change of Control. . . . . . . . . . . . . . . . . . . . . 17
(c) Seller Litigation. . . . . . . . . . . . . . . . . . . . . 17
(d) Payment of Interest. . . . . . . . . . . . . . . . . . . . 17
SECTION 2.5. Interest. . . . . . . . . . . . . . . . . . . . . . 17
(a) Ordinary Interest. . . . . . . . . . . . . . . . . . . . . 17
(b) Default Interest . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.6. Agent's Fees. . . . . . . . . . . . . . . . . . . . 18
SECTION 2.7. Payments and Computations . . . . . . . . . . . . . 18
(a) Payments . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Computations of Interest . . . . . . . . . . . . . . . . . 18
(c) Business Day . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Assumption of Payment by Borrower. . . . . . . . . . . . . 19
SECTION 2.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 19
(d) Receipts . . . . . . . . . . . . . . . . . . . . . . . . . 20
(e) Lender Forms . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Failure to Provide Forms . . . . . . . . . . . . . . . . . 20
(g) Survival . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Minimize Taxes . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.9. Sharing of Payments, Etc. . . . . . . . . . . . . . 21
SECTION 2.10. Defaulting Lenders . . . . . . . . . . . . . . . . 22
(a) Payments of Defaulted Amounts. . . . . . . . . . . . . . . 22
(b) Payments to Defaulting Lenders . . . . . . . . . . . . . . 22
(c) Rights and Remedies. . . . . . . . . . . . . . . . . . . . 23
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(d) Satisfaction . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III - CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . 24
SECTION 3.1. Delivery of Documents . . . . . . . . . . . . . . . 24
ARTICLE IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 25
SECTION 4.1. Representations and Warranties of Borrower. . . . . 25
(a) Organization and Authority . . . . . . . . . . . . . . . . 25
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Corporate Power. . . . . . . . . . . . . . . . . . . . . . 25
(d) Government Consents. . . . . . . . . . . . . . . . . . . . 26
(e) Enforceability . . . . . . . . . . . . . . . . . . . . . . 26
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Margin Stock . . . . . . . . . . . . . . . . . . . . . . . 26
(h) ERISA Event. . . . . . . . . . . . . . . . . . . . . . . . 27
(i) Withdrawal Liability . . . . . . . . . . . . . . . . . . . 27
(j) Multiemployer Plans. . . . . . . . . . . . . . . . . . . . 27
(k) Other Events . . . . . . . . . . . . . . . . . . . . . . . 27
(l) Compliance With Environmental Laws . . . . . . . . . . . . 27
(m) National Priorities List . . . . . . . . . . . . . . . . . 27
(n) Hazardous Materials. . . . . . . . . . . . . . . . . . . . 27
(o) Other Agreements . . . . . . . . . . . . . . . . . . . . . 28
(p) Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 28
(q) Open Years . . . . . . . . . . . . . . . . . . . . . . . . 28
(r) Federal Adjustments. . . . . . . . . . . . . . . . . . . . 28
(s) State and Local Adjustments. . . . . . . . . . . . . . . . 28
(t) Investment Company . . . . . . . . . . . . . . . . . . . . 28
(u) Solvent. . . . . . . . . . . . . . . . . . . . . . . . . . 29
(v) Owned Real Property. . . . . . . . . . . . . . . . . . . . 29
(w) Leased Real Property . . . . . . . . . . . . . . . . . . . 29
(x) Investments. . . . . . . . . . . . . . . . . . . . . . . . 29
(y) Intellectual Property. . . . . . . . . . . . . . . . . . . 29
(z) Employment Arrangements. . . . . . . . . . . . . . . . . . 29
ARTICLE V - COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . 30
SECTION 5.1. Affirmative Covenants . . . . . . . . . . . . . . . 30
(a) Compliance With Laws, Etc. . . . . . . . . . . . . . . . . 30
(b) Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . 30
(c) Compliance With Environmental Laws . . . . . . . . . . . . 30
(d) Maintenance of Insurance . . . . . . . . . . . . . . . . . 30
(e) Preservation of Corporate Existence, Etc.. . . . . . . . . 31
(f) Visitation Rights. . . . . . . . . . . . . . . . . . . . . 31
(g) Plan Contributions . . . . . . . . . . . . . . . . . . . . 31
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(h) Keeping of Books . . . . . . . . . . . . . . . . . . . . . 31
(i) Maintenance of Properties, Etc.. . . . . . . . . . . . . . 31
(j) Compliance With Terms of Leaseholds. . . . . . . . . . . . 31
(k) Transactions With Affiliates . . . . . . . . . . . . . . . 31
(l) Cash Concentration Accounts. . . . . . . . . . . . . . . . 31
(m) Additional Subsidiary Guaranties, Etc. . . . . . . . . . . 32
SECTION 5.2. Negative Covenants. . . . . . . . . . . . . . . . . 32
(a) Liens, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Debt.. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Lease Obligations. . . . . . . . . . . . . . . . . . . . . 33
(d) Mergers, Etc.. . . . . . . . . . . . . . . . . . . . . . . 33
(e) Investments in Other Persons.. . . . . . . . . . . . . . . 34
(f) Dividends, Etc.. . . . . . . . . . . . . . . . . . . . . . 34
(g) Accounting Changes . . . . . . . . . . . . . . . . . . . . 35
(h) Prepayments, Etc. of Debt. . . . . . . . . . . . . . . . . 35
(i) Partnerships . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Payments Pursuant to Plan of Reorganization. . . . . . . . 35
SECTION 5.3. Reporting Requirements. . . . . . . . . . . . . . . 35
(a) Default Notice . . . . . . . . . . . . . . . . . . . . . . 35
(b) Monthly Financials . . . . . . . . . . . . . . . . . . . . 35
(c) Quarterly Financials . . . . . . . . . . . . . . . . . . . 36
(d) Annual Financials. . . . . . . . . . . . . . . . . . . . . 36
(e) Annual Forecasts . . . . . . . . . . . . . . . . . . . . . 37
(f) ERISA Events . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Plan Terminations. . . . . . . . . . . . . . . . . . . . . 37
(h) Plan Annual Reports. . . . . . . . . . . . . . . . . . . . 37
(i) Multiemployer Plan Notices . . . . . . . . . . . . . . . . 37
(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 38
(k) Securities Reports . . . . . . . . . . . . . . . . . . . . 38
(l) Creditor Reports . . . . . . . . . . . . . . . . . . . . . 38
(m) Agreement Notices. . . . . . . . . . . . . . . . . . . . . 38
(n) Environmental Conditions . . . . . . . . . . . . . . . . . 38
(o) Change of Control Notice . . . . . . . . . . . . . . . . . 38
(p) Other Information. . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.4. Financial Covenants . . . . . . . . . . . . . . . . 39
(a) Working Capital. . . . . . . . . . . . . . . . . . . . . . 39
(b) Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . 39
(c) Capital Expenditures . . . . . . . . . . . . . . . . . . . 39
(d) Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . 40
(e) Calculation. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI - EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . 40
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(a) Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Representations and Warranties . . . . . . . . . . . . . . 40
(c) Certain Covenants. . . . . . . . . . . . . . . . . . . . . 40
(d) Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 41
(e) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(f) Insolvency . . . . . . . . . . . . . . . . . . . . . . . . 41
(g) Monetary Judgments . . . . . . . . . . . . . . . . . . . . 42
(h) Non-monetary Judgments . . . . . . . . . . . . . . . . . . 42
(i) Loan Documents . . . . . . . . . . . . . . . . . . . . . . 42
(j) Collateral Documents . . . . . . . . . . . . . . . . . . . 42
(k) ERISA Events . . . . . . . . . . . . . . . . . . . . . . . 42
(l) Withdrawal Liability . . . . . . . . . . . . . . . . . . . 42
(m) Multiemployer Plans. . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII - AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1. Authorization and Action. . . . . . . . . . . . . . 43
SECTION 7.2. Agent's Reliance, Etc.. . . . . . . . . . . . . . . 43
SECTION 7.3. Foothill and Affiliates . . . . . . . . . . . . . . 44
SECTION 7.4. Lender Credit Decision. . . . . . . . . . . . . . . 44
SECTION 7.5. Indemnification . . . . . . . . . . . . . . . . . . 44
SECTION 7.6. Successor Agents. . . . . . . . . . . . . . . . . . 45
SECTION 7.7. Co-Agent. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.8. Reports Prepared by Agent . . . . . . . . . . . . . 45
ARTICLE VIII - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.1. Amendments, Etc.. . . . . . . . . . . . . . . . . . 46
SECTION 8.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . 46
SECTION 8.3. No Waiver; Remedies.. . . . . . . . . . . . . . . . 46
SECTION 8.4. Costs and Expenses. . . . . . . . . . . . . . . . . 47
SECTION 8.5. Right of Set-off. . . . . . . . . . . . . . . . . . 47
SECTION 8.6. Binding Effect. . . . . . . . . . . . . . . . . . . 47
SECTION 8.7. Assignments and Participations. . . . . . . . . . . 47
(a) Assignments. . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Effect of Assignment . . . . . . . . . . . . . . . . . . . 48
(c) Register . . . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(e) Participation. . . . . . . . . . . . . . . . . . . . . . . 49
(f) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 49
(g) Assignment to Federal Reserve Board. . . . . . . . . . . . 50
(h) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.8. Headings. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.9. Consent to Jurisdiction . . . . . . . . . . . . . . 50
(a) Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 50
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Page
(b) Legal Process. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.10. Confidentiality. . . . . . . . . . . . . . . . . . 50
SECTION 8.11. Severability . . . . . . . . . . . . . . . . . . . 51
SECTION 8.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . 51
SECTION 8.13. Execution in Counterparts. . . . . . . . . . . . . 51
LIST OF EXHIBITS
Exhibit A -- Form of Note
Exhibit B -- Form of Security Agreement
Exhibit C -- Form of Confirmation and Grant of Security Interest in
Trademarks
Exhibit D -- Form of Guaranty
Exhibit E -- Form of Compliance Certificate
Exhibit F -- Form of Assignment and Acceptance
Exhibit G -- Form of Release Agreement
Exhibit H -- Form of Warrant Agreement
LIST OF SCHEDULES
Schedule 1.1 -- List of Lenders
Schedule 3.1(c) -- Evidence of Insurance
Schedule 4.1(b) -- List of Subsidiaries
Schedule 4.1(d) -- List of Authorizations, Approvals and
Notices
Schedule 4.1(f) -- List of Litigation
Schedule 4.1(q) -- List of Open Tax Years
Schedule 4.1(r) -- List of Unpaid Proposed Federal
Adjustments to Open Years
Schedule 4.1(s) -- List of Unpaid Proposed State, Local and
Foreign Adjustments to Open Years
Schedule 4.1(v) -- List of Owned Real Property
Schedule 4.1(w) -- List of Leased Real Property
Schedule 4.1(x) -- List of Existing Investments
Schedule 4.1(y) -- List of Patents, Trademarks, Trade
Names, Service Marks and Copyrights
Schedule 4.1(z) -- List of Employment Agreements, Executive
Compensation Arrangements and Agreements
Relating to Voting or Disposition of
Stock
Schedule 5.2(b) -- List of Existing Debt
Schedule 5.2(c) -- List of Existing Liens
v
TERM LOAN AGREEMENT, dated as of November 4, 1996 (this "AGREEMENT"),
among DEP CORPORATION, a Delaware corporation ("BORROWER"), the lenders
("LENDERS") listed on the signature pages hereof, CITY NATIONAL BANK, as
co-agent (the "CO-AGENT") for Lenders (as hereinafter defined) hereunder, and
FOOTHILL CAPITAL CORPORATION ("FOOTHILL"), as Agent ("AGENT") for Lenders. As
used herein, the term "Lenders" includes Lenders listed on the signature pages
hereof and/or their predecessors in interest, as the context may require.
PRELIMINARY STATEMENTS:
(1) Pursuant to the Asset Purchase Agreement, dated as of July 9,
1993, between Borrower and S.C. Xxxxxxx & Son, Inc. (the "SELLER"), Borrower
acquired the Agree and Halsa product lines and certain assets relating thereto
from the Seller (the "ACQUISITION").
(2) In connection with the Acquisition, Lenders made a term loan of
$45,000,000 to Borrower in order to pay to the Seller the cash consideration for
the Acquisition.
(3) In connection with the Acquisition, Lenders also made available
to Borrower up to $35,000,000 of credit on a fully revolving basis to pay the
transaction fees and expenses related to the Acquisition, to refinance the
Obligations of Borrower existing on the Closing Date under or pursuant to the
Revolving Credit Agreement dated as of November 30, 1990, as amended among
Borrower, Citibank and City National Bank as lenders, and Citibank, N.A. as
agent for such lenders, and to provide working capital for Borrower and its
Subsidiaries.
(4) On April 1, 1996 (the "PETITION DATE"), Borrower filed for
protection under Chapter 11 of the Bankruptcy Code;
(5) This Agreement is made pursuant to a Plan of Reorganization (the
"PLAN OF REORGANIZATION") which has been approved pursuant to Chapter 11 of the
Bankruptcy Code. The Plan of Reorganization (including the terms defined
therein) is incorporated herein by this reference as if fully set forth herein.
(6) Pursuant to the Plan of Reorganization, the Allowed Claims of
Lenders are classified in Class 1.
(7) Pursuant to the Plan of Reorganization, the following shall be
added to the principal balance of loans under the Bank Credit Agreement (as
defined in the Plan of Reorganization): (i) the Professional Fee Amount; and
(ii) all but $150,000 of the Allowed Class 1 506(b) Postpetition Interest Claims
(as defined in the Plan Reorganization) which is referred to herein as the
"LENDER EFFECTIVE DATE ALLOWED CLAIM."
1
(8) Conditioned upon the occurrence of the Effective Date (as defined
in the Plan of Reorganization), the terms of the Plan of Reorganization and this
Agreement are binding on Borrower and Lenders.
(9) This Agreement is subject to the terms of the Plan of
Reorganization, and in the event of any inconsistency between this Agreement and
the Plan of Reorganization, the Plan of Reorganization shall control.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, it is hereby provided as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION" has the meaning specified in Preliminary Statement (1).
"ACQUISITION DOCUMENTS" means the final documentation relating to the
Acquisition.
"ADVANCE" has the meaning specified in Section 2.1.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"AGENT" has the meaning specified in the Plan of Reorganization.
"AGENT'S ACCOUNT" means the account maintained by the Agent with Chase
Manhattan, 0 Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA 000000000, Credit
Foothill Capital Corporation, Acct. No. 323-266193 (re: DEP Corporation) or
such other deposit account as Agent may from time to time specify in writing to
Borrower and Lenders.
"AGREEMENT" has the meaning provided in the first paragraph of this
Agreement.
"ALLOWED CLAIM" has the meaning specified in the Plan of
Reorganization.
2
"ALLOWED CLASS 1 506(b) POSTPETITION INTEREST CLAIMS" has the meaning
specified in the Plan of Reorganization.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Agent, in accordance
with Section 8.7 and in substantially the form of Exhibit F hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as now or
hereafter in effect, or any successor statute.
"BORROWER" has the meaning specified in the recital of parties to this
Agreement.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York City.
"CAPITAL EXPENDITURES" means, for any period, all expenditures during
such period for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have a useful
life of more than one year.
"CAPITALIZED LEASES" of any Person means all obligations of such
Person as lessee under Leases that have been or should be, in accordance with
GAAP, recorded as Capital Leases.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
Borrower free and clear of all Liens (other than Permitted Liens) and having a
maturity of not greater than 90 days from the date of issuance thereof: (a)
readily marketable direct obligations of the Government of the United States or
any agency or instrumentality thereof or obligations unconditionally guaranteed
by the full faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that is a
Lender or a member of the Federal Reserve System, issues (or the parent of which
issues) commercial paper rated as described in clause (c), is organized under
the laws of the United States or any State thereof and has combined capital and
surplus of at least $1 billion, (c) commercial paper in an aggregate amount of
no more than $500,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United States and rated
at least "Prime-1" (or the then equivalent grade) by Xxxxx'x Investors Services,
Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's Corporation,
or (d) interests in mutual funds or money market funds which invest exclusively
in the obligations described in clauses (a) through (c) above (without regard to
the per issuer limitation).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"CHANGE OF CONTROL" means the occurrence of (i) any Person or two or
more Persons acting in concert shall have acquired (by an acquisition approved
by the board of
3
directors of Borrower) beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities and Exchange Act of
1934), directly or indirectly, of common stock of Borrower (or other securities
convertible into such common stock) representing 26% or more of the combined
voting power of all common stock of Borrower, (ii) at any time, Xxxxxx Xxxxxxxx
and his Affiliates shall collectively own beneficially (including having the
right to vote) less than 26% of the combined voting power of all common stock of
Borrower or (iii) at any time, the majority of the board of directors of
Borrower is not comprised of `Continuing Directors', which term shall mean those
individuals who on the Effective Date were directors of Borrower and those
individuals subsequently elected or appointed whose election or appointment was
recommended or approved by a majority of the Continuing Directors.
"CHASE MANHATTAN" means The Chase Manhattan Bank and its successors.
"CLASS 1 WARRANTS" has the meaning specified in the Plan of
Reorganization.
"CLOSING DATE" means August 6, 1993.
"COLLATERAL" means all "Collateral" referred to in the Collateral
Documents and all other property that is subject to any Lien granted from time
to time in favor of Agent for the benefit of Lenders to secure payment of any of
the Obligations under the Loan Documents.
"COLLATERAL DOCUMENTS" means the Security Agreement, the Confirmation
and Grant of Security Interest in Trademarks, and all other agreements or
instruments delivered to Agent for the benefit of Lenders from time to time to
secure payment of any of the Obligations under the Loan Documents, in each case
as amended, supplemented or otherwise modified from time to time.
"CONFIDENTIAL INFORMATION" means information that Borrower furnishes
to Agent or any Lender on a confidential basis, but does not include any such
information that is or becomes generally available to the public (other than
information that is or becomes available to the public as a result of disclosure
by Agent or any Lender in violation of Section 8.10) or that is or becomes
available to Agent or such Lender from a source other than Borrower or any agent
of Borrower.
"CONFIRMATION AND GRANT OF SECURITY INTEREST IN TRADEMARKS" means a
confirmation and grant of security interest in trademarks from a Grantor in
favor of Agent for the benefit of Lenders in substantially the form of Exhibit
C.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONSOLIDATED NET WORTH" means, as of any date of determination, all
amounts which would in conformity with GAAP be included under stockholders'
equity in a Consolidated balance sheet of Borrower and its Subsidiaries as of
such date, minus (to the
extent not otherwise deducted in accordance with GAAP) the carrying value of (a)
treasury stock and capital stock, intercompany obligations or other securities
of, or capital contributions to or investments in, any Subsidiary and (b) any
write-up in the book value of an asset resulting from any revaluation thereof
after July 31, 1996.
"CONSOLIDATED TOTAL LIABILITIES" means all obligations (including
without limitation all Debt) of Borrower and its Subsidiaries which in
accordance with GAAP would be included in determining total liabilities on a
Consolidated balance sheet of Borrower and its Subsidiaries.
"CURRENT ASSETS" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a company
conducting a business the same as or similar to that of such Person, after
deducting adequate reserves in each case in which a reserve is proper in
accordance with GAAP.
"CURRENT LIABILITIES" of any person means all items (including taxes
accrued as estimated) that in accordance with GAAP would be classified as
current liabilities of such Person, EXCLUDING, HOWEVER, all amounts of Funded
Debt of such Person required to be paid or prepaid within one year after the
date of determination.
"DEBT" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money; (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables that
are incurred in the ordinary course of such Person's business); (c) all
Obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments; (d) all Obligations of such Person created or arising under
any conditional sale or other title retention agreement 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); (e) all Capitalized Leases of such Person; (f) all
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities; (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital stock, valued,
in the case of Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; (h) all
Debt of others referred to in clauses (a) through (g) above guaranteed directly
or indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (iii) to supply
funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is received
or such services are rendered), or (iv) otherwise to assure a creditor against
loss; and (i) all Debt referred to in clauses (a) through (g) above secured by
(or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property
5
(including, without limitation, 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, HOWEVER, that in the case of Borrower and its
Subsidiaries, Debt shall not include any indebtedness owed by any Subsidiary of
Borrower to Borrower or by Borrower to any Subsidiary of Borrower, PROVIDED that
if any such indebtedness is evidenced by a document or instrument, the same is
pledged pursuant to the appropriate Security Agreement and, if not so evidenced,
is at its creation effectively pledged (by book entry, notation or otherwise) to
Agent.
"DEP COMMON STOCK" means the Common Stock, par value $0.01, of
Borrower, after giving effect to the Plan of Reorganization.
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"DEFAULTED AMOUNT" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to Agent or any other Lender hereunder
or under any other Loan Document at or prior to such time which has not been so
paid as of such time, including, without limitation, any amount required to be
paid by such Lender to (a) any other Lender pursuant to Section 2.9 to purchase
any participation in Advances owing to such other Lender and (b) Agent pursuant
to Section 7.5 to reimburse Agent for such Lender's ratable share of any amount
required to be paid by Lenders to Agent as provided therein.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time,
(a) owes a Defaulted Amount or (b) shall take or be the subject of any action or
proceeding of a type described in Section 6.1(f).
"DISCLOSED LITIGATION" has the meaning specified in Section 4.1(f).
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
office of such Lender situated in the United States of America which it
specifies as its "Domestic Lending Office" opposite its name on Schedule 1.1
hereto or in the Assignment and Acceptance pursuant to which it became a Lender,
or such other office of such Lender situated in the United States of America as
such Lender may from time to time specify to Borrower and Agent.
"EBITDA" means, for any period, net income (or net loss) PLUS the sum
of (a) interest expense, (b) income tax expense (or credit), (c) depreciation
expense, and (d) amortization expense, in each case determined in accordance
with GAAP for such period.
"EFFECTIVE DATE" means the date the Plan of Reorganization became or
becomes effective in accordance with the Plan of Reorganization.
"ELIGIBLE ASSIGNEE" means (a) any Lender, (b) any Affiliate of any
Lender, and (c) any other bank or other financial institution approved in
writing by Borrower and Agent as
6
an Eligible Assignee for purposes of this Agreement, PROVIDED that Borrower's
approval shall not be unreasonably withheld.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, CERCLA, the Resource Conservation and Recovery Act, the
Hazardous Materials Transportation Act, the Clean Water Act, the Toxic
Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and
the Occupational Safety and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of
7
proceedings to terminate Plan of such Person or any of its ERISA Affiliates,
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that could constitute grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
"EVENTS OF DEFAULT" has the meaning specified in Section 6.1.
"EXISTING DEBT" means Debt of Borrower and its Subsidiaries
outstanding immediately before the Effective Date and listed on Schedule 5.2(b)
or provided for by the Plan of Reorganization.
"EXISTING LIENS" means Liens on the assets of Borrower and its
Subsidiaries existing immediately prior to the Effective Date and listed on
Schedule 5.2(c) or provided for by the Plan of Reorganization.
"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 that is a Business Day, the average of the quotations for such day for such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it.
"FOOTHILL" has the meaning specified in the recital of parties to this
Agreement.
"FUNDED DEBT" of any Person means Debt of such Person that by its
terms matures more than one year after the date of creation or determination or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year after such date,
including, without limitation, all amounts of Funded Debt of such Person
required to be paid or prepaid within one year after the date of determination
and including, in the case of Borrower, Debt under the Notes.
"GAAP" has the meaning specified in Section 1.3.
"GRANTOR" means any Person who from time to time executes a Collateral
Document, or any Person who from time to time grants a Lien in favor of Agent
for the benefit of Lenders to secure payment of any of the Obligations under the
Loan Documents.
"GUARANTY" means the guaranty of payment in favor of Agent for the
benefit of Lenders in substantially the form of Exhibit D.
8
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVESTMENT" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (h) and (i) of the definition of "Debt" in
respect of such Person, but excluding (i) loans or advances on account of trade
credit given in the ordinary course of Borrower's business and (ii) lease
payments or other expenditures incurred in the ordinary course of Borrower's
business or expenditures which would be considered ordinary course expenditures
by the standards or trade customs of the industry in which Borrower operates.
"LENDER EFFECTIVE DATE ALLOWED CLAIM" has the meaning specified in the
recital of the parties.
"LENDERS" has the meaning specified in the first paragraph of this
Agreement.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, and
the Collateral Documents.
"LOCKBOX ACCOUNT" has the meaning specified in the Security Agreement.
"MARGIN STOCK" has the meaning specified in Regulation G and
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower and its Subsidiaries, taken as a whole, (b)
the rights and remedies of Agent or any
9
Lender under any Loan Document or (c) the ability of Borrower to perform its
Obligations under any Loan Document to which it is or is to be a party.
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any Debt or capital
stock, any securities convertible into or exchangeable for capital stock or any
warrants, rights or options to acquire capital stock by any Person, the
aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions; (b) the amount
of taxes payable in connection with or as a result of such transaction; (c) all
other reasonable out-of-pocket expenses incurred in connection with or as a
result of such transaction; and (d) the amount of any Debt (excluding
intercompany Debt) that is secured by a Lien on such asset which, by the terms
of such transaction, is required to be repaid upon such disposition or that
would, if secured by a Lien, create with such a Lien a "purchase money security
interest" within the meaning of Section 9107 of the California Uniform
Commercial Code, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid to a
Person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.
"NOTE" means a promissory note of Borrower payable to the order of any
Lender, in substantially the form of Exhibit A hereto, evidencing the
indebtedness of Borrower to such Lender resulting from the Advance of such
Lender.
"OBLIGATION" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.1(f). Without limiting the generality of
the foregoing, the Obligations of Borrower under the Loan Documents include (a)
the obligation to pay principal, interest, charges, expenses, fees, attorneys'
fees and disbursements, indemnities and other amounts payable by Borrower under
any Loan Document and (b) the
10
obligation to reimburse any amount in respect of any of the foregoing that any
Lender, in its sole discretion, may elect to pay or advance on behalf of
Borrower.
"OPEN YEAR" has the meaning specified in Section 4.1(q).
"OTHER TAXES" has the meaning specified in Section 2.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor.
"PERMITTED LIENS" means the following:
(i) Liens for taxes, assessments and governmental charges or
levies which are not yet due and payable or which may be paid after the due
date without penalty or which are being contested in good faith through
appropriate proceedings, provided however, that Borrower shall have set
aside adequate reserves in accordance with GAAP with respect to any
contested tax, assessment or charge;
(ii) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens arising
in the ordinary course of business securing obligations which are not
overdue for a period of more than 60 days or which are being contested in
good faith through appropriate actions, provided, however, that Borrower
shall have set aside adequate reserves in accordance with GAAP with respect
to such contested obligations;
(iii) Liens arising from judgment or awards which do not
create an Event of Default pursuant to Section 6.1(g) or 6.1(h) or with
respect to which Borrower has obtained a stay of execution pending appeal,
provided, however, that Borrower shall have posted a bond which satisfies
the legal requirements applicable to such appeal, and provided, further,
that Borrower shall have set aside adequate reserves in accordance with
GAAP with respect to such contested judgment or award;
(iv) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations;
(v) Existing Liens;
(vi) Liens created by the Loan Documents or in favor of Agent in
connection therewith;
(vii) purchase money Liens upon or in property acquired or
held by Borrower or any of its Subsidiaries in the ordinary course of
business to secure the purchase price of such property or to secure Debt
incurred solely for the purpose of financing the acquisition, construction
or improvement of any such property to be subject to such Liens, or Liens
existing on any such property at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
11
amount; provided, however, that no such Lien shall extend to or cover any
property other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed or
replaced; and provided, further, that the aggregate principal amount of
Debt of Borrower and its Subsidiaries on a Consolidated basis secured by
Liens permitted by this clause (vii) shall not exceed $2,200,000 at any
time outstanding and that any such Debt shall not otherwise be prohibited
by the terms of the Loan Documents;
(viii) Liens arising in connection with Capitalized Leases in
an aggregate principal amount for Borrower and its Subsidiaries on a
Consolidated basis not to exceed $2,000,000 at any time outstanding; and
(ix) the replacement, extension or renewal of any Lien permitted
by clauses (v) through (viii) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Debt secured thereby.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLAN OF REORGANIZATION" has the meaning specified in Preliminary
Statement (5).
"PREFERRED STOCK" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"PRIME RATE" means the "prime rate" as published from time to time in
THE WALL STREET JOURNAL, national edition, representing the base rate for
corporate loans, as reflected therein.
"PRINCIPAL SUBSIDIARY" means any Subsidiary of Borrower whose total
assets constitute over 5% of the Consolidated total assets of Borrower and its
Subsidiaries at such time; and "Principal Subsidiaries" means all of such
corporations and Subsidiaries.
"PROFESSIONAL FEE AMOUNT" means $975,000.
"REDEEMABLE" means, with respect to any capital stock, Debt or other
right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon
1
the occurrence of a condition not solely within the control of the issuer or
(b) is redeemable at the option of the holder.
"REGISTER" has the meaning specified in Section 8.7(c).
"REGULATION G" and "REGULATION U" mean Regulation G and Regulation U,
respectively, of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"REORGANIZATION EXPENSES" means expenses incurred by Borrower in
connection with its proceeding under the Bankruptcy Code and the Plan of
Reorganization.
"REQUIRED LENDERS" means at any time Lenders owed or holding more than
50% of the aggregate principal amount of the Advances outstanding at such time;
provided, however, if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the determination of Required Lenders at such time
the aggregate principal amount of the Advances made by such Lender and
outstanding at such time.
"SECURITY AGREEMENT" means a security agreement granting Liens on
Collateral consisting of personal property and fixtures executed by a Grantor in
favor of Agent for the benefit of Lenders in substantially the form, in the case
of Borrower, of Exhibit B.
"SELLER" has the meaning specified in Preliminary Statement (1).
"SELLER LITIGATION" means any civil action or other proceeding brought
by Borrower or any of its Subsidiaries against the Seller, whether arising under
the Bankruptcy Code or otherwise, relating to the Acquisition or the assets and
liabilities acquired or assumed by Borrower in connection therewith.
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the value of the property of such Person
at fair valuation is greater than the debts of such Person at fair valuation,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small capital.
13
"SUBORDINATED DEBT" means any Debt of Borrower that is subordinated to
the Obligations of Borrower under the Loan Documents on, and that otherwise
contains, terms and conditions satisfactory to the Required Lenders.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (a) the issued
and outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
aggregate general partners' or joint venturers' interest in the capital or
profits of such partnership or joint venture or (c) the controlling interest, by
contract or otherwise, in such trust or estate, is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person's other Subsidiaries.
"TAXES" has the meaning specified in Section 2.8(a).
"TERMINATION DATE" means the date of the repayment in full of all
amounts due hereunder.
"VOTING STOCK" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.2. 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" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.3. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1. THE ADVANCES. On the Effective Date, an amount equal to
the Lender Effective Date Allowed Claim shall be deemed to constitute an advance
(an "ADVANCE") hereunder.
14
SECTION 2.2. REPAYMENT. Borrower shall repay to Agent for the
ratable account of Lenders the aggregate outstanding principal amount of the
Advances (as of the Effective Date) as follows:
(a) MONTHLY PRINCIPAL PAYMENTS. Borrower shall make twelve
monthly principal payments in an amount equal to one-twelfth of the
Professional Fee Amount. These monthly payments shall be made on the first
day of the first calendar month following the Effective Date and on the
first day of each of the subsequent eleven calendar months thereafter.
(b) QUARTERLY PRINCIPAL PAYMENTS. In addition to the principal
payments required pursuant to Section 2.2(a), Borrower shall make quarterly
principal payments in accordance with the following table:
PAYMENT DATE PRINCIPAL AMOUNT
----------------------------------------------- ----------------
Later of Effective Date or September 30, 1996 $ 100,000
December 31, 1996 $ 100,000
March 31, 1997 $ 100,000
June 30, 1997 $ 100,000
September 30, 1997 $ 350,000
December 31, 1997 $ 350,000
March 31, 1998 $ 350,000
June 30, 1998 $ 350,000
September 30, 1998 $ 750,000
December 31, 1998 $ 750,000
March 31, 1999 $1,000,000
June 30, 1999 $1,000,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $1,250,000
June 30, 2000 $1,500,000
September 30, 2000 $1,500,000
December 31, 2000 $1,750,000
15
PAYMENT DATE PRINCIPAL AMOUNT
----------------------------------------------- ----------------
March 31, 2001 $1,750,000
June 30, 2001 $1,750,000
September 30, 2001 $1,750,000
December 31, 2001 $1,750,000
March 31, 2002 $2,000,000
June 30, 2002 $2,000,000
(c) FINAL PRINCIPAL PAYMENT. On July 31, 2002, Borrower shall
pay the remaining unpaid principal amount of all Advances.
SECTION 2.3. OPTIONAL PREPAYMENTS. Borrower may, upon at least three
Business Days' notice to Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given Borrower shall, prepay the
outstanding aggregate principal amount of the Advances in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
aggregate principal amount prepaid; PROVIDED, HOWEVER, that each partial
prepayment shall be in an aggregate amount of $300,000 or an integral multiple
of $100,000 in excess thereof. Each such prepayment of any Advances shall be
applied to the installments thereof in direct order of maturity.
SECTION 2.4. MANDATORY PREPAYMENTS.
(a) NET CASH PROCEEDS. Borrower shall, on the 10th Business Day
following the date of receipt of the Net Cash Proceeds from (i) the sale,
lease, transfer or other disposition of any assets of Borrower or any of
its Subsidiaries (other than (A) sales of inventory in the ordinary course
of business, (B) sales of damaged, worn or obsolete equipment to the extent
the proceeds thereof are intended to be used to purchase replacements for
such equipment within 10 Business Days or sales of damaged, worn or
obsolete equipment made after the purchase of replacements for such
equipment, and (C) sales of assets, or a series of sales of related assets,
which are sold for an amount, or an aggregate amount, less than $100,000,
EXCEPT to the extent that the aggregate of all such sales in any fiscal
year exceeds $500,000); (ii) the incurrence or issuance by Borrower or any
of its Subsidiaries of any Debt (other than Debt described in Section
5.2(b)(i), (ii), and (iv) through (vii)); and (iii) the sale or issuance by
Borrower or any of its Subsidiaries of any capital stock, any securities
convertible into or exchangeable for capital stock or any warrants, rights
or options to acquire capital stock (other than the sale or issuance of
such stock upon the exercise by employees, directors, or consultants of
Borrower and its Subsidiaries of stock options issued pursuant to
Borrower's stock option plans), prepay an aggregate principal amount of the
Advances equal to the amount of such Net Cash Proceeds; provided that,
16
in each such case the amount prepaid hereunder shall be reduced to the
extent that during such 10 Business Day period Borrower or its Subsidiaries
have utilized or entered into a binding commitment to utilize such Net Cash
Proceeds to effect a Capital Expenditure by Borrower or a Subsidiary of
Borrower, or, in the case of a sale of securities, to redeem outstanding
securities of Borrower or of any Subsidiary of Borrower. Each such
prepayment under this Section 2.4(a) shall be applied in inverse order to
the unpaid installments of the Advances.
(b) CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, at the request of the Required Lenders through Agent, Borrower
shall prepay the outstanding aggregate principal amount of the Advances in
whole.
(c) SELLER LITIGATION. Borrower shall, on the 10th Business Day
following the date of receipt by Borrower or any of its Subsidiaries of any
cash proceeds in respect of any Seller Litigation (whether pursuant to
judgment, settlement or otherwise), prepay an aggregate principal amount of
the Advances equal to the amount of such cash proceeds (less only the
amount of any costs, fees, expenses and taxes incurred by Borrower in
respect of such Seller Litigation, including, without limitation, fees and
expenses of counsel to Borrower and other consultants of Borrower actually
paid or payable by Borrower in respect of such Seller Litigation), provided
that the amount prepaid hereunder shall be reduced to the extent that
during such 10 Business Day period Borrower or its Subsidiaries have
utilized or entered into a binding commitment to utilize such cash proceeds
to effect a Capital Expenditure by Borrower or a Subsidiary of Borrower.
Each such prepayment pursuant to this subsection 2.4(c) shall be applied in
inverse order to the unpaid installments of the Advances. Borrower
acknowledges and agrees that in the event Borrower or any of its
Subsidiaries shall receive any property other than cash in respect of any
Seller Litigation, such property shall immediately be pledged to Agent for
the benefit of Lenders pursuant to such Collateral Documents (including any
additional Collateral Documents) as Agent may request in order to create
and perfect a first priority security interest in such property to secure
the payment of the Obligations under the Loan Documents.
(d) PAYMENT OF INTEREST. All prepayments under this Section 2.4
shall be made together with accrued interest to the date of such prepayment
on the principal amounts prepaid.
SECTION 2.5. INTEREST.
(a) ORDINARY INTEREST. Borrower shall pay interest on the
unpaid principal amount of each Advance owing to each Lender from the
Effective Date until such principal amount shall be paid in full (subject,
however, to the provisions of subsection (b) below) at a rate per annum
equal at all times to the sum of (i) the Prime Rate in effect from time to
time plus (ii) 2% payable in arrears monthly on the first Business Day of
each calendar month
17
(commencing with the first calendar month following the Effective Date)
during such periods and on the date such Advance shall be paid in full.
(b) DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default, Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a) above, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a) above and (ii) the amount of
any interest, fee or other amount payable hereunder which is not paid when
due, from the date such amount shall be due until such amount shall be paid
in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on Advances pursuant to clause (a)
above.
SECTION 2.6. AGENT'S FEES. On the last day of each fiscal quarter
commencing October 31, 1996 and ending on the payment of the outstanding
principal amount of the Advances hereunder, Borrower shall pay to Agent for its
own account an agent fee of $15,000.
SECTION 2.7. PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS. Borrower shall make each payment hereunder and
under the Notes not later than 1:00 p.m. (New York City time) on the day
when due in U.S. dollars to Agent at Agent's Account in same day funds.
Agent will promptly thereafter cause like funds to be distributed (i) if
such payment by Borrower is in respect of principal, interest or any other
Obligation then payable hereunder and under the Notes to more than one
Lender, to such Lenders for the account of their respective Domestic
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lenders and (ii) if such payment by
Borrower is in respect of any Obligation then payable hereunder to one
Lender, to such Lender for the account of its Domestic Lending Office, in
each case to be applied in accordance with the terms of this Agreement.
Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 8.7(d),
from and after the effective date of such Assignment and Acceptance, Agent
shall make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender assignee thereunder, and the
parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date
directly between themselves.
(b) COMPUTATIONS OF INTEREST. All computations of interest
based on the Prime Rate shall be made by Agent on the basis of a year of
365 or 366 days, as the case may be, and all computations based on the
Federal Funds Rate shall be made by Agent on the basis of a year of 360
days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest
or fees are payable. Each determination by Agent of an interest rate or
18
fee hereunder shall be conclusive and binding for all purposes, absent
manifest error (including clerical and administrative error).
(c) BUSINESS DAY. Whenever any payment hereunder or under the
Notes shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
interest.
(d) ASSUMPTION OF PAYMENT BY BORROWER. Unless Agent shall have
received notice from Borrower prior to the date on which any payment is due
to any Lender hereunder that Borrower will not make such payment in full,
Agent may assume that Borrower has made such payment in full to Agent on
such date and Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrower shall not have
so made such payment in full to Agent, each such Lender shall repay to
Agent forthwith on demand such amount distributed to such Lender together
with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
Agent, at the Federal Funds Rate.
SECTION 2.8. TAXES.
(a) TAXES. Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with Section 2.7, 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 Agent, taxes on
or measured by overall net income and franchise taxes on overall net income
or on net capital imposed by any jurisdiction or any political subdivision
thereof under the laws of which such Lender or Agent is organized, is
fiscally resident, or maintains a Domestic Lending Office, (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Note to any Lender or 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 2.8) such Lender or Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions and (iii)
Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law.
(b) OTHER TAXES. In addition, Borrower shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or
levies that arise from any payment made hereunder or under the Notes or
from the execution,
19
delivery or registration of, or otherwise with respect to, this Agreement
or the Notes (hereinafter referred to as "OTHER TAXES").
(c) PAYMENT OF TAXES. Borrower shall indemnify each Lender and
Agent for the full amount of Taxes and Other Taxes, and for the full amount
of taxes imposed by any jurisdiction within the United States on amounts
payable under this Section 2.8, paid by such Lender or Agent (as the case
may be) and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or
Agent (as the case may be) makes written demand therefor.
(d) RECEIPTS. Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to in
Section 8.2, the original receipt of payment thereof or a certified copy of
such receipt.
(e) LENDER FORMS. Each Lender organized under the laws of a
jurisdiction outside the United States shall, on or prior to the Effective
Date for each Lender party hereto on the Effective Date, and on the date of
the Assignment and Acceptance pursuant to which it became a Lender in the
case of each other Lender, and from time to time thereafter if requested in
writing by Borrower or Agent (but only so long thereafter as such Lender
remains lawfully able to do so), provide Agent and Borrower with two duly
completed copies of Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party that reduces the
rate of withholding tax on payments under this Agreement or the Notes or
certifying that the income receivable pursuant to this Agreement or the
Notes is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Lender at the time such
Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until such Lender
provides the appropriate form certifying that a lesser rate applies,
whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; PROVIDED, HOWEVER,
that, if at the date of the Assignment and Acceptance pursuant to which a
Lender assignee becomes a party to this Agreement, the Lender assignor was
entitled to payments under subsection (a) in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that
may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to
the Lender assignee on such date. If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form 1001 or 4224, that the
Lender reasonably considers to be confidential, the Lender shall give
notice thereof to Borrower and shall not be obligated to include in such
form or document such confidential information.
20
(f) FAILURE TO PROVIDE FORMS. For any period with respect to
which a Lender has failed to provide Borrower with the appropriate form
described in subsection (e) (OTHER THAN if such failure is due to a change
in law occurring after the date on which a form originally was required to
be provided or if such form otherwise is not required under subsection
(e)), such Lender shall not be entitled to indemnification under subsection
(a) or (c) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(g) SURVIVAL. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of Borrower
contained in this Section 2.8 shall survive the payment in full of
principal and interest hereunder and under the Notes.
(h) MINIMIZE TAXES. Each Lender shall use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions)
to minimize the amount of Taxes and Other Taxes (including reasonable
efforts to designate a different Domestic Lending Office if the making of
such a designation would allow such Lender to perform its obligations to
make Advances or to continue to maintain Advances and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender).
Each Lender further shall give notice to Borrower (with a copy to Agent)
promptly after such Lender becomes aware of any Tax or Other Tax which
Borrower is obligated to pay pursuant to this Section 2.8.
SECTION 2.9. SHARING OF PAYMENTS, ETC. If any Lender shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender hereunder and under the Notes at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of the Obligations due and payable to all Lenders hereunder and under the
Notes at such time) of payments on account of the Obligations due and payable to
all Lenders hereunder and under the Notes at such time obtained by all Lenders
at such time or (b) on account of Obligations owing (but not due and payable) to
such Lender hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations owing
to such Lender at such time to (ii) the aggregate amount of the Obligations
owing (but not due and payable) to all Lenders hereunder and under the Notes at
such time) of payments on account of the Obligations owing (but not due and
payable) to all Lenders hereunder and under the Notes at such time obtained by
all Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such participations in the Obligations due and payable or owing to them,
as the case may be, as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded and
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such other Lender's ratable
21
share (according to the proportion of (i) the purchase price paid to such Lender
to (ii) the aggregate purchase price paid to all Lenders) of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such other Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. Any Lender so purchasing a participation from another
Lender pursuant to this Section 2.9 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of
Borrower in the amount of such participation.
SECTION 2.10. DEFAULTING LENDERS.
(a) PAYMENTS OF DEFAULTED AMOUNTS. In the event that, at any
one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Amount to Agent or any of the other Lenders
and (iii) Borrower shall make any payment hereunder or under any other Loan
Document to Agent for the account of such Defaulting Lender, then Agent
may, on its behalf or on behalf of such other Lenders and to the fullest
extent permitted by applicable law, apply at such time the amount so paid
by Borrower to or for the account of such Defaulting Lender to the payment
of each such Defaulted Amount to the extent required to pay such Defaulted
Amount. In the event that Agent shall so apply any such amount to the
payment of any such Defaulted Amount on any date, the amount so applied by
Agent shall constitute for all purposes of this Agreement and the other
Loan Documents payment, to such extent, of such Defaulted Amount on such
date. Any such amount so applied by Agent shall be retained by Agent or
distributed by Agent to such other Lenders, ratably in accordance with the
respective portions of such Defaulted Amounts payable at such time to Agent
and such other Lenders and, if the amount of such payment made by Borrower
shall at such time be insufficient to pay all Defaulted Amounts owing at
such time to Agent and the other Lenders, in the following order of
priority:
(i) FIRST, to Agent for any Defaulted Amount then owing to
Agent; and
(ii) SECOND, to any other Lenders for any Defaulted Amounts
then owing to such other Lenders, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lenders.
Any portion of such amount paid by Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by
Agent pursuant to this subsection (a), shall be applied by Agent as
specified in subsection (b) of this Section 2.10.
(b) PAYMENTS TO DEFAULTING LENDERS. In the event that, at any
one time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting
Lender shall not owe a Defaulted Amount and (iii) Borrower, the Agent or
any other Lender shall be
22
required to pay or distribute any amount hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then Borrower or
such other Lender shall pay such amount to Agent to be held by Agent, to
the fullest extent permitted by applicable law, in escrow or Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such
amount otherwise held by it. Any funds held by Agent in escrow under this
subsection (b) shall be deposited by Agent in an account with Chase
Manhattan, in the name and under the control of Agent, but subject to the
provisions of this subsection (b). The terms applicable to such account,
including the rate of interest payable with respect to the credit balance
of such account from time to time, shall be Chase Manhattan's standard
terms applicable to escrow accounts maintained with it. Any interest
credited to such account from time to time shall be held by Agent in escrow
under, and applied by Agent from time to time in accordance with the
provisions of, this subsection (b). Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to
time to the extent necessary to pay any amount payable by such Defaulting
Lender hereunder and under the other Loan Documents to Agent or any other
Lender, as and when such amounts are required to be made or paid and, if
the amount so held in escrow shall at any time be insufficient to make and
pay all such amounts required to be paid at such time, in the following
order of priority:
(i) FIRST, to Agent for any amount then due and payable by
such Defaulting Lender to Agent hereunder; and
(ii) SECOND, to any other Lenders for any amount then due
and payable by such Defaulting Lender to such other Lenders hereunder,
ratably in accordance with such respective amounts then due and
payable to such other Lenders.
In the event that such Defaulting Lender shall, at any time, cease to be a
Defaulting Lender, any funds held by Agent in escrow at such time with
respect to such Defaulting Lender shall be distributed by Agent to such
Defaulting Lender and applied by such Defaulting Lender to the Obligations
owing to such Lender at such time under this Agreement and the other Loan
Documents ratably in accordance with the respective amounts of such
Obligations outstanding at such time.
(c) RIGHTS AND REMEDIES. The rights and remedies against a
Defaulting Lender under this Section 2.10 are in addition to other rights
and remedies which Borrower, Agent or any Lender may have against such
Defaulting Lender with respect to any Defaulted Amount.
(d) SATISFACTION. Any payment made by Borrower for the account
of any Defaulting Lender shall be a payment in satisfaction of Borrower's
obligation in favor of the Defaulting Lender for which the payment was
made, notwithstanding the fact that the payment may be applied in the
manner set forth in this Section 2.10.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1. DELIVERY OF DOCUMENTS. Concurrently with the Effective
Date, Agent shall have received, to the extent not then in its possession, each
dated the Effective Date (unless otherwise specified), in sufficient copies for
each Lender (except for the Notes, the certificates and instruments representing
the Pledged Shares (as defined in the Security Agreements) and Pledged Debt (as
defined in the Security Agreements) and the stock and bond powers delivered
therewith)):
(i) The Notes to the order of Lenders.
(ii) The Security Agreement, duly executed by Borrower, together
with:
(A) certificates representing all the stock of the
Subsidiaries of Borrower listed on Schedule I of the Security
Agreement (such stock to be defined as the Pledged Shares referred to
therein) accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt referred to therein endorsed
in blank;
(B) Uniform Commercial Code financing statements for filing
in the following jurisdictions, duly executed by Borrower, dated as of
the Effective Date: California, Hawaii, New Jersey and Tennessee;
(C) evidence of the insurance required by the terms of the
Security Agreement, naming Agent as insured and loss payee with such
responsible and reputable insurance companies or associations, and in
such amounts and covering such risks, as is reasonably satisfactory to
Agent; and
(D) the Lockbox Letters referred to in the Security
Agreement, duly executed by Borrower and the Lockbox Banks referred to
in the Security Agreement, and undated executed copies of Lockbox
Notices (referred to in the Security Agreement) to the Lockbox Banks,
dated as of the Effective Date.
(iii) The Confirmation and Grant of Security Interest in
Trademarks, duly executed by Borrower, dated as of the Effective Date.
(iv) Pursuant to the provisions of the Plan of Reorganization,
Borrower, Agent and each of the Lenders shall have executed and delivered a
Release Agreement, in substantially the form of the attached Exhibit G (the
"RELEASE AGREEMENT").
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(v) The Agent, on behalf of the Lenders, shall have received
542,488 newly issued shares of DEP Common Stock to be distributed to the
Lenders in accordance with the Plan of Reorganization.
(vi) Borrower and each of the Lenders which has elected to
receive Class 1 Warrants pursuant to the Plan of Reorganization shall have
executed and delivered a Warrant Agreement, in substantially the form of
the attached Exhibit H (the "WARRANT AGREEMENT"), and Borrower shall have
executed and delivered to the Agent for the benefit of such Lenders
warrants to purchase an aggregate of 330,050 shares of DEP Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
represents and warrants, as of the Effective Date, as follows:
(a) ORGANIZATION AND AUTHORITY. Borrower (i) is a corporation
duly organized, validly existing and good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect, and (iii) has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted, to execute and deliver, and to perform its obligations under,
this Agreement and the other Loan Documents to which it is a party.
(b) SUBSIDIARIES. Set forth on Schedule 4.1(b) hereto is a
complete and accurate list of all Subsidiaries of Borrower, showing as of
the date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the
percentage of the outstanding shares of each such class owned (directly or
indirectly) by Borrower and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights at
the date hereof. All of the outstanding capital stock of all of such
Subsidiaries has been validly issued, is fully paid and non-assessable and
is owned by Borrower or one or more of its Subsidiaries free and clear of
all Liens, except for Permitted Liens.
(c) CORPORATE POWER. The execution, delivery and performance by
Borrower of this Agreement, the Notes, and the other Loan Documents, and
the consummation of the transactions contemplated hereby and thereby, are
within Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene Borrower's charter or
by-laws, (ii) violate any law,
25
rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result
in the breach of, or constitute a default under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting Borrower or any of its properties or (iv) except
for the Liens created by the Collateral Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of Borrower. Borrower is not in violation of any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the violation or breach
of which would have a Material Adverse Effect.
(d) GOVERNMENT CONSENTS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due
execution, delivery, recordation, filing or performance by Borrower of this
Agreement, the Notes, or any other Loan Document, or for the consummation
of the other transactions contemplated hereby and thereby, (ii) the grant
by Borrower of the Liens granted by it pursuant to the Collateral
Documents, (iii) the perfection or maintenance of the Liens created by the
Collateral Documents which can be perfected by filing under the Uniform
Commercial Code, for a period of five years, or can be perfected by filing
for recordation under the U.S. Federal statute for trademarks, 15 U.S.C.
Section 1060, or (iv) the exercise by Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for the authorizations,
approvals, actions, notices and filings listed on Schedule 4.1(d), all of
which have been duly obtained, taken, given or made and are in full force
and effect.
(e) ENFORCEABILITY. This Agreement has been, and each of the
Notes, and each other Loan Document when delivered hereunder will have
been, duly executed and delivered by Borrower. This Agreement is, and each
of the Notes, and each other Loan Document when delivered hereunder will
be, the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms.
(f) LITIGATION. Except for the proceedings under Chapter 11 of
the Bankruptcy Code to which the Plan of Reorganization relates and as set
forth in Schedule 4.1(f) (collectively the "DISCLOSED LITIGATION"), there
is no action, suit, investigation, litigation or proceeding affecting
Borrower including any Environmental Action, pending or threatened before
any court, governmental agency or arbitrator that (i) would have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement, any Note, or any other Loan Document or
other transactions contemplated hereby.
26
(g) MARGIN STOCK. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock,
and no proceeds of any Advance will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. None of the Pledged Shares (as defined in the
Security Agreements) constitutes Margin Stock.
(h) ERISA EVENT. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of Borrower or any of its ERISA
Affiliates.
(i) WITHDRAWAL LIABILITY. Neither Borrower nor any of its ERISA
Affiliates has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan.
(j) MULTIEMPLOYER PLANS. Neither Borrower nor any of its ERISA
Affiliates has been notified by the sponsor of a Multiemployer Plan of
Borrower or any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(k) OTHER EVENTS. Neither the business nor the properties of
Borrower is affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God
or of the public enemy or other casualty (whether or not covered by
insurance) that would have a Material Adverse Effect.
(l) COMPLIANCE WITH ENVIRONMENTAL LAWS. The operations and
properties of Borrower comply in all material respects with all
Environmental Laws, all material Environmental Permits have been obtained
and are in effect for the operations and properties of Borrower, Borrower
is in compliance in all material respects with all such material
Environmental Permits, and no circumstances exist that could (i) form the
basis of an Environmental Action against Borrower or any of their
properties that would have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law.
(m) NATIONAL PRIORITIES LIST. None of the properties of
Borrower is listed or proposed for listing on the National Priorities List
under CERCLA or on the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the Environmental Protection
Agency or any analogous state list of sites requiring investigation or
cleanup or is adjacent to any such property, and no underground storage
tanks, as such term is defined in 42 U.S.C. Section 6991, are located on
any property of Borrower or, to the best of its knowledge, on any adjoining
property.
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(n) HAZARDOUS MATERIALS. Neither Borrower nor any of its
Subsidiaries has transported or arranged for the transportation of any
Hazardous Materials to any location that is listed or proposed for listing
on the National Priorities List under CERCLA or on the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the Environmental Protection Agency or any analogous state
list, Hazardous Materials have not been generated, used, treated, handled,
stored or disposed of on, or released or transported to or from, any
property of Borrower or, to the best of its knowledge, any adjoining
property, except in compliance with all Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all Environmental Laws
and Environmental Permits.
(o) OTHER AGREEMENTS. Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or corporate restriction that would have a Material
Adverse Effect.
(p) TAX RETURNS. Borrower has filed, has caused to be filed or
has been included in all Federal tax returns required to be filed and all
state, local and foreign tax returns Borrower believes it is required to
file, or has timely applied for an extension for the filing thereof, and
has paid all taxes shown thereon to be due, together with applicable
interest and penalties, or will pay such taxes, interest and penalties in
accordance with the Plan of Reorganization, or is contesting in good faith
amounts due through appropriate proceedings and has established adequate
reserves therefore in accordance with GAAP.
(q) OPEN YEARS. Set forth on Schedule 4.1(q) hereto is a
complete and accurate list, as of the date hereof, of each taxable year of
Borrower for which Federal income tax returns have been filed and for which
the expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an "OPEN
YEAR").
(r) FEDERAL ADJUSTMENTS. Except as disclosed on Schedule 4.1(r)
hereto, there is no unpaid amount, as of the date hereof, of adjustments to
the Federal income tax liability of Borrower proposed by the Internal
Revenue Service with respect to Open Years, and no issues have been raised
by the Internal Revenue Service in respect of Open Years that, in the
aggregate, would have a Material Adverse Effect.
(s) STATE AND LOCAL ADJUSTMENTS. Except as disclosed on
Schedule 4.1(s) hereto, there is no unpaid amount, as of the date hereof,
of adjustments to the state, local and foreign tax liability of Borrower
and its Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns), and no issues have been raised by such taxing authorities
that, in the aggregate, would have a Material Adverse Effect.
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(t) INVESTMENT COMPANY. Borrower is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any
Advances, the application of the proceeds or repayment thereof by Borrower,
nor the consummation of the other transactions contemplated hereby, will
violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(u) SOLVENT. Borrower is Solvent.
(v) OWNED REAL PROPERTY. Set forth on Schedule 4.1(v) hereto is
a complete and accurate list of all real property owned by Borrower showing
as of the date hereof the street address, county or other relevant
jurisdiction, state, record owner and book and fair value thereof.
Borrower has good, marketable and insurable fee simple title to such real
property (including any such real property constituting Collateral), free
and clear of all Liens, other than Permitted Liens.
(w) LEASED REAL PROPERTY. Set forth on Schedule 4.1(w) hereto
is a complete and accurate list of all leases of real property under which
Borrower is the lessee showing as of the date hereof the street address,
county or other relevant jurisdiction, state, lessor, lessee, expiration
date and annual rental cost thereof. Each such lease is the legal, valid
and binding obligation of the lessor thereof, enforceable in accordance
with its terms.
(x) INVESTMENTS. Set forth on Schedule 4.1(x) hereto is a
complete and accurate list of all Investments held by Borrower showing as
of the Effective Date the amount, obligor or issuer and maturity, if any,
thereof.
(y) INTELLECTUAL PROPERTY. Set forth on Schedule 4.1(y) hereto
is a complete and accurate list of all patents, trademarks, trade names,
service marks and copyrights, and all applications therefor and licenses
thereof, of Borrower showing as of the date hereof the jurisdiction in
which registered, the registration number, the date of registration and the
expiration date.
(z) EMPLOYMENT ARRANGEMENTS. Set forth on Schedule 4.1(z) is a
complete and accurate list of (i) all employment agreements and executive
compensation arrangements to which Borrower is a party which provide for
aggregate compensation (excluding, for the purposes of this Section 4.1(z),
compensation in the form of employee stock options granted to such Person)
to any Person (assuming compliance with or satisfaction of all
contingencies or conditions thereof) of more than $300,000 per year and
(ii) all agreements relating to the voting or disposition of any
outstanding shares of capital stock of Borrower to which Borrower is a
party or of which Borrower is otherwise aware. Borrower has delivered to
Agent a true and complete copy of each of the agreements required to be
listed in Schedule 4.1(z).
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ARTICLE V
COVENANTS OF BORROWER
SECTION 5.1. AFFIRMATIVE COVENANTS. So long as any Advance shall
remain unpaid, Borrower will, unless the Required Lenders shall otherwise
consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien (other than a Permitted Lien) upon its
property; provided, however, that neither Borrower nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, Borrower shall be entitled to defer payment of "Priority Tax
Claims" (as defined in the Plan of Reorganization) in accordance with the
Plan of Reorganization.
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each
of its Subsidiaries and all lessees and other Persons occupying its
properties to comply, in all material respects, with all Environmental Laws
and Environmental Permits applicable to its operations and properties;
obtain and renew all Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries to conduct, any
investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from any of its properties, in accordance with the
requirements of all Environmental Laws; provided, however, that neither
Borrower nor any of its Subsidiaries shall be required to undertake any
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which Borrower or such
Subsidiary operates.
30
(e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Except as a
direct result of a transaction permitted under Section 5.2(d), preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises.
(f) VISITATION RIGHTS. At any reasonable time and from time to
time (which request shall be made on reasonable grounds), permit Agent or
any of Lenders or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of Borrower and any of its
Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
(g) PLAN CONTRIBUTIONS. Make, and cause each of its
Subsidiaries to make, when due, all contributions required by law to be
made to all Plans.
(h) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of Borrower and each such Subsidiary in accordance with generally
accepted accounting principles in effect from time to time.
(i) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(j) COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
otherwise perform all material obligations in respect of all leases of real
property, keep such leases in full force and effect and not allow such
leases to lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify Agent of any default by any party with
respect to such leases and cooperate with Agent in all respects to cure any
such default, and cause each of its Subsidiaries to do so.
(k) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to Borrower or such Subsidiary than it
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate.
(l) CASH CONCENTRATION ACCOUNTS. Maintain main cash
concentration accounts with City National Bank and Lockbox Accounts into
which all proceeds of Collateral are paid with City National Bank and
Pittsburgh National Bank or one or more banks acceptable to Agent that have
accepted the assignment of such accounts to Agent pursuant to the Security
Agreement. To the extent not otherwise provided in the
31
preceding sentence, maintain all deposit accounts or investment accounts
(other than investment accounts permitted under Section 5.2(e)(iii) hereof)
with City National Bank, with such accounts and the monies therein to be
part of the Collateral for the Obligations of Borrower under the Loan
Documents, provided that Borrower's access to such accounts shall not be
restricted by Lenders except in the event that any payment to Lenders has
not been made when due; and provided further, that such requirement shall
not be applicable to accounts in the United Kingdom and Canada in the
respective aggregate maximum amounts of $100,000 and $500,000 (or their
equivalent in the respective currency), the lockbox account of Borrower
maintained at Pittsburgh National Bank and the payroll account of Borrower
maintained at Bank of America. N.T. & S.A. in Carson, California.
(m) ADDITIONAL SUBSIDIARY GUARANTIES, ETC. Upon the formation
of any Principal Subsidiary or any Subsidiary of Borrower becoming a
Principal Subsidiary, and at the expense of Borrower, (i) within 5 days
after such formation or becoming, furnish to Agent a description of the
real and personal properties of such Principal Subsidiary in detail
reasonably satisfactory to Agent; (ii) within 10 days after such formation
or becoming, cause such Principal Subsidiary to duly execute and deliver to
Agent the Guaranty and such Collateral Documents (together with all the
stock of such Principal Subsidiary accompanied by undated stock powers
executed in blank, if not previously delivered to Agent) and other
documents as Agent may reasonably request; (iii) within 15 days after such
formation or becoming, take whatever action (including, without limitation,
the filing of Uniform Commercial Code financing statements and the giving
of notices) may be necessary or advisable in the opinion of Agent to vest
in Agent valid and perfected security interests on the properties purported
to be subject to the Collateral Documents delivered pursuant to this
Section 5.1(m); and (iv) at any time and from time to time, promptly cause
such Principal Subsidiary to execute and deliver any and all further
instruments and documents and take all such other actions as Agent may
reasonably deem necessary in obtaining the full benefits of, or in
perfecting and preserving the security interests created by, such Guaranty
and Collateral Documents.
SECTION 5.2. NEGATIVE COVENANTS. So long as any Advance shall remain
unpaid, Borrower will not, at any time, without the written consent of the
Required Lenders:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions the Permitted Liens.
(b) DEBT. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Debt other than:
32
(i) Debt under the Loan Documents;
(ii) unsecured Debt incurred in the ordinary course of
business for borrowed money, maturing within one year from the date
incurred, and aggregating, for Borrower and its Subsidiaries on a
Consolidated basis, not more than $1,000,000 at any one time
outstanding;
(iii) Subordinated Debt;
(iv) Existing Debt and any Debt extending the maturity of,
or refunding or refinancing, in whole or in part, any Existing Debt,
provided that the terms of any such extending, refunding or
refinancing Debt, and of any agreement entered into and of any
instrument issued in connection therewith, are otherwise permitted by
the Loan Documents and further provided that the principal amount of
such Existing Debt shall not be increased above the principal amount
thereof outstanding immediately prior to such extension, refunding or
refinancing, and the direct and contingent obligors therefor shall not
be changed, as a result of or in connection with such extension,
refunding or refinancing;
(v) Debt secured by Liens described in clauses (vii) and
(viii) of the definition of Permitted Liens set forth in Section 1.1
not to exceed in the aggregate the amount set forth in such Section;
(vi) unsecured Debt incurred in the ordinary course of
business for the deferred purchase price of property or services,
maturing within one year from the date created, and aggregating, for
Borrower and its Subsidiaries on a Consolidated basis, not more than
$1,000,000 at one time outstanding; and
(vii) indorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
PROVIDED, HOWEVER, that Dep International, Ltd., a U.S. Virgin Islands
corporation and a Subsidiary of Borrower, will not be permitted to create,
incur, assume or suffer to exist any Debt whatsoever.
(c) LEASE OBLIGATIONS. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
obligations as lessee for the rental or hire of real or personal property of any
kind under leases or agreements to lease including Capitalized Leases having an
original term of one year or more that would cause the direct and contingent
liabilities of Borrower and its Subsidiaries, on a Consolidated basis, in
respect of all such obligations to exceed $1,500,000 payable in any period of 12
consecutive months.
33
(d) MERGERS, ETC. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries to do so,
except that (i) any Subsidiary of Borrower may merge into or consolidate with
any other Subsidiary of Borrower provided that, in the case of any such
consolidation, the Person formed by such consolidation shall be a Subsidiary of
Borrower and (ii) any Subsidiary of Borrower may merge into Borrower; provided,
however, that in each case, immediately after giving effect thereto, no event
shall occur and be continuing that constitutes a Default and, in the case of any
such merger to which Borrower is a party, Borrower is the surviving corporation;
and except that Borrower and/or one or more of its Subsidiaries may engage in
any such transactions in order to effect a sale of all of the assets of Borrower
or such Subsidiaries.
(e) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) (A) Investments by Borrower and its Subsidiaries in
any Subsidiary that has executed a Guaranty and a Security Agreement
hereunder, (B) Investments by Borrower and its Subsidiaries in other
Subsidiaries of Borrower existing on the Effective Date, and (C)
Investments by Borrower and its Subsidiaries in other Subsidiaries of
Borrower all the stock of which has been pledged to Agent for the
benefit of Lenders under the applicable Security Agreement in an
aggregate amount invested from the Effective Date not to exceed
$2,000,000;
(ii) loans and advances to employees of Borrower and its
Subsidiaries in the ordinary course of the business as presently
conducted in an aggregate principal amount not to exceed $200,000 at
any time outstanding;
(iii) Investments by Borrower and its Subsidiaries in
Cash Equivalents;
(iv) advances or additional capital contributions to Dep
Asia Limited, a Hong Kong corporation, in an outstanding aggregate
amount not to exceed $2,500,000;
(v) Investment existing on the Effective Date and listed on
Schedule 4.1(x); and
(vi) other Investments in an aggregate amount invested not
to exceed $2,000,000.
(f) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital
34
stock, warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or any warrants,
rights or options to acquire such capital stock, or permit any of its
Subsidiaries to purchase, redeem, retire, defease or otherwise acquire for
value any capital stock of Borrower or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except that
Borrower may (i) declare and deliver dividends and distributions payable
only in common stock of Borrower; and (ii) purchase, redeem, retire,
defease or otherwise acquire shares of its capital stock with the proceeds
received from the issue of new shares of its capital stock with equal or
inferior voting powers, designations, preferences and rights.
(g) ACCOUNTING CHANGES. Make or permit, or permit any of its
Subsidiaries to make or permit, any change as to its fiscal year or in
accounting policies or reporting practices, except as required by GAAP.
(h) PREPAYMENTS, ETC. OF DEBT. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, other than (i) the prepayment of the Advances in accordance with the
terms of this Agreement; (ii) regularly scheduled or required repayments or
redemptions of Debt permitted under Section 5.2(b); and (iii) in accordance
with the Plan of Reorganization, or amend, modify or change in any manner
any term or condition of any Debt permitted under Section 5.2(b) if the
effect of such amendment, modification or change is to increase the
required amount of any payment or prepayment or to create an Event of
Default, or permit any of its Subsidiaries to do any of the foregoing.
(i) PARTNERSHIPS. Become a general partner in any general or
limited partnership, or permit any of its Subsidiaries to do so, other than
any Subsidiary the sole assets of which consist of its interest in such
partnership and other than through a special interest vehicle.
(j) PAYMENTS PURSUANT TO PLAN OF REORGANIZATION.
Notwithstanding any other provision of this Agreement to the contrary,
Borrower shall be authorized to make any and all payments and to take any
and all such other actions as are required under the Plan of
Reorganization.
SECTION 5.3. REPORTING REQUIREMENTS. So long as any Advance shall
remain unpaid Borrower will, unless the Required Lenders shall otherwise consent
in writing, furnish to Lenders:
(a) DEFAULT NOTICE. As soon as possible and in any event within
five days after any officer of Borrower becomes aware of the occurrence of
each Default continuing on the date of such statement, a statement of the
chief financial officer of Borrower setting forth details of such Default
and the action that Borrower has taken and proposes to take with respect
thereto.
35
(b) MONTHLY FINANCIALS. As soon as available and in any event
within 30 days after the end of each month other than a month which is the
last month of a fiscal quarter or fiscal year, (i) a Consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such month; (ii)
Consolidated statements of income of Borrower and its Subsidiaries
(including a breakdown of sales by product line) for such month and the
period commencing on the first day of the fiscal year in which such month
occurs and ending on the last day of such month; and (iii) Consolidated
statements of cash flows of Borrower and its Subsidiaries for the period
commencing on the first day of the fiscal year in which such month occurs
and ending on the last day of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding month or
period of the preceding year, all in reasonable detail and duly certified
by the chief financial officer of Borrower that, to the best of the
knowledge of such chief financial officer, subject to year-end audit
adjustments, the financial information contained therein fairly present the
financial condition of Borrower and its Subsidiaries.
(c) QUARTERLY FINANCIALS. As soon as available and in any event
within 45 days after the end of each fiscal quarter of Borrower other than
the last fiscal quarter of a fiscal year, (i) a Consolidated balance sheet
of Borrower and its Subsidiaries as of the end of such quarter; (ii)
Consolidated statements of income of Borrower and its Subsidiaries
(including a breakdown of sales by product line) for such quarter and the
period commencing on the first day of the fiscal year in which such quarter
occurs and ending on the last day of such quarter; and (iii) Consolidated
statements of cash flows of Borrower and its Subsidiaries for the period
commencing on the first day of the fiscal year in which such quarter occurs
and ending on the last day of such quarter, setting forth in the case of
subclause (ii) above in comparative form, the corresponding figures for the
corresponding quarter or period of the preceding fiscal year and the
corresponding figures from the most recent business plan delivered to
Lenders pursuant to Section 5.3(e) hereof and in the case of subclause (i)
and (iii) above in comparative form the corresponding figures from the most
recent plan delivered to Lenders pursuant to Section 5.3(e) hereof, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of Borrower as having been
prepared in accordance with GAAP, together with (i) a certificate of said
officer stating that no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature
thereof and the action that Borrower has taken and proposes to take with
respect thereto and (ii) a completed compliance certificate, in
substantially the form of Exhibit E attached hereto, duly executed by the
chief financial officer or chief executive officer of Borrower.
(d) ANNUAL FINANCIALS. As soon as available and in any event
within 90 days after the end of each fiscal year of Borrower, a copy of the
annual audit report for such year for Borrower and its Subsidiaries,
including therein a Consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated statements
of income and cash flows of Borrower and its Subsidiaries for
36
such fiscal year, in each case accompanied by an opinion reasonably
acceptable to the Required Lenders of a nationally recognized public
accounting firm, together with (i) a certificate of such accounting firm to
Lenders stating that in the course of the regular audit of the business of
Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default has occurred and
is continuing, or if, in the opinion of such accounting firm, a Default has
occurred and is continuing, a statement as to the nature thereof and (ii) a
completed compliance certificate, in substantially the form of Exhibit E,
duly executed by the chief financial officer or the chief executive officer
of Borrower. In addition, Borrower shall furnish to Lenders, as soon as
available and in any event no later than 45 days after the end of each
fiscal year of Borrower, (A) a Consolidated balance sheet of Borrower and
its Subsidiaries as of the end of such fiscal year, and (B) Consolidated
statements of income (including a breakdown of sales by product line) and
cash flows of Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of Borrower as having been
prepared in accordance with GAAP.
(e) ANNUAL FORECASTS. (i) As soon as available and in any event
no later than 30 days after the end of each fiscal year of Borrower,
Borrower's annual business plan and forecasts prepared by management of
Borrower, in form reasonably satisfactory to Agent, of balance sheets,
income statements (including a breakdown of sales by product line) and cash
flow statements (it being understood that each such business plan and all
such forecasts furnished to Lenders shall set forth information on a
quarterly basis for the first fiscal year covered thereby and shall set
forth information on an annual basis for each fiscal year thereafter until
the Termination Date).
(f) ERISA EVENTS. Promptly and in any event within 10 days
after Borrower or any of its ERISA Affiliates knows or has reason to know
that any ERISA Event with respect to Borrower or any of its ERISA
Affiliates has occurred, a statement of the chief financial officer of
Borrower describing such ERISA Event and the action, if any, that Borrower
or such ERISA Affiliate has taken and proposes to take with respect
thereto.
(g) PLAN TERMINATIONS. Promptly and in any event within five
Business Days after receipt thereof by Borrower or any of its ERISA
Affiliates, copies of each notice from the PBGC stating its intention to
terminate any Plan of Borrower or any of its ERISA Affiliates or to have a
trustee appointed to administer any such Plan.
(h) PLAN ANNUAL REPORTS. Promptly and in any event within 30
days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each Plan of Borrower or any of its ERISA
Affiliates.
37
(i) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event
within five Business Days after receipt thereof by Borrower or any of its
ERISA Affiliates from the sponsor of a Multiemployer Plan of Borrower or
any of its ERISA Affiliates, copies of each notice concerning (i) the
imposition of Withdrawal Liability by any such Multiemployer Plan, (ii) the
reorganization or termination, within the meaning of Title IV of ERISA, of
any such Multiemployer Plan or (iii) the amount of liability incurred, or
that may be incurred, by Borrower or any of its ERISA Affiliates in
connection with any event described in clause (i) or (ii).
(j) LITIGATION. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Borrower or any of its
Subsidiaries of the type described in Section 4.1(f), and promptly after
the occurrence thereof, notice of any adverse change in the status or the
financial effect on Borrower of the Disclosed Litigation from that
described on Schedule 4.1(f).
(k) SECURITIES REPORTS. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
that Borrower or any of its Subsidiaries sends to its stockholders, and
copies of all regular, periodic and special reports, and all registration
statements, that Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority that may
be substituted therefor, or with any national securities exchange.
(l) CREDITOR REPORTS. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of Borrower or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to Lenders pursuant to any other clause of this
Section 5.3.
(m) AGREEMENT NOTICES. Promptly upon receipt thereof, copies of
all notices, requests and other documents (other than routine
correspondence) received by Borrower or any of its Subsidiaries under or
pursuant to any Acquisition Documents and, from time to time upon request
by Agent, such information and reports regarding the Acquisition Documents
as Agent may reasonably request.
(n) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence
thereof, notice of any condition or occurrence on any property of Borrower
that results in a material noncompliance by Borrower or any of its
Subsidiaries with any Environmental Law or Environmental Permit or could
(i) form the basis of an Environmental Action against Borrower or any of
its Subsidiaries or such property that would have a Material Adverse Effect
or (ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
38
(o) CHANGE OF CONTROL NOTICE. As soon as possible and in any
event within five days after the occurrence of any event referred to in
clause (i) or (ii) of the definition of "Change of Control" contained in
Section 1.1 hereof, notice of the occurrence of such event.
(p) OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower as any Lender may from time to time
reasonably request.
SECTION 5.4. FINANCIAL COVENANTS. So long as any Advance shall
remain unpaid, Borrower will, unless the Required Lenders otherwise consent in
writing:
(a) WORKING CAPITAL. Maintain a ratio of Consolidated Current
Assets to Consolidated Current Liabilities of not less than 1.5 to 1.0.
(b) FIXED CHARGE COVERAGE RATIO. Maintain, for each period of
four consecutive quarters set forth below, a ratio of (i) Consolidated
EBITDA of Borrower and its Subsidiaries for such period MINUS the sum of
(A) cash Capital Expenditures of Borrower and its Subsidiaries during such
period, and (B) Consolidated cash income taxes paid (net of any cash income
tax refunds received) by Borrower and its Subsidiaries during such period,
to (ii) the sum of (A) interest payable on, and amortization of debt
discount in respect of, all Debt of Borrower and its Subsidiaries during
such period and (B) principal amounts of all Funded Debt payable by
Borrower and its Subsidiaries during such period of not less than the ratio
set forth below for the respective period:
FOUR-QUARTER PERIOD ENDING RATIO
---------------------------------------------------
On October 31, 1996 0.30 to 1.0
On January 31, 1997 0.35 to 1.0
On April 30, 1997 0.50 to 1.0
On July 31, 1997 0.85 to 1.0
During 1997/1998 fiscal year 0.95 to 1.0
During 1998/1999 fiscal year 0.95 to 1.0
During 1999/2000 fiscal year 0.90 to 1.0
During 2000/2001 fiscal year 0.80 to 1.0
During 2001/2002 fiscal year 0.85 to 1.0
(c) CAPITAL EXPENDITURES. Not make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all
39
such Capital Expenditures made by Borrower and its Subsidiaries in any
period of 12 consecutive months to exceed an aggregate amount of $1,500,000
plus an amount equal to the sum of (i) Net Cash Proceeds which, in
accordance with the provisions of Section 2.4(a), are utilized by Borrower
or any Subsidiary of Borrower to effect a Capital Expenditure during such
12-consecutive-month period; PLUS (ii) cash proceeds which, in accordance
with the provision of Section 2.4(c), are utilized by Borrower or any
Subsidiary of Borrower to effect a Capital Expenditure during such
12-consecutive-month period.
(d) LEVERAGE RATIO. Maintain, for each quarter ended in the
periods set forth below, a ratio of Consolidated Total Liabilities to
Consolidated Net Worth of not greater than the ratio set forth below for
such quarter:
FISCAL QUARTER ENDING RATIO
-----------------------------------------------
During 1996/1997 fiscal year 40 to 1.0
During 1997/1998 fiscal year 30 to 1.0
During 1998/1999 fiscal year 18 to 1.0
During 1999/2000 fiscal year 13 to 1.0
During 2000/2001 fiscal year 8 to 1.0
During 2001/2002 fiscal year 5 to 1.0
(e) CALCULATION. In making calculations under this Section 5.4,
Reorganization Expenses shall be excluded.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) PAYMENT. Borrower shall fail to pay any principal of any
Advance when due and payable, or shall fail to pay any interest on any
Advance within three days after such interest shall become due and payable,
or Borrower shall fail to make any other payment under any Loan Document
within three days after the same becomes due and payable; or
(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made or deemed made by Borrower (or any of its officers) under or
in connection with any Loan Document shall prove to have been incorrect in
any material respect when made or deemed made; or
40
(c) CERTAIN COVENANTS. Borrower shall fail to perform or
observe any term, covenant or agreement contained in Sections 5.2, 5.3(a)
or 5.4; or
(d) COVENANTS. Borrower shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 15
Business Days after written notice thereof shall have been given to
Borrower by Agent or any Lender; or
(e) DEBT. Borrower or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount payable in
respect of, any Debt that is outstanding in a principal amount of at least
$1,000,000 in the aggregate (but excluding Debt outstanding hereunder and
any Debt for the deferred purchase price of property or services to the
extent such Debt is being contested in good faith by Borrower and Borrower
has set aside adequate reserves on its books in accordance with GAAP in
respect of such contested Debt) of Borrower or such Subsidiary (as the case
may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be declared
to be due and payable or required to be prepaid or redeemed (other than by
a regularly scheduled required prepayment or redemption or a prepayment or
redemption that is required other than as a result of a default by or other
condition in respect of Borrower), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) INSOLVENCY. Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Borrower or any of its Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or Borrower or any of its Subsidiaries shall
41
take any corporate action to authorize any of the actions set forth above
in this subsection (f); or
(g) MONETARY JUDGMENTS. Any judgment or order for the payment
of money in excess of $5,000,000 shall be rendered against Borrower or any
of its Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) NON-MONETARY JUDGMENTS. Any non-monetary judgment or order
shall be rendered against Borrower or any of its Subsidiaries that would
have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(i) LOAN DOCUMENTS. Any material provision of any Loan Document
after delivery thereof pursuant hereto shall for any reason cease to be
valid and binding on or enforceable against Borrower to it, or Borrower
shall so state in writing (other than ceasing to be valid, binding or
enforceable as a result of an amendment, release, waiver, termination, or
consent given by Lenders or Agent); or
(j) COLLATERAL DOCUMENTS. Any Collateral Document after
delivery thereof pursuant hereto shall for any reason (other than pursuant
to the terms thereof) cease to create a valid and perfected first priority
(other than as a result of the priority of Permitted Liens) Lien on the
Collateral purported to be covered thereby, or any Grantor shall so state
in writing (other than ceasing to create a valid and perfected first
priority Lien as a result of an amendment, release, waiver, termination, or
consent given by Lenders or Agent); or
(k) ERISA EVENTS. Any ERISA Event shall have occurred with
respect to, a Plan of Borrower or any of its ERISA Affiliates and the sum
(determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans
of Borrower and their ERISA Affiliates with respect to which an ERISA Event
shall have occurred and then exist (or the liability of Borrower and their
ERISA Affiliates related to such ERISA Event) exceeds $1,000,000; or
(l) WITHDRAWAL LIABILITY. Borrower or any of its ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer Plan
of Borrower or any of its ERISA Affiliates that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
borrower and its ERISA Affiliates as Withdrawal Liability (determined as of
the date of such notification), exceeds $1,000,000 or requires payments
exceeding $1,000,000 per annum; or
42
(m) MULTIEMPLOYER PLANS. Borrower or any of its ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer Plan
of Borrower or any of its ERISA Affiliates that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, and as a result of such reorganization or termination the aggregate
annual contributions of Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $1,000,000;
then, and in any such event, Agent shall at the request, or may with the consent
of the Required Lenders, by notice to Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower.
ARTICLE VII
AGENT
SECTION 7.1. AUTHORIZATION AND ACTION. Agent is authorized on behalf
of each Lender to take such action as agent on its behalf and to exercise such
powers and discretion under this Agreement and the other Loan Documents as are
delegated to Agent by the terms hereof and thereof, together with such powers
and discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lenders and all holders of Notes; PROVIDED, HOWEVER,
that Agent shall not be required to take any action that exposes Agent to
personal liability or that is contrary to this Agreement or applicable law.
Agent shall give to each Lender prompt notice of each notice given to it by
Borrower pursuant to the terms of this Agreement.
SECTION 7.2. AGENT'S RELIANCE, ETC. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, Agent: (i) may treat the
payee of any Note as the holder thereof until Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
8.7; (ii) may consult with legal counsel (including counsel for Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be
43
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with the Loan Documents; (iv) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
Borrower or to inspect the property (including the books and records) of
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any other instrument or document furnished pursuant hereto;
(vi) shall incur no liability under or in respect of any Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telegram, telecopy, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties; and (vii) shall incur no
liability as a result of any determination whether the transactions contemplated
by the Loan Documents constitute a "highly leveraged transaction" within the
meaning of the interpretations issued by the Comptroller of the Currency, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System.
SECTION 7.3. FOOTHILL AND AFFILIATES. With respect to its Advances
and the Notes issued to it, Foothill shall have the same rights and powers under
the Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Foothill in its individual capacity. Foothill and
its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, Borrower, any of its Subsidiaries and any Person
who may do business with or own securities of Borrower or any such Subsidiary,
all as if Foothill were not Agent and without any duty to account therefor to
Lenders.
SECTION 7.4. LENDER CREDIT DECISION. Each Lender shall independently
and without reliance upon Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, make its own decisions
in taking or not taking action under this Agreement.
SECTION 7.5. INDEMNIFICATION. Each Lender severally shall indemnify
Agent (to the extent not promptly reimbursed by Borrower) from and against such
Lender's ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by Agent under the Loan Documents; PROVIDED, HOWEVER,
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse Agent promptly
upon demand for its ratable share of any costs and expenses payable by Borrower
under Section 8.4, to the extent that Agent is not promptly reimbursed for such
costs and expenses by Borrower. For purposes of this Section 7.5, Lenders'
respective ratable shares of any amount shall be determined, at any time,
according
44
to the aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lenders. The failure of any Lender to reimburse Agent
promptly upon demand for its ratable share of any amount required to be paid by
Lenders to Agent as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse Agent for its ratable share of such amount,
but no Lender shall be responsible for the failure of any other Lender to
reimburse Agent for such other Lender's ratable share of such amount.
SECTION 7.6. SUCCESSOR AGENTS. Agent may resign at any time by
giving written notice thereof to Lenders and Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and upon the execution
and filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Collateral Documents, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 7.7. CO-AGENT. The Co-Agent as such will have no duties or
responsibilities under this Agreement or any other Loan Document.
SECTION 7.8. REPORTS PREPARED BY AGENT. In the event that Agent
shall obtain or prepare any analyses, information or reports relating to
Borrower and its Subsidiaries and not otherwise required by the terms hereof to
be delivered to Lenders, Agent may, at the request of any Lender, provide to
such Lender such analyses, reports and information as Agent shall in its sole
discretion determine is appropriate; PROVIDED, HOWEVER, that any Lender
requesting or receiving any such analyses, report or information thereby
expressly acknowledges and agrees that (i) any such analysis, report or
information is being provided by Agent as an accommodation to such Lender, (ii)
that none of the delivery, receipt or content of any such analyses, report or
information shall affect such Lender's obligations to at all times,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as such Lender shall deem appropriate at the
time, make its own credit decisions in taking or not taking action under this
Agreement, and (iii) Agent shall incur no liability whatsoever as a result of
the delivery, receipt or content of any such
45
analyses, report or information and shall be fully indemnified with respect
thereto pursuant to Section 7.5 hereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by all Lenders (other than any Lender which is, at
such time, a Defaulting Lender), do any of the following at any time: (i) waive
any of the conditions specified in Section 3.1, (ii) change the aggregate unpaid
principal amount of the Advances, or the number of Lenders, that shall be
required for Lenders or any of them to take any action hereunder, (iii) amend
this Section 8.1, (iv) subject Lenders to any additional obligations, (v) reduce
the principal of, or interest (other than interest payable pursuant to Section
2.5(b)) on, the Notes or any fees or other amounts payable hereunder or (vi)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder; PROVIDED FURTHER that no
amendment, waiver or consent shall, unless in writing and signed by Agent in
addition to Lenders required above to take such action, affect the rights or
duties of Agent under this Agreement or any Note.
SECTION 8.2. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to Borrower, at its address at 0000 Xxxx Xxx Xxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxx, President and
Chairman, Telecopy Number (000) 000-0000, with a copy thereof to Xxxxxx &
Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000,
Attention: Xxxxxx X. Xxxxxx, Telecopy Number (000) 000-0000; if to any Bank, at
its Domestic Lending Office specified opposite its name on Schedule 1.1 hereto;
if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to Agent,
at its address at 11111 Santa Xxxxxx Boulevard, Suite 1500, Commercial Banking,
Xxx Xxxxxxx, XX 00000, Attention: Xxxxx Xxxxxxx, Telecopy Number (310) 479-
0461; or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall, when mailed, telegraphed, telecopied, telexed or cabled,
be effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, except that notices and communications to Agent
pursuant to Article II, III or VII shall not be effective until received by
Agent.
SECTION 8.3. NO WAIVER; REMEDIES. No failure on the part of any
Lender or Agent to exercise, and no delay in exercising, any right hereunder or
under any Note shall
46
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 8.4. COSTS AND EXPENSES. Borrower agrees to pay on demand
all reasonable costs and expenses of Agent and Lenders in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy insolvency or other similar proceeding affecting creditors'
rights generally or otherwise.
SECTION 8.5. RIGHT OF SET-OFF. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.1 to authorize Agent to declare
the Notes due and payable pursuant to the provisions of Section 6.1, each Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise 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 such Lender or such
Affiliate to or for the credit or the account of Borrower against any and all of
the Obligations of Borrower now or hereafter existing under this Agreement and
the Note or Notes held by such Lender, irrespective of whether such Lender shall
have made any demand under this Agreement or such Note or Notes and although
such obligations may be unmatured. Each Lender shall promptly notify Borrower
after any such set-off and application; PROVIDED, HOWEVER, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.
SECTION 8.6. BINDING EFFECT. This Agreement shall become effective
on the Effective Date and thereafter shall be binding upon and inure to the
benefit of Borrower, Agent and each Lender and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Lenders.
SECTION 8.7. ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Subject to the provisions of Section 8.7(i),
each Lender may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of the Advances owing to it and the
Notes held by it); PROVIDED, HOWEVER, that (i) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a
Lender or an assignment of all of a Lender's rights and obligations under
this Agreement, the amount of the Advance of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than $5,000,000 and each such assignment shall be to an
Eligible Assignee, and (ii) the parties to each such assignment shall
execute and deliver to Agent, for its acceptance and recording in
41
the Register, an Assignment and Acceptance, together with the Notes subject
to such assignment and a processing and recordation fee of $2,500. A copy
of such Assignment and Acceptance shall also be delivered to Borrower;
PROVIDED, HOWEVER, that such delivery to Borrower shall not be a condition
of effectiveness of such Assignment and Acceptance. Upon such execution,
delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (x) 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 of a Lender hereunder and (y)
the Lender assignor 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).
(b) EFFECT OF ASSIGNMENT. By executing and delivering an
Assignment and Acceptance, the Lender assignor 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 any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance or observance by Borrower of any
of its obligations under any Loan Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it
has received a copy of the Loan Documents, together with copies of the
financial statements referred to in Section 4.1 and 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 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 any Loan
Document; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement
and the other Loan Documents as are delegated to Agent by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of
this Agreement are required to be performed by it as a Lender.
(c) REGISTER. Agent shall maintain at its address referred to
in Section 8.2 a copy of each Assignment and Acceptance delivered to and
accepted by it
48
and a register for the recordation of the names and addresses of Lenders
and the principal amount of the Advances owing to, each Lender from time to
time (the "REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, Agent and
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) NOTES. Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with any Notes
subject to such assignment, Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit F hereto,
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to
Borrower. Within five Business Days after its receipt of such notice,
Borrower, at its own expense, shall execute and deliver to Agent, in
exchange for the surrendered Note, a new Note to the order of such Eligible
Assignee in an aggregate amount equal to the Advance assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained
an Advance hereunder, a new Note to the order of the assigning Lender in an
aggregate amount equal to the Advance retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of the Advances outstanding on the effective date of the
Assignment and Acceptance, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto.
(e) PARTICIPATION. Subject to the provisions of Section 8.7(i),
each Lender may sell participations in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or
a portion of the Advances owing to it and the Note held by it); 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, (iii) such
Lender shall remain the holder of such Note for all purposes of this
Agreement, (iv) Borrower, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (v) no participant under
any such participation shall have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any
departure by Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest (other than
interest payable pursuant to Section 2.5(b)) on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest (other than interest payable pursuant to Section 2.5(b)) on, the
Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or release all or substantially all
of the Collateral.
49
(f) DISCLOSURE. Any Lender may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 8.7, disclose to the assignee or participant or
proposed assignee or participant, any information relating to Borrower
furnished to such Lender by or on behalf of Borrower; PROVIDED, HOWEVER,
that, prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of any
Confidential Information received by it from such Lender.
(g) ASSIGNMENT TO FEDERAL RESERVE BOARD. Notwithstanding any
other provision set forth in this Agreement, any Lender (including any
Eligible Assignee of any Lender) may at any time create a security interest
in, or assign, all or any portion of its rights under this Agreement and
the other Loan Documents (including, without limitation, the Advances owing
to it and the Notes held by it) in favor of or to any Federal Reserve Bank
without notice to, or consent of, Borrower or Agent.
(h) TAXES. Notwithstanding the provisions of Section 2.8,
Borrower shall not be liable for (i) any Taxes or Other Taxes, that are
incurred by any Affiliate of any Lender when such Affiliate becomes a
Lender under Section 8.7(a) to the extent such Taxes or Other Taxes exceed
the Taxes or Other Taxes that would have been incurred by such Lender, or
(ii) any Taxes or Other Taxes, that are incurred by any participant
referred to in Section 8.7(e).
SECTION 8.8. HEADINGS. Article and Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 8.9. CONSENT TO JURISDICTION.
(a) JURISDICTION. Borrower hereby irrevocably submits to the
jurisdiction of any California or federal court sitting in the County of
Los Angeles, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, and Borrower hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard
and determined in such courts. Borrower hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.
(b) LEGAL PROCESS. Nothing in this Section 8.9 shall affect the
right of any Lender or Agent to serve legal process in any other manner
permitted by law or affect the right of any Lender or Agent to bring any
action or proceeding against Borrower or its property in the courts of
other jurisdictions.
SECTION 8.10. CONFIDENTIALITY. Neither Agent nor any Lender shall
disclose any Confidential Information to any Person without the consent of
Borrower, other than (a) to Agent's or such Lender's Affiliates and their
officers, directors, employees, agents and
50
advisors and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis; (b) as required by any law, rule or
regulation or judicial process; and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking. If any
Lender or Agent is required by any law, rule or regulation or judicial process
to disclose any Confidential Information, such Lender or Agent, as the case may
be, will promptly give notice to Borrower so that Borrower may seek a protective
order or other appropriate remedy. If Borrower shall not obtain such protective
order or other remedy, such Lender or Agent, as the case may be, will endeavor
to furnish only that portion of the Confidential Information which such Lender
or Agent believes to be legally required.
SECTION 8.11. SEVERABILITY. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
SECTION 8.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.
SECTION 8.13. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
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51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
DEP CORPORATION
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
FOOTHILL CAPITAL CORPORATION, as a
Lender and as Agent
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
CITY NATIONAL BANK, as a Lender and as
Co-Agent
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
PNC BANK, N.A., as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
S-1
XXXXXXX, XXXXX CREDIT PARTNERS, L.P., as a
Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
CERBERUS PARTNERS, L.P., as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
TCW SPECIAL CREDITS FUND V - THE PRINCIPAL
FUND, as a Lender
By:
----------------------------------------
Name:
-------------------------------
Title:
-------------------------------
By: TCW ASSET MANAGEMENT COMPANY, its
general partner
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
S-2
