EXHIBIT 1.4
COMERICA--2ND RESTATED AGR
SECOND RESTATED REVOLVING CREDIT AGREEMENT
THIS SECOND RESTATED REVOLVING CREDIT AGREEMENT is made as of the 30th day
of September 1999 by and between IPG HOLDINGS LP, a Delaware limited partnership
("Holdings"), IPG (US) INC., a Delaware corporation ("IPG"; collectively with
Holdings, "Borrower"), INTERTAPE POLYMER GROUP INC., a corporation organized
under the laws of Canada ("Company") and COMERICA BANK, a banking corporation
organized under the laws of Michigan, with principal offices at 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Bank").
W I T N E S S E T H:
WHEREAS, Holdings and Bank are party to a certain Restated Revolving Credit
Agreement dated as of May 8, 1998, as amended (collectively, the "Prior
Agreement") pursuant to which Bank established a revolving credit facility for
Holdings in the amount of Sixty Million Dollars ($60,000,000) which contained a
subfacility for IPG (and others) in the amount of $10,000,000 and Holdings
delivered to Bank a Eurodollar Revolving Note, as evidence thereof, in the face
amount of Sixty Million Dollars ($60,000,000) and IPG (and others) delivered to
Bank a Eurodollar Revolving Note, as evidence of the subfacility, in the face
amount of Ten Million Dollars ($10,000,000) (collectively, the "Prior Notes").
WHEREAS, Holdings and Company have requested Bank to amend the Prior
Agreement and Prior Notes to among other things, add IPG as a Borrower
hereunder;
WHEREAS, Bank is willing to do so on the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree that the Prior Agreement is hereby
amended and restated in its entirety as follows:
ARTICLE 1
REVOLVING CREDIT FACILITY
1.1 Subject to and upon the terms and conditions herein set forth, the Bank
hereby establishes a Revolving Credit Facility in favor of the Borrower
("Revolving Credit") which may be utilized by Borrower by direct advances under
Section 1.2 below and/or for Letters of Credit issued under Section 1.4 hereof,
provided however that the aggregate principal amount of advances under the
Revolving Credit plus the aggregate face amount of Letters of Credit at any one
time outstanding, plus the aggregate principal amount of the advances
outstanding under the Subfacility Note, shall at no time exceed the Commitment
Amount.
1.2 Subject to the provisions of this Agreement, so long as no Event of
Default exists, and if no condition exists which, but for the giving of notice
or the lapse of time or both, would constitute an Event of Default hereunder,
the Borrower may draw upon such Revolving Credit in whole or in part, from time
to time, and the amount of any borrowing may be repaid and reborrowed, until the
Maturity Date.
1.3 The indebtedness hereunder shall be due and payable in full on the
Maturity Date and interest thereon shall accrue and be paid as provided in the
promissory note executed by Borrower as evidence of the Revolving Credit in the
form attached as Exhibit "A" (the "Note").
1.4 The Borrower may request the Bank from time to time to issue, for the
Borrower's accounts with third parties, letters of credit (called herein,
together with any "Letters of Credit" which were issued by Bank pursuant to the
Prior Agreement which remain issued and unexpired as of the Closing Date, the
"Letters of Credit"), in each case with expiries not later than the earlier of
(x) one year and (y) the Maturity Date. In connection with each such request,
Borrower shall execute and deliver to Bank, prior to the requested date of
issuance, a letter of credit application and agreement in form satisfactory to
Bank.
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1.5 The Borrower shall pay to the Lender (a) a closing fee, on even date
herewith, in the amount of , which fee shall be fully earned as of
the date hereof and shall not be refundable in whole or part for any reason,
(b) with respect to Letters of Credit generally, the Bank's standard charges in
connection with processing, issuance, amendments and drawings on letters of
credit, which standard charges are set forth in Exhibit B hereto, (c) with
respect to standby Letters of Credit, letter of credit fees payable quarterly in
arrears on each the first day of each January, April, July and October, in the
amount of one percent (1%) per annum on the face amounts thereof, and (d) with
respect to trade Letters of Credit, letter of credit fees, payable upon issuance
thereof in the amount of three-eighths percent ( 3/8%) per annum of the face
amount thereof.
ARTICLE 2
PURPOSE OF THE LOAN
2.1 The proceeds of the loan to be made hereunder are to be used (i) in an
initial advance to be made on the Closing Date for the purpose of, and in the
amount necessary to, repay, by replacement and renewal evidences, indebtedness
outstanding under the Prior Note, and (ii) thereafter, for general working
capital purposes.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE BORROWER
Each Borrower, respectively, represents and warrants to the Bank that:
3.1 AUTHORIZATION. The Borrower has the power and authority necessary and
has taken all necessary steps in order to be authorized to borrow hereunder and
to execute and deliver and perform its obligations under this Agreement and Note
in accordance with the terms and conditions thereof and to complete the
transactions contemplated herein. This Agreement and the Note have been duly
executed and delivered by duly authorized officers of the Borrower and Company
and constitute legal, valid and binding obligations of the Borrower and Company,
enforceable in accordance with their terms.
3.2 NO VIOLATION TO RESULT. The execution and delivery of this Agreement
and the contemplated hereby:
(a) are not in violation or breach of, do not conflict with or constitute a
default under, and will not accelerate or permit the acceleration of the
performance required by, the organizational documents of the Borrower or
any note, debt instrument, security agreement or mortgage, or any other
contract or agreement, written or oral, to which the Borrower is a party
or by which the Borrower or any of its properties or assets are bound;
(b) will not be an event which, after notice or lapse of time or both, will
result in any such violation, breach, conflict, default, or acceleration;
(c) will not result in violation under any law, judgment, decree, order,
rule, regulation or other legal requirement of any governmental
authority, court or arbitration tribunal whether federal, state,
provincial, municipal or local (within the U.S. or otherwise) at law or
in equity, and applicable to the Borrower; and
(d) will not result in the creation or imposition of any lien, possibility
of lien, encumbrance, security agreement, equity, option, claim, charge,
pledge or restriction in favor of any third person upon any of the
properties or assets of the Borrower.
3.3 NO EXISTING DEFAULTS. To the best knowledge and reasonable belief of
the Borrower, there exists no unwaived material default or violation:
(a) under any of the material terms of any note, debt instrument, security
agreement or mortgage or under any other material commitment, contract,
agreement, license, lease or other instrument, whether written or oral,
to which it is a party or by which it or any of its properties or assets
is bound;
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(b) under any law, judgment, decree, order, permit, rule, regulation or
other legal requirement or any governmental authority, court or
arbitration tribunal whether federal, state, provincial, municipal or
local (within the U.S. or otherwise), at law or in equity, and applicable
to it or to any of its properties or assets, wherein such default would
result in a material adverse effect upon the Borrower, its properties or
assets; or
(c) in the payment of any of its monetary obligations or debts and there
exists no condition or event which, after notice or lapse of time or
both, would constitute a material default in connection with any of the
foregoing.
3.4 NO ADVERSE CHANGES. From the date of the December 31, 1998 financial
statements delivered by Company to Bank pursuant to the Prior Agreement:
(a) The Borrower has not sustained any damage, destruction or loss, by
reason of fire, explosion, earthquake, casualty, labor trouble,
requisition or taking of property by any government or agency thereof,
windstorm, embargo, riot, act of God or the public enemy, flood, volcanic
eruption, accident, other calamity or other similar or dissimilar event
(whether or not covered by insurance) adversely affecting the business,
properties, financial condition or operations of the Borrower taken as a
whole;
(b) There have been no changes in the condition (financial or otherwise),
business, net worth, assets, properties, liabilities or obligations
(fixed, contingent, known, unknown or otherwise) of the Borrower which in
the aggregate have had or may have a material adverse effect on the
business, properties, financial condition or operations of the Borrower
taken as a whole, and there has been no occurrence, circumstance or
combination thereof which might reasonably be expected to result in any
such adverse effect.
3.5 FULL DISCLOSURE. The information furnished by the Borrower or by any
of its directors, officers, employees, agents, accountants or representatives to
the Bank or its counsel pursuant to this Agreement (whether furnished prior to,
at, or subsequent to the date hereof), the information contained in the Exhibits
and Schedules referred to in this Agreement, and the other information furnished
to the Bank by the Borrower or by any of their respective directors, officers,
employees, agents, accountants or representatives of the Borrower (pursuant to
the request of the Bank or otherwise), does not and will not omit to state any
material fact necessary to make all such information not misleading.
3.6 TAXES. The Borrower has prepared (or caused to be prepared) and
properly filed (or caused to be properly filed) with the appropriate federal,
state, provincial, municipal or local authorities (within the U.S. or otherwise)
all tax returns, information returns and other reports required to be filed and
have paid or accrued (or caused to be so paid or accrued) in full all taxes,
interest, penalties, assessments or deficiencies, if any, due to, or claimed to
be due by, any taxing authority. The Borrower has not executed or filed with any
taxing authority any agreement extending the period for assessment or collection
of any taxes. The Borrower is not a party to any pending action or proceeding,
nor is any such action or proceeding threatened, by any governmental authority
for the assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against the Borrower and during the course
of any audit currently in process or not completed, no issues have been
suggested by any representative of any such governmental authority that, if
asserted, would result in a proposed assessment of taxes, interest or penalties,
against the Borrower.
3.7 TITLE TO ASSETS. The Borrower has good and marketable title to its
property, free and clear of any and all liens, encumbrances, security
agreements, equities, options, claims, charges, pledges, restrictions,
encroachments, defects in title and easements except for the matters previously
disclosed to the Bank in writing.
3.8 LITIGATION. Except as set forth in Exhibit 3.8 hereto, there is no
litigation, suit, proceeding, action, claim or investigation, at law or in
equity, pending or threatened against the Borrower or its property or assets,
before any court, agency, authority or arbitration tribunal, including, without
limitation, any product liability, workers' compensation or wrongful dismissal
claims, or claims, actions, suits or proceedings relating to toxic materials,
hazardous substances, pollution or the environment which are not properly
insured. There are no facts known to the Borrower which, if known to the
Borrower, to customers, governmental authorities or other persons, might result
in any such litigation, suit, proceeding, action, claim or investigation. Except
as set forth in
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such Exhibit 3.8 hereto, the Borrower is not subject to or in default with
respect to any notice, order, writ, injunction or decree of any court, agency,
authority or arbitration tribunal.
3.9 COMPLIANCE WITH LAWS. To the best of its knowledge and belief, the
Borrower has complied with all laws, municipal by-laws, regulations, rules,
orders, judgments, decrees and other requirements and policies imposed by any
governmental authority applicable to it, its properties or the operation of its
business. Without limiting the generality of the foregoing, the Borrower is in
full compliance with:
(a) all laws relating to the protection of human health and safety,
including, without limitation, the Occupational Safety and Health Act of
1970, as amended, and all regulations and standards issued thereunder by
the Secretary of Labor or the Occupational Safety and Health
Administrator or other governmental agency or authority acting at any
time thereunder;
(b) all laws relating to protection of the environment, including, without
limitation, the Resource Conservation and Recovery Act ("RCRA") and the
Comprehensive Environment Response, Compensation and Liability Act
("CERCLA");
(c) all laws administered by the Environmental Protection Agency;
(d) all laws relating to equal opportunity; and
(e) all zoning, building and other laws, ordinances, rules, regulations,
plans and directives of government authorities, Boards of Fire
Underwriters and other entities having jurisdiction, as well as all
private restrictions and covenants (whether or not registered or of
record), in each case without reliance on nonconforming use or similar
rule.
The Borrower has not received any notice or citation for noncompliance with
any of the foregoing, and there exists no condition, situation or circumstance,
nor has there existed such a condition, situation or circumstance, which, after
notice or lapse of time, or both, would constitute noncompliance with or give
rise to future liability with regard to any of the foregoing, except as
otherwise disclosed in Exhibit 3.9 hereto.
3.10 TRUE COPIES. All documents furnished or caused to be furnished to the
Bank or its counsel by the Borrower or by any of its directors, officers,
employees, agents, accountants or representatives are true and correct copies,
and there are no amendments or modifications thereto except as set forth in such
documents.
ARTICLE 4
CONDITIONS OF LENDING
4.1 The obligation of the Bank to make any advance of the loans hereunder or
to issue any Letter of Credit shall be subject to the fulfillment of each of the
foregoing conditions:
(a) PROMISSORY NOTE. The Borrower shall have executed and delivered to
the Bank the Note and the Subborrowers shall have executed and delivered to
the bank the Subfacility Note, dated the date hereof, incorporated by
reference herein and made part hereof.
(b) GUARANTEE. Company, shall have executed and delivered to the Bank
a Guarantee in respect of each of the Borrower's obligations hereunder, such
Guarantee to be in form and substance satisfactory to the Bank's counsel and
the Borrower, shall have executed and delivered to the Bank a Guarantee in
respect of each of the Subborrower's obligations under the Subfacility Note,
such Guarantee to be in form and substance satisfactory to the Bank's
counsel.
(c) OFFICER'S CERTIFICATE. The Bank shall have received: (i) the
certificate of the General Partner of Holdings and the secretary of IPG,
certifying as to the Borrower's authority in respect of the borrowing by the
Borrower hereunder and the issuance of the Note and the offices and specimen
signatures of officers of the Borrower executing any documents delivered to
the Bank in connection with the Loan; and (ii) the certificate of the
secretary of Company certifying as to the Company's authority to execute and
deliver this Agreement and the guarantee and showing the officers and
specimen signatures of officers of Company executing and delivering such
documents.
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(d) OPINIONS. The Bank shall have received opinion letters from the
legal counsel for the Borrower and the Company covering such matters as the
Bank shall require and in form and content satisfactory to the Bank.
ARTICLE 5
COVENANTS
The Borrower and Company covenant and agree that, until any Note together
with interest and all its other indebtedness to the Bank under this Agreement
are paid in full, unless specifically waived by the Bank in writing:
5.1 CORPORATE EXISTENCE, ETC. The Company and Borrower will preserve and
keep in full force and effect, and will cause each Restricted Subsidiary to
preserve and keep in full force and effect, its corporate existence and all
licenses and permits necessary to the proper conduct of its business; provided,
however, that the foregoing shall not prevent any transaction permitted by
Section 5.12.
5.2 INSURANCE. The Company and Borrower will maintain, and will cause each
Restricted Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties in accordance with
good business practice.
5.3 TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS. Without
limiting any other obligation of the Borrower and Company hereunder including,
without limitation, pursuant to the second sentence of this Section 5.3, the
Company and Borrower will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company, Borrower or such
Subsidiary, respectively, or upon or in respect of all or any part of the
property or business of the Company and Borrower or such Subsidiary, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a Lien upon
any property of the Company, Borrower or a Restricted Subsidiary; provided,
however, that the Company, Borrower or such Subsidiary shall not be required to
pay any such tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any property of the Company, Borrower or such Subsidiary or any material
interference with the use thereof by the Company, Borrower or such Subsidiary,
and (ii) the Company, Borrower or such Subsidiary shall set aside on its books,
reserves adequate in accordance with GAAP. The Company and Borrower will
promptly comply and will cause each Subsidiary to comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which could materially and adversely affect the properties,
business, profits or condition of the Company and Borrower and its Subsidiaries
or would result in any Lien not permitted under Section 5.10.
5.4 MAINTENANCE, ETC. The Company and Borrower will maintain, preserve and
keep, and will cause each Restricted Subsidiary to maintain, preserve and keep,
its properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
5.5 NATURE OF BUSINESS. The Company, Borrower and each Restricted
Subsidiary will continue to carry on substantially the same type of business
currently carried on and activities which are ancillary, incidental or necessary
to the ongoing business of the Company, Borrower and the Restricted Subsidiaries
as presently conducted.
5.6 CONSOLIDATED NET WORTH. The Company will at all times keep and
maintain Consolidated Net Worth at an amount not less than $200,000,000.
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5.7 FIXED CHARGES COVERAGE RATIO. The Company will keep and maintain the
ratio (determined as of the end of each fiscal quarter of the Company) of Net
Income Available for Fixed Charges to Fixed Charges for the immediately
preceding period of four consecutive fiscal quarters including the fiscal
quarter ending on the calculation date (taken as a single accounting period) at
not less than 2.0 to 1.0.
5.8 LEVERAGE RATIO. The Company will not at any time permit Consolidated
Funded Debt to exceed 55% of Consolidated Total Capitalization.
5.9 ADDITIONAL LIMITATIONS ON DEBT.
(a) The Company and the Borrower will not, and will not permit any
Restricted Subsidiary to, create, assume or incur or in any manner become
liable in respect of any Debt, except:
(1) Funded Debt of the Company, Borrower and Restricted Subsidiaries
permitted by Section 5.8;
(2) Current Debt of the Company, Borrower or any Restricted Subsidiary,
provided that during the twelve-month period immediately preceding
the date of any determination hereunder, there shall have been a
period of 30 consecutive days during which Current Debt of the
Company and its Restricted Subsidiaries shall be an amount no greater
than the amount of additional Funded Debt that could have been issued
on each such day of said 30-day period within the limitations of
Section 5.9(a)(1) above;
(3) in addition to the limitations with respect to Debt pursuant to the
foregoing paragraphs (1) and (2), in the case of Priority Debt, at
the time of issuance of any such Priority Debt and after giving
effect thereto and the application of the proceeds thereof, (x) the
aggregate principal amount of Priority Debt shall not exceed an
amount equal to 20% of Consolidated Net Worth and (y) all such
Priority Debt shall have been incurred within the other applicable
limitations of this Section 5.9(a); and
(4) Debt of a Restricted Subsidiary owing to the Company or to a
Wholly-owned Restricted Subsidiary.
(b) Any corporation which becomes a Restricted Subsidiary after the date
hereof shall for all purposes of this Section 5.9 be deemed to have
created, assumed or incurred at the time it becomes a Restricted
Subsidiary all Debt of such corporation existing immediately after it
becomes a Restricted Subsidiary.
5.10 LIMITATION ON LIENS. The Company and Borrower will not, and will not
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or governmental charges or
levies and Liens securing claims or demands of mechanics and materialmen,
provided payment thereof is not at the time required by Section 5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Restricted Subsidiary shall at any time
in good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, warehousemen's
and attorneys' liens and statutory landlords' liens) and Liens to secure
the performance of bids, tenders or trade contracts, or to secure
statutory obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money; provided in each case, the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings;
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(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Restricted Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in the
operation of the business of the Company and its Restricted Subsidiaries;
(e) Liens securing Indebtedness of a Restricted Subsidiary to the Company or
to another Wholly-owned Restricted Subsidiary;
(f) Liens on shares of stock of Unrestricted Subsidiaries;
(g) Liens existing as of January 1, 1998 and reflected on Exhibit 5.10
hereto.
(h) Liens incurred after the Closing Date given to secure the payment of the
purchase price incurred in connection with (and within twelve months of)
the acquisition after the Closing Date of fixed assets useful and
intended to be used in carrying on the business of the Company or a
Restricted Subsidiary, including Liens existing on such fixed assets at
the time of acquisition thereof or at the time of acquisition by the
Company or a Restricted Subsidiary of any business entity then owning
such fixed assets, whether or not such existing Liens were given to
secure the payment of the purchase price of the fixed assets to which
they attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition, provided that (i) the Lien shall
attach solely to the fixed assets acquired or purchased, (ii) at the time
of acquisition of such fixed assets, the aggregate amount remaining
unpaid on all Indebtedness secured by Liens on such fixed assets whether
or not assumed by the Company or a Restricted Subsidiary shall not exceed
an amount equal to the lesser of the total purchase price or fair market
value at the time of acquisition of such fixed assets (as determined in
good faith by the Board of Directors of the Company), and (iii) all such
Indebtedness shall have been incurred within the other applicable
limitations of Section 5.8 and Section 5.9; and
(i) Liens, in addition to those permitted by Section 5.10(a) through
(h) above, securing Debt of the Company or any Restricted Subsidiary
(including, without limitation, Liens securing obligations of the Company
or any Restricted Subsidiary under any operating lines or short-term or
revolving bank facilities); provided that after giving effect to the
incurrence of all Debt secured by such Liens (i) the aggregate principal
amount of Priority Debt shall not exceed an amount equal to 20% of
Consolidated Net Worth and (ii) all such Debt shall have been incurred
within the other applicable limitations of Section 5.8 and Section 5.9;
5.11 RESTRICTED PAYMENTS. The Company and Borrower will not, and will not
permit any Restricted Subsidiary to, make any Restricted Investment or
Restricted Payment, if, after giving effect thereto, the sum of (i) the
aggregate amount of Restricted Payments made during the period from and after
January 1, 1998 to and including the date of the making of the Restricted
Payment in question, plus (ii) the aggregate amount of all Restricted
Investments made by the Company or any Restricted Subsidiary during said period
would exceed the sum of (x) $115,000,000 (Canadian) plus (y) 75% of Consolidated
Net Income for such period, computed on a cumulative basis for said entire
period (or if such Consolidated Net Income is a deficit figure for any fiscal
period within such period, then minus 100% of such deficit) plus (z) an amount
equal to the aggregate net cash proceeds received by the Company from the
issuance or sale after the Closing Date (other than to the Company or any
Subsidiary) of shares of common stock of the Company (such sum described in
clauses (x), (y) and (z) being referred to as the "Available Pool").
In addition to the foregoing restrictions, the Company will not make any
Restricted Payments or any Restricted Investment if, at the time thereof or
after giving effect thereto, any Default or Event of Default shall exist.
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof.
For the purposes of this Section 5.11, the amount of any Restricted Payment
declared, paid or distributed in property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith
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by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
In valuing any Restricted Investments for the purpose of applying the
limitations set forth in this Section 5.11, such Restricted Investments shall be
taken at the original cost thereof, without allowance for any subsequent
write-offs or appreciation or depreciation therein, but less any amount repaid
or recovered on account of capital or principal.
For purposes of this Section 5.11, at any time when a corporation becomes a
Restricted Subsidiary, all Restricted Investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Restricted
Subsidiary, at such time.
5.12 MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Company and Borrower will not, and will not permit any Restricted
Subsidiary to, (i) consolidate or amalgamate with or be a party to a
merger with any other corporation or (ii) sell, lease or otherwise
dispose of all or any substantial part (as defined in paragraph (d) of
this Section 5.12) of Consolidated Assets; provided, however, that:
(1) any Restricted Subsidiary may merge or amalgamate or consolidate with
or into the Company or any Wholly-owned Restricted Subsidiary so long
as in any merger or consolidation involving the Company, the Company
shall be the surviving or continuing corporation;
(2) the Company may consolidate or amalgamate or merge with any other
corporation if (i) (x) in the case of any consolidation or merger,
the purchasing, surviving or continuing corporation shall be the
Company or (y) in the case of any amalgamation, the Company's
existence shall continue with the amalgamation and all obligations
hereunder and under the Note shall constitute obligations of the
amalgamated entity and (ii) at the time of such amalgamation,
consolidation or merger and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing; and
(3) any Restricted Subsidiary may sell, lease or otherwise dispose of all
or any substantial part of its assets to the Company or any
Wholly-owned Restricted Subsidiary.
(b) The Company will not permit any Restricted Subsidiary to issue or sell
any shares of stock of any class (including as "stock" for the purposes
of this Section 5.12, any warrants, rights or options to purchase or
otherwise acquire stock or other Securities exchangeable for or
convertible into stock) of such Restricted Subsidiary to any Person other
than the Company or a Wholly-owned Restricted Subsidiary, except for the
purpose of qualifying directors, or except in satisfaction of the validly
pre-existing preemptive rights of minority shareholders in connection
with the simultaneous issuance of stock to the Company and/or a
Restricted Subsidiary whereby the Company and/or such Restricted
Subsidiary maintain their same proportionate interest in such Restricted
Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any shares
of stock of any Restricted Subsidiary (except to qualify directors) and
will not permit any Restricted Subsidiary to sell, transfer or otherwise
dispose of (except to the Company or a Wholly-owned Restricted
Subsidiary) any shares of stock of any other Restricted Subsidiary,
unless:
(1) simultaneously with such sale, transfer, or disposition, all shares
of stock of such Restricted Subsidiary at the time owned by the
Company and by every other Restricted Subsidiary shall be sold,
transferred or disposed of as an entirety; and
(2) such sale or other disposition does not involve a substantial part
(as hereinafter defined) of the assets of the Company and its
Restricted Subsidiaries.
(d) As used in this Section 5.12, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the
Company and its Restricted Subsidiaries if the book value of such assets,
when added to the book value of all other assets sold, leased or
otherwise disposed of by the Company and its Restricted Subsidiaries
(other than in the ordinary course of business) during the 12-month
period ending with the date of such sale, lease or other disposition,
exceeds 10% of Consolidated Assets, determined as of the end of the
immediately preceding fiscal quarter.
14
For the purpose of making any determination of "substantial part," any sale,
lease or other dispositions of assets of the Company and its Restricted
Subsidiaries shall not be included if and to the extent the net proceeds are
segregated from the general accounts of the Company and any Restricted
Subsidiary, invested in Cash Equivalents until applied in accordance with
clauses (1) or (2) below, and either (1) within one year after such sale, lease
or other disposition, are used to acquire Like Assets, or (2) within one year
after such sale, lease or disposition, are applied to the optional prepayment of
Senior Funded Debt. Any such prepayment applied to the prepayment of the Notes
shall be prepaid as and to the extent provided in Section 2.2 hereof.
5.13 TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Restricted Subsidiary to, enter into or be a party to any transaction
or arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of and pursuant to the
reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
5.14 TERMINATION OF PENSION PLANS. The Company will not and will not
permit any Subsidiary to withdraw from any Multiemployer Plan or permit any
employee benefit plan maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) or the imposition of a Lien on any property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA.
5.15 DESIGNATION OF RESTRICTED SUBSIDIARIES. The Company may designate any
Subsidiary a Restricted Subsidiary by giving written notice to Bank that the
Board of Directors of the Company has made such designation, provided, however,
no Subsidiary may be designated a Restricted Subsidiary unless, at the time of
such designation and after giving effect thereto, no Default or Event of Default
shall exist. Any such designation shall be irrevocable.
5.16 REPORTS AND RIGHTS OF INSPECTION. The Company will keep, and will
cause each Restricted Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of,
or in relation to, the business and affairs of the Company or such Restricted
Subsidiary, in accordance with GAAP consistently applied (except for changes
disclosed in the financial statements furnished to you pursuant to this
Section 5.17 and concurred in by the independent public accountants referred to
in Section 5.17(b) hereof), and will furnish to you so long as you are the
holder of any Note and to each other holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) QUARTERLY STATEMENTS. As soon as available and in any event within
75 days after the end of each quarterly fiscal period (except the last) of
each fiscal year, copies of:
(1) consolidated balance sheets of the Company and its consolidated
Subsidiaries (and, if different, of the Restricted Group) as of the
close of such quarterly fiscal period, setting forth in comparative
form the consolidated figures for the corresponding period of the
fiscal year then most recently ended,
(2) consolidated statements of earnings and retained earnings of the
Company and its consolidated Subsidiaries (and, if different, of the
Restricted Group) for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal period,
in each case setting forth in comparative form the consolidated
figures for the corresponding periods of the preceding fiscal year,
and
(3) consolidated statements of changes in cash resources of the Company
and its consolidated Subsidiaries (and, if different, of the
Restricted Group) for the portion of the fiscal year ending with such
quarterly fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
15
(b) ANNUAL STATEMENTS. As soon as available and in any event within
140 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the Company and its
consolidated Subsidiaries (and, if different, of the Restricted
Group) as of the close of such fiscal year, and
(2) consolidated and consolidating statements of earnings and retained
earnings and changes in cash resources of the Company and its
consolidated Subsidiaries (and, if different, of the Restricted
Group) for such fiscal year,
in each case setting forth in comparative form the consolidated and
consolidating figures for the preceding fiscal year, all in
reasonable detail and with regard to the consolidated figures,
accompanied by a report thereon of a firm of independent public
accountants of recognized national standing in the United States or
Canada selected by the Company to the effect that the consolidated
financial statements present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries (and, if different, of the Restricted Group) as of the
end of the fiscal year being reported on and the consolidated results
of the operations and cash flows for said year in conformity with
GAAP and that the examination of such accountants in connection with
such financial statements has been conducted in accordance with
generally accepted auditing standards and included such tests of the
accounting records and such other auditing procedures as said
accountants deemed necessary in the circumstances;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary;
(d) GOVERNMENTAL AND OTHER REPORTS. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each regular
or periodic report, and any registration statement or prospectus filed by
the Company or any Subsidiary with any securities exchange or any
governmental regulatory body including, but without limitation, the
Companies Form 20F and unaudited quarterly reports, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency having jurisdiction over the
Company or any of its Subsidiaries;
(e) ERISA REPORTS. Promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC or
any other person to terminate any Plan; (iii) the institution of any steps
by the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a
non-exempt "prohibited transaction" within the meaning of Section 406 of
ERISA in connection with any Plan; (v) any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any of the
foregoing;
(f) OFFICER'S CERTIFICATES. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the provisions
of this Agreement and setting forth: (i) the information and computations
(in sufficient detail) required in order to establish whether the Company
was in compliance with the requirements of Section 5.6 through Section 5.12
at the end of the period covered by the financial statements then being
furnished, and (ii) whether there existed as of the date of such financial
statements and whether, to the best of such officer's knowledge, there
exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default
(including, without limitation, with respect to Section 5.2) and, if any
such condition or event exists on the date of the certificate, specifying
the nature and period of existence thereof and the action the Company is
taking and proposes to take with respect thereto;
(g) ACCOUNTANT'S CERTIFICATES. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion
with respect to such financial statements, stating that they have reviewed
this Agreement and stating further whether, in making their audit, such
accountants have become aware of any Default or Event of Default under any
of the terms or provisions of this Agreement insofar as
16
any such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying
the nature and period of existence thereof;
(h) UNRESTRICTED SUBSIDIARIES. Within the respective periods provided
in paragraphs (a) and (b) above, financial statements of the character and
for the dates and periods as in said paragraphs (a) and (b) provided
covering each Unrestricted Subsidiary (or groups of Unrestricted
Subsidiaries on a consolidated basis);
(i) FORECASTS AND BUDGET. Within sixty (60) days following the end of
each fiscal year of Company, the Consolidated pre-tax operating forecast and
Consolidated capital expenditures budget of Company; and
(j) REQUESTED INFORMATION. With reasonable promptness, such other data
and information as you or any such holder may reasonably request.
Without limiting the foregoing, the Company will permit Bank, to visit
and inspect, any of the properties of the Company, Borrower and any
Restricted Subsidiary, to examine all of their books of account, records,
reports and other papers, to make copies and extracts therefrom and to
discuss their respective affairs, finances and accounts with their
respective officers, employees, and independent public accountants (and
by this provision the Company authorizes said accountants to discuss with
you the finances and affairs of the Company and its Restricted
Subsidiaries) all at such reasonable times and as often as may be
reasonably requested.
5.17 FURTHER ASSURANCE. The Borrower shall, at its cost and expense, upon
request of the Bank, duly execute and deliver to the Bank such further
instruments and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of the Bank to carry out more effectively the
provisions and purposes of this Agreements.
5.18 PERFORMANCE OF OBLIGATIONS. The Borrower shall perform all
obligations in accordance with usual and customary business terms, except to the
extent that the non-fulfillment of same would not reasonably be expected to
result in a Material Adverse Change, considered on a Consolidated basis, and
except where the same are being contested in good faith, if the outcome of such
contestation, if decided adversely to the Company or the Restricted
Subsidiaries, would not reasonably be expected to result in a Material Adverse
Change, considered on a Consolidated basis. Notwithstanding the foregoing
contained in this Section it shall punctually pay all amounts due or to become
due under this Agreement.
ARTICLE 6
DEFAULTS AND REMEDIES
6.1 EVENTS OF DEFAULT. If any of the "Events of Default" (as defined in
the Note) shall occur, then and in any such event, and at any time thereafter,
if such or any other Event of Default shall then be continuing, the Bank may, at
its option, declare the Notes to be due and payable, whereupon the maturity of
the then unpaid balance of the Note shall be accelerated and the same, and all
interest accrued thereon, shall forthwith become due and payable without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note to the contrary
notwithstanding, provided, however, upon the occurrence of an Event of Default
of the type described in clause (d) of the definition of Events of Default in
the Note, the Bank's commitment to lend shall automatically terminate and all of
the principal, interest and other amounts payable hereunder, hereunder and under
the Note and in connection with any outstanding Letter of Credit shall be
automatically due and payable without notice or demand. In addition to the
foregoing, upon any demand therefore made by Bank during the existence of any
Event of Default, Borrower and Company hereby agree to deposit and pledge to
bank, cash collateral in an amount not less than the aggregate face amount of
all Letters of Credit which are outstanding as of the date of such demand.
6.2 SUITS FOR ENFORCEMENT. In case any one or more Events of Default shall
occur and be continuing, the Bank may proceed to protect and enforce its rights
or remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement, or other provision
contained herein, in the Note or in any document or instrument delivered in
connection with or pursuant to this Agreement, or to
17
enforce the payment of the Note and Borrower's and Company's other obligations
hereunder or any other legal or equitable right or remedy. The Borrower and
Company expressly agree:
(i) That the Courts of the State of Michigan and the United States District
Court for the Eastern District of Michigan, shall be the exclusive
forums for the adjudication of any enforcement action or dispute arising
under this Agreement and/or the Notes.
(ii) That it is subject to the personal jurisdiction of the Courts of the
State of Michigan in connection with any enforcement action or dispute
arising under this agreement.
(iii) That service of any summons and complaint made by certified mail to the
then address of the Borrower with copies to the Borrower's counsel,
shall be deemed good and sufficient service.
6.3 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred
upon the Bank is intended to be exclusive of any other right or remedy contained
herein, in the Note or in any instrument or document delivered in connection
with or pursuant to this Agreement, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
6.4 RIGHTS AND REMEDIES NOT WAIVED. No course of dealing between the
Borrower and the Bank or any failure or delay on the part of the Bank in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights or remedies of the Bank and no single or partial exercise of any rights
or remedies hereunder shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder.
ARTICLE 7
DEFINITIONS
7.1 The following words and expressions, when used in this Agreement, unless
the contrary is stipulated, have the following meaning:
"AFFILIATE" means any Person (other than a Restricted Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of
the Company or (iii) 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by the Company or a Subsidiary. The term
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise;
"CAPITALIZED LEASE" shall mean any lease (i) the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP or
(ii) for which the amount of the asset and liability thereunder as if so
capitalized should be disclosed in a note to such balance sheet.
"CAPITALIZED RENTALS" of any Person means as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"CASH EQUIVALENTS" means, as of the date of any determination thereof,
Investments of the type described in clauses (ii), (iii) and (iv) of the
definition of the term "Restricted Investments".
"CLOSING DATE" shall mean the date on which the conditions described in
Section 4.1 hereof are satisfied.
"COMMITMENT AMOUNT" means Sixty Million Dollars ($60,000,000).
"CONSOLIDATED" means produced by aggregating the relevant financial
statements or accounts of the Subsidiaries (or other Persons which, in
accordance with GAAP, are to be included in such computation) of a Person on
a line-by-line basis (i.e.: adding together corresponding items of assets,
liabilities, revenues and expenses) with the relevant financial statements
or accounts of such Person, eliminating inter-company balances and
transactions and providing for any Minority Interests, all as determined in
accordance with GAAP; for greater certainty, the Consolidated ratios
contemplated by Section 5.14 with respect to the
18
Company shall include its Restricted Subsidiaries as well as all
Unrestricted Subsidiaries the Debt of which is guaranteed by the Company;
"CONSOLIDATED" when used as a prefix to any item shall mean the aggregate
amount of all such item of the Company and its Restricted Subsidiaries on a
consolidated basis eliminating intercompany items in accordance with GAAP.
"CONSOLIDATED ASSETS" shall mean, as of the date of any determination
thereof, consolidated total assets of the Company and its Restricted
Subsidiaries determined in accordance with GAAP (excluding, in any event,
assets or equity attributable to Unrestricted Subsidiaries).
"CONSOLIDATED CURRENT LIABILITIES" shall mean as of the date of any
determination thereof such liabilities of the Company and its Restricted
Subsidiaries on a consolidated basis as shall be determined in accordance
with GAAP to constitute current liabilities (excluding, in any event,
liabilities attributable to Unrestricted Subsidiaries).
"CONSOLIDATED NET INCOME" for any period shall mean the gross revenues of
the Company and its Restricted Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on
a consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses (i) on the sale or other disposition of Investments
or fixed or capital assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses or
(ii) attributable to any non-recurring or extraordinary items including,
without limitation, any discontinuance of operations;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued prior to
the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a Restricted
Subsidiary), substantially all the assets of which have been acquired in
any manner by the Company or any Restricted Subsidiary, realized by such
corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Restricted Subsidiary)
in which the Company or any Restricted Subsidiary has an ownership
interest unless such net earnings shall have actually been received by
the Company or such Restricted Subsidiary in the form of cash
distributions;
(g) any portion of the net earnings of any Restricted Subsidiary which for
any reason is unavailable for payment of dividends to the Company or any
other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up of
assets;
(i) any deferred or other credit representing any excess of the equity in
any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the Company
or any Restricted Subsidiary; and
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income
arising during such period.
"CONSOLIDATED NET WORTH" shall mean, as of the date of any determination
thereof, the consolidated total shareholders equity of the Company and its
Restricted Subsidiaries, determined in accordance with GAAP.
19
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean, as of the date of any
determination thereof, the sum of (i) the aggregate principal amount of
Consolidated Funded Debt then outstanding plus (ii) Consolidated Net Worth.
"CURRENT DEBT" of any Person shall mean as of the date of any determination
thereof all Debt of such Person other than Funded Debt of such Person.
"DEBT" of any Person shall mean, as of the date of any determination thereof
(without duplication):
(i) all Indebtedness for borrowed money or evidenced by notes, bonds,
debentures or similar evidences of Indebtedness of such Person;
(ii) obligations secured by any Lien upon property owned by such Person or
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under any such arrangement in the event of default are
limited to repossession or sale of property including, without
limitation, obligations secured by Liens arising from the sale or
transfer of notes or accounts receivable, but, in all events, excluding
trade payables and accrued expenses constituting Consolidated Current
Liabilities:
(iii) Capitalized Rentals;
(iv) reimbursement obligations in respect of credit enhancement instruments
including letters of credit (excluding, however, short-term letters of
credit and surety bonds issued in commercial transactions in the
ordinary course of business); and
(v) (without duplication of any of the foregoing) Guaranties of obligations
of others of the character referred to hereinabove in this definition.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA AFFILIATE" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"EVENT OF DEFAULT" shall have the meaning given it in the Note.
"FIXED CHARGES" for any period shall mean on a consolidated basis the sum of
(i) all Rentals (other than Rentals on Capitalized Leases) payable during
such period by the Company and its Restricted Subsidiaries, and (ii) all
Interest Charges on all Indebtedness (including the interest component of
Rentals on Capitalized Leases) of the Company and its Restricted
Subsidiaries.
"FUNDED DEBT" of any Person shall mean all Debt of such Person having a
final maturity of one or more than one year from the date of origin thereof
(or which is renewable or extendible at the option of the obligor for a
period or periods of one or more than one year from the date of origin),
including all payments in respect thereof that are required to be made
within one year from the date of any determination of Funded Debt, whether
or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means the generally
accepted accounting principles acknowledged by the Canadian Institute of
Chartered Accountants and published in the Canadian Institute of Chartered
Accountants' Handbook;
"GUARANTIES" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or
20
payment of such Indebtedness or obligation, or (y) to maintain working
capital or other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Indebtedness or
obligation, (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (iv) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor against loss
in respect thereof. For the purposes of all computations made under this
Agreement, a Guaranty in respect of any Indebtedness for borrowed money
shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"INDEBTEDNESS" of any Person shall mean and include all obligations of such
Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which has
been incurred in connection with the acquisition of property or assets,
(ii) obligations secured by any Lien upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the
payment of such obligations, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event
of default are limited to repossession or sale of property,
(iv) Capitalized Rentals and (v) Guaranties of obligations of others of the
character referred to in this definition.
"INTEREST CHARGES" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made. Computations of Interest Charges on
a pro forma basis for Indebtedness having a variable interest rate shall be
calculated at the rate in effect on the date of any determination.
"INTERTAPE POLYMER CORP." shall mean Intertape Polymer Corp., a Virginia
corporation, and any Person who succeeds to all, or substantially all, of
the assets and business of Intertape Polymer Corp.
"INVESTMENTS" shall mean all investments, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares
of capital stock, indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to
be used or consumed in the ordinary course of business.
"LIEN" shall mean any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but
not limited to the security interest lien arising from a mortgage,
encumbrance, pledge, Capitalized Lease, conditional sale or trust receipt or
a lease in which such Person is lessor, consignment or bailment for security
purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements) affecting property. For
the purposes of this Agreement, the Company or a Restricted Subsidiary shall
be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes and such retention or
vesting shall constitute a Lien.
"LIKE ASSETS" shall mean, as of the date of any determination thereof,
capital assets, used or to be used by the Company or any Restricted
Subsidiary in the lines of business in which the Company or such Restricted
Subsidiary is engaged as of the Closing Date or in businesses reasonably
related thereto.
"LONG-TERM LEASE" shall mean any lease of real or personal property (other
than a Capitalized Lease) having an original term, including any period for
which the lease may be renewed or extended at the option of the lessor, of
more than three years.
21
"MATERIAL ADVERSE CHANGE" means a material adverse change in the business,
assets, liabilities, financial position, operating results or business
prospects of the Company or any of the Restricted Subsidiaries, or in the
ability of the Borrower or the Company to perform any of its obligations
under this Agreement or under the Guarantee.
"MATURITY DATE" means April 1, 2000.
"MATERIAL DEBT" shall mean any Debt which has or relates to, in the
aggregate, an unpaid principal amount (or aggregate liability) of more than
U.S. $15,000,000 or an equivalent amount of money in any other currency.
"MINORITY INTERESTS" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater, and by
valuing Minority Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to reflect
any changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred stock.
"MULTIEMPLOYER PLAN" shall have the same meaning as in ERISA.
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the sum
of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for
any Federal, state or other income taxes made by the Company and its
Restricted Subsidiaries during such period, (iii) Fixed Charges of the
Company and its Restricted Subsidiaries during such period and (iv) all
amortization expenses.
"NEW SUBSIDIARY" means a direct or indirect Subsidiary of IPG (US) Inc. that
is incorporated, created or acquired after the date hereof as well as any
existing Subsidiary of IPG (US) Inc. that is not currently a Subborrower
under the Subfacility Note.
"NOTE AGREEMENT" means the agreement(s) entered into by the Company dated as
of July 1, 1999, with respect to the issuance and sale of two series of
senior notes in an aggregate principal amount of US $137,000,000;
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"PLAN" means a "PENSION PLAN," as such term is defined in ERISA, established
or maintained by the Company or any ERISA Affiliate or as to which the
Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"PRIORITY DEBT" shall have the meaning set forth in the Note Agreement.
"RENTALS" shall mean and include as of the date of any determination thereof
all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by the Company or a Restricted Subsidiary, as lessee
or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or a Restricted
Subsidiary (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called "percentage leases" shall be computed solely on
the basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"REPORTABLE EVENT" shall have the same meaning as in ERISA.
"RESPONSIBLE OFFICER" shall mean any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
22
"RESTRICTED GROUP" shall mean, as of the date of determination thereof, the
Company and its Restricted Subsidiaries.
"RESTRICTED INVESTMENTS" shall mean all Investments, other than:
(a) Investments by the Company and its Restricted Subsidiaries in and to
Restricted Subsidiaries, including, without limitation, Investments
(i) directly out of the cash proceeds to the Company of the concurrent
sale of shares of capital stock of the Company or (ii) pursuant to a
direct share exchange offer by the Company, and including any Investment
in a corporation which, after giving effect to such Investment, will
become a Restricted Subsidiary;
(b) Investments in commercial paper maturing in 270 days or less from the
date of issuance which, at the time of acquisition by the Company or any
Restricted Subsidiary, is accorded a rating of at least A-2 by
Standard & Poor's Corporation or at least Prime-2 by Xxxxx'x Investors
Service, Inc.;
(c) Investments in (i) direct obligations of the United States of America or
any agency or instrumentality of the United States of America, the
payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America or (ii) direct obligations of
Canada or any agency or instrumentality of Canada, the payment or
guarantee of which constitutes a full faith and credit obligation of
Canada, in either case, maturing in twelve months or less from the date
of acquisition thereof;
(d) Investments in certificates of deposit maturing within one year from the
date of issuance thereof, issued by a bank or trust company organized
under the laws of the United States, any state thereof or Canada or any
province thereof, having capital, surplus and undivided profits
aggregating at least U.S. $100,000,000 (or its equivalent in Canadian
currency) and whose long-term certificates of deposit are, at the time of
acquisition thereof by the Company or a Restricted Subsidiary, rated A-
or better by Standard & Poor's Corporation or A3 or better by Xxxxx'x
Investors Service, Inc. or Investments in Eurodollar Certificates of
deposit maturing within one year after the acquisition thereof and issued
by a bank in western Europe or England having capital, surplus and
undivided profits of at least U.S. $1,000,000,000 (or its equivalent in
such country's local currency); and
(e) loans or advances (including, without limitation, loans or advances to
employees of the Company for the purchase by such employee of shares of
stock of the Company by such employee) in the usual and ordinary course
of business to officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to carrying on the
business of the Company or any Restricted Subsidiary provided that the
aggregate amount of all such loans or advances shall at no time exceed
U.S. $1,000,000.
"RESTRICTED PAYMENTS" shall mean, for any period,
(i) the declaration or payment, directly or indirectly, of any dividend
either in cash or property, on any shares of capital stock of the
Company or any Restricted Subsidiary;
(ii) the purchase, redemption or retirement, directly or indirectly, of any
shares of capital stock of any class or of any warrants, rights or
options to purchase or acquire any shares of capital stock of the
Company or any Restricted Subsidiary; and
(iii) any payment or distribution, directly or indirectly, by the Company or
a Restricted Subsidiary in respect of its capital stock;
provided, however, that "Restricted Payments" shall not include any such
dividends, purchases, redemptions, retirements or other distribution by a
Restricted Subsidiary to the Company or to a Wholly-owned Restricted
Subsidiary.
"RESTRICTED SUBSIDIARY" shall mean and include Intertape Polymer Corp.,
Polymer International Corp., Intertape Polymer Inc., any other Subsidiary so
described in Exhibit C hereto and any other Subsidiary (i) which is
organized under the laws of the United States, Puerto Rico, Canada or any
Qualifying EU Jurisdiction or any jurisdiction thereof; (ii) which conducts
substantially all of its business and has substantially all of its assets
within the United States, Puerto Rico, Canada or any Qualifying EU
23
Jurisdiction; (iii) of which more than 80% (by number of votes) of the
Voting Stock is beneficially owned by the Company or any Wholly-owned
Restricted Subsidiary, and (iv) which has been designated by the Board of
Directors of the Company as a Restricted Subsidiary in accordance with
Section 5.16.
"SECURITY" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SENIOR FUNDED DEBT" shall mean Consolidated Funded Debt, other than
Subordinated Funded Debt.
"SUBBORROWERS" shall mean American Tape Co., Intertape Polymer Corp., Anchor
Continental, Inc., Central Products Company and any New Subsidiary that
becomes a borrower under the Subfacility Note in accordance with the terms
of Section 8.9 below.
"SUBFACILITY NOTE" shall mean the Eurodollar Revolving Note made by the
Subborrowers (other than any New Subsidiary) to the order of the Bank as of
the date hereof in the face amount of Fifteen Million Dollars ($15,000,000)
and any extensions, renewals or replacements thereof or amendments thereto.
"SUBSIDIARY" shall mean shall mean any corporation, association or other
business entity (whether now existing or hereafter organized or acquired) in
which more than fifty percent (50%) of the outstanding ownership interests
having ordinary voting power for the election of directors and the exercise
the general direction and supervision of such entity, as of any applicable
date of determination, shall be owned directly, or indirectly through one or
more Subsidiaries, by Borrower.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"VOTING STOCK" shall mean Securities of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar
functions).
"WHOLLY-OWNED" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock
(except shares required as directors' qualifying shares) shall be owned by
the Company and/or one or more of its Wholly-owned Restricted Subsidiaries.
24
ARTICLE 8
MISCELLANEOUS
8.1 NOTICE AND COMMUNICATIONS. All communications and notices provided for
the parties hereunder shall be in writing and mailed by certified mail, return
receipt requested or delivered to:
(a) The Borrower and the Company: Intertape Polymer Group Inc.
000X Xxxxxx xx Xxxxxx
Xx. Xxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
(b) The Bank: Comerica Bank
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Persons
International Banking
or to such other address as shall be designated by the parties in a written
notice to the other, complying as to delivery with the terms of this Agreement.
8.2 INCONSISTENCY. Whenever the provisions of the Note are inconsistent
with any of the provisions of the Agreement herein, the provisions of the Note
shall be deemed to control.
8.3 EXPENSES. The Borrower agrees to pay all costs, expenses as well as
any and all stamp and other taxes payable or determined to be payable in
connection with the preparation, execution and delivery of this Agreement, the
Note and related documents (collectively, the "Documents"), including reasonable
attorney's fees and disbursements.
8.4 CONSTRUCTION. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted principles of good
accounting practice and consistently applied.
8.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or transfer its rights hereunder without
the prior written consent of the Bank.
8.6 HEADINGS. Article headings used in this Agreement are for convenience
only and shall not affect the construction or interpretation of this Agreement.
8.7 LAW GOVERNING AGREEMENT. The validity, performance, interpretation and
other incidents of this Agreement shall be governed by the internal laws of the
State of Michigan.
8.8 MODIFICATIONS. This Agreement may not be modified in any way without a
writing duly executed by all parties hereto.
8.9 NEW SUBSIDIARY BORROWINGS. A New Subsidiary shall become a Subborrower
(as if it had executed and delivered the Subfacility Note) upon the delivery of
the following to the Bank, in form and substance satisfactory to the Bank:
(i) certified true and complete copies of the organizational documents (such as
articles of incorporation, articles or organization, certificate of limited
partnership, bylaws, operating agreement, partnership agreement, etc.) of the
New Subsidiary; (ii) opinion letter(s) from the legal counsel for the New
Subsidiary covering such matters as the Bank shall require; (iii) a duly
executed and authorized joinder certificate in the form of Exhibit D attached
hereto; (iv) if the resolutions of any guarantor of the Subfacility Note
delivered in connection with this Agreement authorizing the delivery of such
guaranty do not include the adding of a New Subsidiary as a Subborrower, then an
acknowledgement by such guarantor to the addition of such new Subborrower under
such guaranty; and (v) such other items as are reasonably requested by the Bank
in connection with the foregoing.
[SIGNATURES ON THE FOLLOWING PAGE]
25
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and with
respect to the Borrower, its seal the day and year first above written,
intending and declaring this to be a duly sealed instrument.
IPG HOLDINGS LP
By: Intertape Polymer Inc.
Its General Partner
By:/s/XXXXXX X. XXXXXXXXX
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer, Secretary
IPG (US) INC.
By: /s/XXXXXX X. XXXXX
Name: Xxxxxx X. Xxxxx
Title: VP Sales -- Distribution Products
INTERTAPE POLYMER GROUP INC.
By: /s/XXXXXX X. XXXXXXXXX
Name: Xxxxxx X. Xxxxxxxxx
Title: Chef Financial Officer, VP
Administration
By: /s/XXX XXXXXX
Name: Xxx Xxxxxx
Title: V.P. Finance
COMERICA BANK
By: /s/XXXXXXX PERSONS
Name: Xxxxxxx Persons
Title: Vice President
26
