EXHIBIT 4.2
RESTATED REVOLVING CREDIT AGREEMENT
AMONG
UNITED STATES LEATHER, INC.
AND
A.R. ▇▇▇▇▇▇ LIMITED,
as Borrowers,
AND
THE FIRST NATIONAL BANK OF BOSTON,
AND
OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT,
as Banks,
AND
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
Dated as of December 20, 1996
TABLE OF CONTENTS
Section Title Page
SECTION I - DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . 24
1.3 References to Dollar Amounts: United
States or Canadian Dollars . . . . . . . . . . . . . . . . 24
SECTION II - DESCRIPTION OF U.S. CREDIT
2.1 The U.S. Loans . . . . . . . . . . . . . . . . . . . . . . 24
2.2 The U.S. Revolving Credit Notes . . . . . . . . . . . . . . 25
2.3 Overadvances . . . . . . . . . . . . . . . . . . . . . . . 26
2.4 U.S. Commitment Fee . . . . . . . . . . . . . . . . . . . . 26
2.5 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . 27
2.6 Agent's Administrative Fee . . . . . . . . . . . . . . . . 27
2.7 Reduction of Aggregate U.S. Credit Commitments . . . . . . 27
2.8 U.S. Cash Management . . . . . . . . . . . . . . . . . . . 28
SECTION IIA - DESCRIPTION OF CANADIAN CREDIT
2.A.1 The Canadian Loans . . . . . . . . . . . . . . . . . . . . 29
2.A.2 The Canadian Revolving Credit Notes . . . . . . . . . . . . 30
2.A.3 Canadian Commitment Fee . . . . . . . . . . . . . . . . . . 30
2.A.4 Reduction of Aggregate Canadian Credit Commitment . . . . . 30
2.A.5 Canadian Cash Management . . . . . . . . . . . . . . . . . 30
SECTION IIB - PROVISIONS APPLICABLE TO ALL REVOLVING LOANS
2.B.1 Notice of Borrowing or Conversion . . . . . . . . . . . . . 31
2.B.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.B.3 Duration of Interest Periods . . . . . . . . . . . . . . . 34
2.B.4 Conversion of Borrowings; Renewals . . . . . . . . . . . . 34
2.B.5 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 36
2.B.6 Letters of Credit Fees . . . . . . . . . . . . . . . . . . 37
2.B.7 Changed Circumstances . . . . . . . . . . . . . . . . . . . 38
2.B.8 Payments Not at End of Interest Period . . . . . . . . . . 39
2.B.9 Computation of Interest . . . . . . . . . . . . . . . . . . 40
2.B.10 Changes in Laws, Etc . . . . . . . . . . . . . . . . . . . 40
2.B.11 Capital Requirements . . . . . . . . . . . . . . . . . . . 41
2.B.12 Payments and Prepayments of the Revolving Loans . . . . . . 41
2.B.13 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . 42
2.B.14 Telephonic Notices . . . . . . . . . . . . . . . . . . . . 42
2.B.15 Maximum Interest . . . . . . . . . . . . . . . . . . . . . 42
2.B.16 Procedures for Payment . . . . . . . . . . . . . . . . . . 43
SECTION III - CONDITIONS OF REVOLVING LOAN
3.1 Conditions Precedent to Initial Revolving Loan . . . . . . 44
3.2 Conditions Precedent to Initial Canadian Loan . . . . . . . 49
3.3 Conditions Precedent to all Revolving Loans . . . . . . . . 49
SECTION IV - REPRESENTATIONS AND WARRANTIES
4.1 Organization and Qualification . . . . . . . . . . . . . . 50
4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . 50
4.3 Valid Obligations . . . . . . . . . . . . . . . . . . . . . 50
4.4 Consents or Approvals . . . . . . . . . . . . . . . . . . . 51
4.5 Title to Properties; Absence of Encumbrances . . . . . . . 51
4.6 Location of Records and Collateral; Name Change . . . . . . 51
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . 52
4.8 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.9 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 53
4.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 53
4.13 Investment Company Act . . . . . . . . . . . . . . . . . . 53
4.14 Compliance with ERISA and Employee Benefit Legislation . . 53
4.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 53
4.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 55
4.17 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 56
4.18 Compliance with Statutes, etc . . . . . . . . . . . . . . . 56
4.19 Capitalization . . . . . . . . . . . . . . . . . . . . . . 56
4.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 56
4.21 Certain Transactions . . . . . . . . . . . . . . . . . . . 57
4.22 Restrictions on the Borrower . . . . . . . . . . . . . . . 57
4.23 Capital Leases . . . . . . . . . . . . . . . . . . . . . . 57
4.24 Franchises, Patents, Copyrights, Etc . . . . . . . . . . . 57
4.25 Collateral . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION V - AFFIRMATIVE COVENANTS
5.1 Financial Statements and other Reporting Requirements . . . 58
5.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . 61
5.3 Maintenance and Insurance . . . . . . . . . . . . . . . . . 62
5.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.5 Inspection by the Agent . . . . . . . . . . . . . . . . . . 63
5.6 Maintenance of Books and Records . . . . . . . . . . . . . 63
5.7 Environmental Indemnification . . . . . . . . . . . . . . . 63
5.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 64
5.9 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 65
5.10 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 65
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . 66
5.12 Location of Records and Collateral; Name Change . . . . . . 66
SECTION VI - NEGATIVE COVENANTS
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 66
6.2 Contingent Liabilities . . . . . . . . . . . . . . . . . . 67
6.3 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.4 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . 67
6.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . 67
6.6 Merger; Consolidation; Sale or Lease
of Assets; Acquisitions . . . . . . . . . . . . . . . . . . 69
6.7 EBITDA to Cash Interest Expense Ratio . . . . . . . . . . . 69
6.8 Leverage Covenant . . . . . . . . . . . . . . . . . . . . . 70
6.9 Minimum EBITDA . . . . . . . . . . . . . . . . . . . . . . 70
6.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . 71
6.11 Investments . . . . . . . . . . . . . . . . . . . . . . . . 71
6.12 ERISA and Employment Benefit Legislation . . . . . . . . . 71
6.13 Transactions with Affiliates . . . . . . . . . . . . . . . 71
6.14 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.15 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . 72
6.16 Minimum Excess Availability . . . . . . . . . . . . . . . . 72
6.17 Capital Expenditures . . . . . . . . . . . . . . . . . . . 72
6.18 No Amendments to Certain Documents . . . . . . . . . . . . 72
6.19 Labor Union Agreements . . . . . . . . . . . . . . . . . . 72
SECTION VII - DEFAULTS
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 73
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION VIII - CONCERNING THE AGENT AND THE BANKS
8.1 Appointment and Authorization . . . . . . . . . . . . . . . 76
8.2 Agent and Affiliates . . . . . . . . . . . . . . . . . . . 76
8.3 Future Advances . . . . . . . . . . . . . . . . . . . . . . 76
8.4 Delinquent Bank . . . . . . . . . . . . . . . . . . . . . . 78
8.5 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.6 Interest, Fees and Other Payments . . . . . . . . . . . . . 81
8.7 Action by Agent . . . . . . . . . . . . . . . . . . . . . . 81
8.8 Notification of Defaults and Events of Default . . . . . . 81
8.9 Consultation with Experts . . . . . . . . . . . . . . . . . 82
8.10 Liability of Agent . . . . . . . . . . . . . . . . . . . . 82
8.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . 82
8.12 Independent Credit Decision . . . . . . . . . . . . . . . . 83
8.13 Consents of all Banks . . . . . . . . . . . . . . . . . . . 83
8.14 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 83
8.15 Relationship among Banks Regarding U.S.
Loans and Canadian Loans . . . . . . . . . . . . . . . . . 84
SECTION IX - MISCELLANEOUS
9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . 87
9.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . 88
9.5 Term of Agreement . . . . . . . . . . . . . . . . . . . . . 88
9.6 No Waivers . . . . . . . . . . . . . . . . . . . . . . . . 88
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 88
9.8 Amendments, Waivers, Etc . . . . . . . . . . . . . . . . . 88
9.9 Binding Effect of Agreement . . . . . . . . . . . . . . . . 90
9.10 Successors and Assigns . . . . . . . . . . . . . . . . . . 90
9.11 Syndication of the Revolving Loans . . . . . . . . . . . . 93
9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 93
9.13 Partial Invalidity . . . . . . . . . . . . . . . . . . . . 93
9.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 93
9.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 94
9.17 Judgment Currency . . . . . . . . . . . . . . . . . . . . . 94
EXHIBITS
EXHIBIT A-1 - Form of U.S. Revolving Credit Note
EXHIBIT A-2 - Form of Canadian Revolving Credit Note
EXHIBIT B-1- Form of Notice of Borrowing or Conversion (U.S.)
EXHIBIT B-2- Form of Notice of Borrowing or Conversion (Canada)
EXHIBIT C - Indebtedness; Encumbrances; Guarantees
EXHIBIT D - Disclosures
EXHIBIT E - Subsidiaries
EXHIBIT F - Locations of Real Property
EXHIBIT G - Form of Borrowing Base Report
EXHIBIT H - Form of Report of Chief Financial Officer
EXHIBIT I - Form of Single Purpose Entity Provisions
EXHIBIT J - Form of Solvency Certificate
EXHIBIT K - Form of Opinion of Counsel to the Borrower
SCHEDULES
SCHEDULE 1 - Revolving Credit Commitments and Commitment Percentages
RESTATED REVOLVING CREDIT AGREEMENT
Dated as of December 20, 1996
THIS RESTATED REVOLVING CREDIT AGREEMENT is made as of December 20,
1996, among UNITED STATES LEATHER, INC. ("USL"), a Wisconsin corporation,
having its chief executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; A.R. ▇▇▇▇▇▇ LIMITED ("▇▇▇▇▇▇";
collectively with USL, the "Borrowers"), an Ontario corporation, having
its chief executive office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇; THE FIRST NATIONAL BANK OF BOSTON ("Bank of Boston"), a national
bank having its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; the other lending institutions which may become parties hereto
pursuant to Section 9.10 (individually a "U.S. Bank", or the "Canadian
Bank", and collectively, the "U.S. Banks" and the "Banks"); and Bank of
Boston, as agent for itself and each other Bank (the "Agent").
SECTION I
DEFINITIONS
1.1. Definitions.
All capitalized terms used in this Agreement, in the Revolving Credit
Notes or in any other Security Document, or any certificate, report or
other document made or delivered pursuant to this Agreement (unless
otherwise defined therein) shall have the respective meanings assigned to
them below:
Accounts and Accounts Receivable. Individually and collectively, all
rights to payment for goods sold or leased or for services rendered, all
sums of money or other proceeds due or becoming due thereon, all
instruments pertaining thereto, all guaranties and security therefor, and
all goods giving rise thereto and the rights pertaining to such goods,
including the right of stoppage in transit, and all related insurance.
Adjusted Eurodollar Rate. Applicable to any Interest Period, shall
mean a rate per annum determined pursuant to the following formula:
AER = [ IOR ]*
____________
[ 1.00 - RP ]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
* The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.
Where:
"Interbank Offered Rate" applicable to any Eurodollar Loan for any
Interest Period means the rate of interest determined by the Agent to
be the prevailing rate per annum at which deposits in U.S. dollars
are offered to the Agent by first-class banks in the interbank
Eurodollar market in which it regularly participates ("Interbank
Eurodollar Market") on or about 10:00 a.m. (Boston time) 2 Business
Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Eurodollar Loan to
which such Interest Period is to apply for a period of time
approximately equal to such Interest Period.
"Reserve Percentage" applicable to any Interest Period means the rate
(expressed as a decimal) applicable to the Agent during such Interest
Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) of the Agent
with respect to "Eurocurrency liabilities" as that term is defined
under such regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
Affected Loans. See Section 2B.7.
Affiliate. With reference to any Person, (i) any director, officer
or employee of that Person, (ii) any other Person controlling, controlled
by or under direct or indirect common control of that Person, (iii) any
other Person directly or indirectly holding 5% or more of any class of the
capital stock or other equity interests (including options, warrants,
convertible securities and similar rights) of that Person and (iv) any
other Person 5% or more of any class of whose capital stock or other
equity interests (including options, warrants, convertible securities and
similar rights) is held directly or indirectly by that Person.
Notwithstanding the foregoing, the term Affiliate shall not include First
Plaza Group Trust or Mellon Bank, N.A. (in its capacity as trustee), so
long as they do not hold more than 20% of the capital stock of Leather
U.S.
Agent. Bank of Boston in the capacity as Agent for the Banks under
this Agreement and the other Loan Documents, and includes (where the
context so admits) any other Person or Persons succeeding to the functions
of the Agent under this Agreement.
Agent's Fee. See Section 2.6.
Agreement. This Restated Revolving Credit Agreement, as the same may
be supplemented or amended from time to time.
Ancillary Documents. Collectively, (i) the Indenture Agreement, (ii)
the Material Agreements and Contracts, and (iii) all other agreements,
instruments and contracts which shall from time to time be identified by
the Agent and the Borrowers as "Ancillary Documents" for purposes of this
Agreement, as the foregoing may be amended from time to time in accordance
with Section 6.18.
Applicable Base Rate Margin. See Section 2B.2(f).
Applicable Eurodollar Margin. See Section 2B.2(f).
Assignee. See Section 9.10.
Authorized Representative. Until USL's chief financial officer or
chief executive officer notifies the Agent that any of the following is no
longer an Authorized Representative, each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or such other person(s) as
USL's chief financial officer or chief executive officer may identify to
the Agent in writing.
Availability. The sum of the U.S. Borrowing Base, plus the amount of
any Overadvances then permitted to be borrowed under Section 2.3 hereof,
minus the Canadian Deficiency.
Bailee Waivers. Collectively, the separate Bailee Waivers which have
been or are executed and delivered to the Agent, for the ratable benefit
of the Banks and the Agent, by the bailee under any bailment, in form and
substance reasonably acceptable to the Agent.
Bank of Boston. See Preamble.
Bankers' Acceptance Loans. That portion of a Canadian Loan
designated to bear interest based upon the Bankers' Acceptance Rate.
Bankers' Acceptance Rate. For any Interest Period for a Bankers'
Acceptance Loan, the rate of interest announced publicly by the Canadian
Bank in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ from time to time as its Bankers'
Acceptance Rate for bankers' acceptances in Canadian dollars with a face
amount comparable to the principle amount of such Bankers' Acceptance Loan
requested by the Canadian Borrower for which the Bankers' Acceptance Rate
is being determined, with maturities comparable to the Interest Period for
which such Bankers' Acceptance Rate will apply, as of approximately 10:00
a.m. (Toronto time) one Business Day prior to the commencement of such
Interest Period, subject, however, to the provisions of Section 2B.3
hereof.
Banks. See Preamble.
Base Account. An Account Receivable of any of the Borrowers as to
which the Agent has a valid and perfected first-priority security interest
and such Borrower has furnished to the Banks and the Agent information as
required by Section 5.1(d). If and when a Base Account exists by virtue
of constituting proceeds of Base Inventory, the Inventory giving rise to
the Base Account automatically loses its status as Base Inventory.
Base Inventory. Inventory as to which any of the Borrowers has
acquired title prior to, on or after the date hereof, the Agent has
acquired a valid and perfected first-priority security interest, such
Borrower has furnished the Agent information as required by
Section 5.1(d), with respect to any Inventory located on premises leased
by such Borrower, the Agent has received from the landlord at such
premises a Landlord Waiver from the landlord at such premises in form and
substance satisfactory to the Agent, and with respect to any Inventory
located on premises owned by a third party in a bailment, the Agent has
received from the operator at such premises a Bailee Waiver from the
bailee at such premises in form and substance satisfactory to the Agent.
Inventory immediately loses the status of Base Inventory if and when a
Borrower sells it, otherwise transfers title thereto, consigns or consumes
it or the Agent releases or transfers its security interest therein.
Base Rate. The greater of (i) the rate of interest announced from
time to time by the Bank of Boston at its head office as its Base Rate,
and (ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum
(rounded upwards, if necessary, to the next 1/8 of 1%).
Base Rate Loan. Any U.S. Loan bearing interest calculated by
reference to the Base Rate and any Canadian Loan bearing interest
calculated by reference to the Reference Rate.
Bond Repurchase Base Report. See Section 5.1(d).
Borrowers. See Preamble.
Borrowing Base. In relation to the Borrowers as at any particular
date, an amount equal to the lesser of (i) the aggregate Revolving Credit
Commitments as in effect on such date, and (ii) the sum, as determined by
the Agent, as at such date, of (A) an amount equal to 55% of the Net
Security Value of Base Inventory, plus 55% of Eligible Documentary Letters
of Credit, but in no event more than $45,000,000, and (B) 85% of the Net
Outstanding Amount of Base Accounts as at such date; provided that the
Agent, subject to the consent of the Majority Banks or all of the Banks as
required by Section 9.8 hereof, in the reasonable, good faith exercise of
its discretion and based upon a determination that a material change in
the Collateral has occurred, reserves the right to increase or decrease
the foregoing percentages.
Whenever the Borrowing Base is used as a measure of Revolving Loans,
it shall be computed as of, and the Revolving Loans referred to shall be
those reflected in the Loan Account at, the time in question.
Borrowing Base Report. See Section 5.1(d).
Business Day. (i) For all purposes other than as covered by clause
(ii) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Boston, Massachusetts (and for purposes of Canadian Loans
in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇) are open for the conduct of a substantial
part of their commercial banking business; and (ii) with respect to all
notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day that is a Business Day
described in clause (i) and that is also a day on which trading takes
place between banks in United States or Canadian dollar deposits in the
Interbank Eurodollar Market.
Canadian Bank. Such Canadian lending institution as the Agent may
designate from time to time to serve as the lender under the Canadian
Loans, and such institution's Canadian successors and assigns.
Canadian Base Account. Any Base Account to which title is held by,
and in which a security interest is granted to the Agent on behalf of the
Canadian Bank by, the Canadian Borrower.
Canadian Base Inventory. Any Base Inventory to which title is held
by, and in which a security interest is granted to the Agent on behalf of
the Canadian Bank by, the Canadian Borrower.
Canadian Borrower. ▇▇▇▇▇▇.
Canadian Borrowing Base. The Borrowing Base solely in relation to
the Canadian Borrower.
Canadian Collateral. Collateral to which title is held by, and in
which a security interest is granted to the Agent on behalf of the
Canadian Bank by, the Canadian Borrower.
Canadian Commitment Fee. The Commitment Fee payable by the Canadian
Borrower to the Canadian Bank pursuant to Section 2A.3.
Canadian Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Canadian Credit Commitments of all the Banks. Schedule 1 may be
amended from time to time unilaterally by the Agent to reflect any changes
to the Canadian Commitment Percentages occurring in accordance with the
terms of this Agreement.
Canadian Credit Commitment. In relation to the Canadian Bank, the
maximum amount of Canadian Loans that such Bank shall be committed to make
to the Canadian Borrower upon the terms and subject to the conditions
contained in this Agreement. The amount of the Canadian Bank's Canadian
Credit Commitment shall be equal to the product of the Canadian Maximum
Amount times such Bank's Canadian Commitment Percentage as set forth on
Schedule 1 hereto.
Canadian Deficiency. The difference of (i) the aggregate outstanding
amount of Canadian Loans plus the outstanding amount of Canadian Letters
of Credit, minus (ii) the Canadian Borrowing Base; but in no event less
than zero dollars ($0).
Canadian Eurodollar Loan. Any Canadian Loan bearing interest at a
rate determined with reference to the Canadian Eurodollar Rate.
Canadian Eurodollar Rate. For any Interest Period for any Canadian
Eurodollar Loan, an interest rate per annum (calculated on the basis of
actual days elapsed over a 360-day year) equal to the offered quotation to
first-class banks in the Interbank Eurodollar Market by the Canadian Bank
for Canadian dollar deposits of amounts and in funds comparable to the
principal amount of such Canadian Eurodollar Loan requested by the
Canadian Borrower for which the Canadian Eurodollar Rate is being
determined with maturities comparable to the Interest Period for which
such Canadian Eurodollar Rate will apply as of approximately 10:00 A.M.
(Boston time) two Business Days prior to the commencement of such Interest
Period, subject, however, to the provisions of Section 2B.3 hereof.
Canadian Letters of Credit. Letters of Credit at site or at time
(including documentary bankers' acceptances), in form customarily issued
by the Canadian Bank as stand by, documentary or commercial letters of
credit, issued by the Canadian Bank at the request of the Canadian
Borrower and for the account of the Canadian Borrower.
Canadian Loan Account. The account or accounts on the books of the
Canadian Bank in which will be recorded Canadian Loans and advances
(including issued and outstanding Canadian Letters of Credit) made by the
Canadian Bank to the Canadian Borrower pursuant to this Agreement,
payments made on such Canadian Loans and other appropriate debits and
credits as provided by this Agreement.
Canadian Loans. Any and all loans, advances and commitments made to
the Canadian Borrower by the Canadian Bank pursuant to Section IIA hereof,
including Base Rate Loans, Eurodollar Loans and Bankers' Acceptance Loans.
Canadian Maximum Amount. $7,500,000 less the dollar amount of any
Mandatory Reduction pursuant to Section 2.7.
Canadian Operating Account. See Section 2A.5.
Canadian Patent and Trademark Security Agreement. The Patent and
Trademark Security Agreement dated as of the date hereof, executed and
delivered by the Canadian Borrower to the Agent, for the benefit of the
Canadian Bank, and to be filed with the appropriate governmental offices.
Canadian Revolving Credit Note. See Section 2A.2.
Canadian Security Agreements. The Security Agreement and the General
Security Agreement, each dated as of the date hereof and executed and
delivered by the Canadian Borrower to the Agent, for the benefit of the
Canadian Bank, to secure the Canadian Borrower's Obligations hereunder.
Capital Expenditures. Any expenditure for fixed assets, leasehold
improvements, capital leases under GAAP, installment purchases of
machinery and equipment, acquisitions of real estate and other similar
expenditures including (i) in the case of a purchase, the entire purchase
price, whether or not paid during the fiscal period in question, (ii) in
the case of a capital lease, the entire rental amount that would be
capitalized on the balance sheet in accordance with GAAP, and (iii)
expenditures in or from any construction-in-process account of a Borrower.
Capital Lease. See Section 4.23.
Cash Interest Expense. For any period, total interest expense (minus
interest income), whether paid or accrued (including the interest
component of capitalized leases), but excluding interest expense, such as
amortization of loan origination fees on the Senior Notes and this
Agreement and amortization of discount, that is not payable in cash.
Cash Management Agreements. Agency Agreements between the Borrowers'
Depository Banks and the Agent.
CERCLA. The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as the same may have been or may be amended from
time to time.
▇▇▇▇▇▇. See Preamble.
▇▇▇▇▇▇ Common Stock. The Equity Securities of ▇▇▇▇▇▇.
Closing Date. The first date on which all of the conditions set
forth in Section 3.1 have been satisfied and the initial Revolving Loans
are to be made hereunder.
Code. The Internal Revenue Code of 1986 and the rules and
regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
Collateral. Collectively, all of the agreements, instruments,
contracts, tangible and intangible personal property, assets, accounts,
Accounts Receivable, Inventory, Equipment, patents, trademarks,
copyrights, other intellectual property and monies, and all of the income,
proceeds and products of any thereof, under or in respect of which the
Agent or any Bank or any of the nominees, agents or legal representatives
of the Agent or any Bank shall have at the relevant time of reference to
the term "Collateral," any rights or interest as security for the payment
or performance of all or any part of the Obligations.
Consolidated and Consolidating. With separate reference to the
Borrowers and, to the extent consistent with USL's reporting practices,
each of their divisions and Subsidiaries that are actively operating and
have assets (excluding USL's foreign sales corporation PVL International,
Inc., a Barbados corporation). Consolidating information shall be
consistent with the internal reporting of USL and in detail as agreed to
with the Agent.
Controlled Group. All members of a controlled group of corporations,
all trades or businesses (whether or not incorporated) under common
control and all other organizations or entities that, together with any
one (or more) of the Borrowers, are treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code or Section 400l of ERISA.
Debt to Tangible Asset Ratio. The ratio of Funded Indebtedness to
FIFO Tangible Assets.
Default. An event or condition that, but for the requirement that
time elapse or notice be given, or both, would constitute an Event of
Default.
Delinquent Bank. See Section 8.4.
Depository Bank. A bank or other federally insured institution
listed on Exhibit D hereto at which the Borrower maintains a Revenue
Depository Account and which enters into a Cash Management Agreement with
the Agent.
EBITDA. In relation to the Borrowers for any period (without
duplication), an amount equal to Net Income, plus the following to the
extent deducted in computing such Net Income: (i) Cash Interest Expense,
(ii) taxes on income, (iii) depreciation, (iv) amortization expense,
including amortization of goodwill, deferred finance costs and other
intangible assets, (v) charges and credits related to any change in the
LIFO reserve, (vi) nonrecurring expenses of $9,344,000 recorded in the
second quarter of 1996, (vii) other expense of $159,000 (transaction fees
on the April, 1996 change in control) recorded in the second quarter of
1996, and (viii) until and including December 31, 1997, extraordinary
losses determined on a pretax basis in accordance with GAAP up to
$3,000,000 in the aggregate, including losses associated with the sale of
assets other than the sale of Inventory in the ordinary course of
business, minus (ix) extraordinary gains determined on a pretax basis in
accordance with GAAP, including gains associated with the sale of assets
other than the sale of Inventory in the ordinary course of business.
EBITDA to Cash Interest Expense Ratio. The ratio of EBITDA to Cash
Interest Expense. Cash Interest Expense and EBITDA shall be measured as
at the last day of the fiscal period of the Borrowers, without
duplication, for which such measurements are made.
Eligible Documentary Letters of Credit. Documentary Letters of
Credit issued by the Agent or the Canadian Bank solely to the extent that
such Letters of Credit are issued for the importation or other purchase of
Inventory that would otherwise constitute Base Inventory at such time as
the Agent acquires a perfected first security interest therein and such
Inventory is identified in a Borrowing Base or Weekly Borrowing Base
Report, provided that such Inventory is not otherwise included in the
Borrowing Base.
Employee Benefit Legislation. Any pension benefit, tax, or other
legislation, regulations, or other statements of administrative policy of
any Governmental Body applicable to any Employee Benefit Plan, including,
without limitation ERISA.
Employee Benefit Plan. Any pension, retirement, bonus, profit-
sharing, insurance, deferred compensation, or other similar plan, program,
arrangement, or practice covering any or all of the past or present
directors, officers, employees, or agents of any Borrower or any related
Person.
Encumbrances. See Section 6.5.
Environmental Laws. Any and all applicable Canadian (or other
foreign) or domestic federal, state and local environmental, health or
safety statutes, laws, regulations, rules, ordinances, policies and rules
or common law (whether now existing or hereafter enacted or promulgated
and as they may be amended from time to time), of all Governmental Bodies
which may now or hereafter have jurisdiction over any of the Borrowers,
and all applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal property or
human health or the environment, including, without limitation, all
requirements pertaining to reporting, licensing, permitting,
investigation, containment, remediation and removal of emissions,
discharges, Releases or threatened Releases of Hazardous Materials,
chemical substances, pollutants or contaminants whether solid, liquid or
gaseous in nature, into the environment or relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal,
transport or handling of such Hazardous Materials, chemical substances,
pollutants or contaminants.
Equipment. Goods, machinery, furniture, fixtures, equipment and
other tangible personal property (other than Inventory), now owned and/or
hereafter acquired by any of the Borrowers.
Equity Securities. As to any Person, any shares of any class of
capital stock or other equity interests of such Person, voting or non-
voting, or any options, warrants or similar rights with respect to any
such shares.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time
to time be supplemented or amended and remain in effect.
Eurodollar Loan. Any U.S. Eurodollar Loan or any Canadian Eurodollar
Loan.
Event of Default. Any event described in Section 7.1.
Excess Availability. The difference of (a) the lesser of (i) the
Maximum Amount, or (ii) Availability, minus (b) the amount of U.S. Loans
then outstanding (including outstanding U.S. Letters of Credit).
Facility Fee. See Section 2.5.
Federal Funds Effective Rate. For any day, a fluctuating interest
rate per annum equal 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
on such transactions received by the Agent from 3 federal funds brokers of
recognized standing selected by the Agent.
FIFO Tangible Assets. The lesser of the book value and the fair
market value of the assets of the Person for whom FIFO Tangible Assets is
being determined, with Inventory being measured on a "first-in-first-out"
basis, minus the book value of intangible assets of such Person.
First Chicago Credit Agreement. The Second Amended and Restated
Credit Agreement, dated as of February 17, 1995, among the Borrowers, The
First National Bank of Chicago, as agent, and the institutions from time
to time party thereto as lenders, as the same may be amended, supplemented
or modified from time to time.
Funded Indebtedness. As applied to the Borrowers on a consolidated
basis, (i) all obligations for borrowed money or other extensions of
credit whether or not secured or unsecured, absolute or contingent,
including, without limitation, the Obligations with respect to outstanding
Revolving Loans and any and all fees and charges then due and payable, and
all obligations representing the deferred purchase price of property,
other than accounts payable arising in the ordinary course of business,
(ii) all obligations evidenced by bonds, notes (including without
limitation the Senior Notes), debentures or other similar instruments,
(iii) all obligations secured by any mortgage, pledge, security interest
or other lien on property owned or acquired by any of the Borrowers, and
(iv) those portions of all obligations arising under capital leases that
are required under GAAP to be capitalized on the consolidated balance
sheet of the Borrowers.
GAAP. Generally accepted accounting principles, consistently
applied.
▇▇▇▇▇▇▇▇. The operating division of USL doing business under the
name of ▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇ Reserve. As applied to ▇▇▇▇▇▇▇▇ (excluding ▇▇▇▇▇▇▇▇/▇▇▇▇▇),
an amount equal to $860,000 of the Base Accounts of ▇▇▇▇▇▇▇▇. The
▇▇▇▇▇▇▇▇ Reserve shall remain in full force and effect until the Agent, in
its reasonable discretion, determines that the Reserve is no longer
necessary.
Governmental Body. Any United States, Canadian or other foreign
federal, state, local, provincial or other governmental authority or
regulatory body, any subdivision, agency, commission or authority thereof
or any quasi-governmental body exercising any governmental regulatory
authority thereunder and any person directly or indirectly owned by or
subject to the control of any of the foregoing, or any court, arbitrator
or other judicial or quasi-judicial tribunal.
Guarantees. As applied to the Borrowers, all guarantees,
endorsements or other contingent or surety obligations with respect to
obligations of others whether or not reflected on the Consolidated and
Consolidating balance sheet of the Borrowers, including without
limitation, any obligation to furnish funds, directly or indirectly
(whether by virtue of partnership arrangements, by agreement to keep-well
or otherwise), through the purchase of goods, supplies or services, or by
way of stock purchase, capital contribution, advance or loan, or to enter
into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person.
Hazardous Material. Any substance (i) the presence of which requires
or may hereafter require notification, investigation, containment or
remediation under any Environmental Law; (ii) which is or becomes defined
as a "hazardous waste", "hazardous material" or "hazardous substance" or
"toxic substances" or "controlled industrial waste" or "pollutant" or
"contaminant" under any present or future Environmental Law or amendments
thereto including, without limitation, CERCLA and its implementing
regulations and any applicable local statutes and the regulations
promulgated thereunder; (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any Governmental Body to the
extent any of the foregoing has or had jurisdiction over any of the
Borrowers or any of their Subsidiaries; or (iv) without limitation, which
contains oil, gasoline, diesel fuel or other petroleum products, asbestos
or polychlorinated biphenyls ("PCBs"). As used in this Agreement, the
term "Release" shall mean and include, without limitation, any leaking,
spilling, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, discarding, burying, abandoning or disposing
into the environment.
Holdings. United States Leather Holdings, Inc., a Delaware
corporation.
Holdings Stock Pledge. The Stock Pledge Agreement, dated as of the
date hereof, between Holdings and the Agent, pursuant to which Holdings
shall pledge to the Agent 100% of the USL Common Stock.
Indebtedness. As applied to the Borrowers on a consolidated basis,
(i) all obligations for borrowed money or other extensions of credit
whether or not secured or unsecured, absolute or contingent, including,
without limitation, the Obligations and unmatured reimbursement
obligations with respect to letters of credit or guarantees issued for the
account of or on behalf of the Borrowers, and all obligations representing
the deferred purchase price of property, other than accounts payable
arising in the ordinary course of business, (ii) all obligations evidenced
by bonds, notes (including without limitation the Senior Notes),
debentures or other similar instruments, (iii) all obligations secured by
any mortgage, pledge, security interest or other lien on property owned or
acquired by any of the Borrowers, whether or not the obligations secured
thereby shall have been assumed, (iv) that portion of all obligations
arising under capital leases that is required to be capitalized on the
Consolidated balance sheet of the Borrowers, and (v) all Guarantees.
Indenture Agreement. The Indenture, dated as of August 2, 1993,
between USL and M&I First National Bank, as Indenture Trustee, as the same
may be supplemented, amended or modified from time to time.
Indenture Trustee. M&I First National Bank, or its successors or
assigns, as Trustee named in the Indenture Agreement.
Ineligible Account. An Account excluded from the definition of Net
Outstanding Amount of Base Accounts under this Agreement.
Ineligible Account Party. Any account debtor or consolidated group
on a consolidated basis which has 35% or more of its aggregate Accounts
owing to a Borrower excluded from the definition of "Net Outstanding
Amount of Base Accounts" pursuant to any of the provisions of that
definition; provided, that, amounts that are secured by a letter of credit
shall be included in the Net Outstanding Amount of Base Accounts to the
extent otherwise permitted in the definition thereof even if the account
debtor would otherwise be ineligible.
Initial Financial Statement. See Section 4.7.
Insolvent or Insolvency. The occurrence of one or more of the
following events with respect to a Person: death; dissolution; termination
of existence; insolvency within the meaning of the United States
Bankruptcy Code or other applicable statutes of any Governmental Body;
such Person's inability to pay its debts as they come due; appointment of
a receiver of any part of the property of, execution of a trust mortgage
or an assignment for the benefit of creditors by, or the entry of an order
for relief or the filing of a petition in bankruptcy or the commencement
of any proceedings under any bankruptcy or insolvency laws, or any laws
relating to the relief of debtors, readjustment of indebtedness or
reorganization of debtors, or the offering of a plan to creditors for
composition or extension, except for an involuntary proceeding commenced
against such Person which is dismissed within 60 days after the
commencement thereof without the entry of an order for relief or the
appointment of a trustee.
Interbank Eurodollar Market. See definition of Adjusted Eurodollar
Rate.
Interbank Offered Rate. See definition of Adjusted Eurodollar Rate.
Interest Payment Date. With respect to each Eurodollar Loan and
Bankers' Acceptance Loan, the last day of the Interest Period for such
Eurodollar Loan or Bankers' Acceptance Loan, as applicable; provided,
however, that with respect to each Interest Period for any Eurodollar Loan
of a duration of three or more months, the Interest Payment Date with
respect thereto shall include, in addition to the last day of such
Interest Period, each day which occurs every three months after the
initial date of such Interest Period.
Interest Period. With respect to each Eurodollar Loan and Bankers'
Acceptance Loan, (A) until the earlier of (i) 60 days after the Closing
Date, and (ii) the date on which Bank of Boston's Revolving Credit
Commitment equals $25,000,000, the period commencing on the date of the
making or continuation of or conversion to such Eurodollar Loan or
Bankers' Acceptance Loan and ending two weeks thereafter, and (B) after
the expiration of the period referred to in the earlier of clauses (A)(i)
and (ii), the period commencing on the date of the making or continuation
of or conversion to such Eurodollar Loan or Bankers' Acceptance Loan and
ending one, two or three months thereafter, as the Borrower may elect in
the applicable Notice of Borrowing or Conversion; provided that:
(i) any Interest Period (other than an Interest Period
determined pursuant to clause (iii) below) that would
otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to clause (iii)
below, end on the last Business Day of a calendar month;
(iii) any Interest Period that would otherwise end after the
Maturity Date shall end on the Maturity Date; and
(iv) except with respect to the two week Interest Periods
referred to in clause (A) above, and notwithstanding clause
(iii) above, no Interest Period shall have a duration of
less than one month, and if any Interest Period would be
for a shorter period, such Interest Period shall not be
available hereunder.
Inventory. Goods, merchandise and other personal property, now owned
or hereafter acquired by any of the Borrowers, which are held for sale or
lease or are furnished or to be furnished under a contract of service or
are raw materials, work in process or materials used or consumed or to be
used or consumed in such Borrower's business.
Investment. As applied to any of the Borrowers, the purchase or
acquisition of any share of capital stock, partnership interest, limited
liability company membership interest, evidence of indebtedness or other
equity security of any other Person, any loan, advance or extension of
credit to, or contribution to the capital of, any other Person, any real
estate held for sale or investment, any commodities futures contracts held
other than in connection with bona fide hedging transactions, any other
investment in any other Person, and the making of any commitment or
acquisition of any option to make an Investment.
Joint Venture/Investment. The proposed joint venture between USL and
an unaffiliated third party to form an operating Person or any other
Investment of debt or equity of USL in any unaffiliated third party.
Labor Union Agreements. Collectively, the labor union agreements
relating to each of the Borrowers and each of their Subsidiaries, as
listed and described on Exhibit D hereto.
Landlord Waivers. Collectively, the separate landlord waivers which
have been or are executed and delivered to the Agent, for the ratable
benefit of the Banks and the Agent, by the landlord under any Lease of
real property, in form and substance reasonably acceptable to the Agent.
Leases or Lease. Any agreement granting a Person the right to occupy
space in a structure or real estate for any period of time or any capital
lease, operating lease or other lease of or agreement to use personal
property including, but not limited to, Equipment, whether evidenced by
written or oral lease, contract, sales agreement or other agreement no
matter how characterized.
Leather U.S. Leather U.S., Inc., a Delaware corporation.
Letter of Credit Maximum Amount. $20,000,000 for the period
commencing on the date hereof through thirty (30) days after the date
hereof, $15,000,000 from the 31st day after the date hereof through the
90th day after the date hereof, and $10,000,000 from and after the 91st
day after the date hereof through the Maturity Date.
Letters of Credit. Canadian Letters of Credit and U.S. Letters of
Credit.
Loan Account. The aggregate of the U.S. Loan Account and the
Canadian Loan Account.
Loan Documents. Collectively, this Agreement (including, without
limitation, the agreements and other instruments listed or described in
Section III), the Revolving Credit Notes, the Landlord Waivers, the Bailee
Waivers, the Cash Management Agreements, the Solvency Certificates, the
Holdings Stock Pledge, the Letters of Credit, the Negative Pledges, and
the Security Documents, together with all agreements and other instruments
contemplated thereby and all schedules, exhibits and annexes thereto, as
the same may from time to time be amended and in effect.
▇▇▇▇▇▇ Consulting Agreement. The agreement dated April 1, 1996,
between USL and Claymore Partners Ltd.
Majority Banks. Those Banks whose aggregate Total Commitment
Percentages constitute at least fifty-one percent (51%) of the Total
Commitment Percentages in effect at the relevant time of reference.
Mandatory Reduction. See Section 2.7.
Material Agreements and Contracts. Those agreements and contracts of
any of the Borrowers or their Subsidiaries, whether written or oral,
listed and described on Exhibit D hereto, but including without
limitation, in any event, the Labor Union Agreements, the ▇▇▇▇▇▇
Consulting Agreement and any contract pursuant to which payments made or
received by a Borrower in any fiscal year exceed, in the aggregate,
$150,000, but excluding any purchase order entered into in the ordinary
course of business.
Maturity Date. The fifth anniversary of the date hereof or such
earlier date upon acceleration pursuant to Section 7.2 of this Agreement.
Maximum Amount. $80,000,000 less the dollar amount of any Voluntary
Reduction or Mandatory Reduction pursuant to Section 2.7 hereof.
Maximum Permissible Rate. See Section 2B.15.
Minimum Availability. Excess Availability of at least $20,000,000.
Minimum EBITDA. See Section 6.9.
Multi-Employer Plans. Any multi-employer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA.
Negative Pledges. Collectively, the Negative Pledges, dated as of
the date hereof and delivered by each of the Borrowers to the Agent, for
the ratable benefit of the Agent and the Banks.
Net Income. The Consolidated gross revenues of the Borrowers and
their Subsidiaries, if any, for the period in question, less taxes on
income, all expenses and other proper charges, all determined in
accordance with GAAP, but in any event, excluding from Net Income (without
duplication): (i) any gain or loss arising from any write-up of assets,
except to the extent inclusion thereof shall be approved in writing by the
Agent; (ii) earnings of any Subsidiary accrued prior to the date it became
a Subsidiary; (iii) the net earnings of any Person (other than a
Subsidiary) in which a Borrower or any Subsidiary has an ownership
interest, except to the extent such net earnings shall have actually been
received by such Borrower or such Subsidiary in the form of cash
distributions; (iv) any gains or losses on the sale or other disposition
of investments or fixed or capital assets in excess of $250,000 in any
given fiscal year; (v) the proceeds of any life insurance policy; (vi) any
deferred or other credit representing any excess of the equity of any
Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary; (vii) any reversal in excess of $250,000 in any given
fiscal year of any contingency reserve, except to the extent that
provision for such contingency reserve shall be made from income arising
during such period; (viii) all extraordinary gains of the Borrowers and
their Subsidiaries, if any, as defined by GAAP, including, without
limitation, gains arising out of the repurchase of Senior Notes; and (ix)
any taxes on income attributable to excluded gains or losses excluded
pursuant to items (i) through (viii) of this paragraph.
Net Outstanding Amount of Base Accounts. The net amount of Base
Accounts outstanding after eliminating from the aggregate amount of
outstanding Base Accounts the amount of the ▇▇▇▇▇▇▇▇ Reserve (until the
Agent determines in its reasonable discretion that the ▇▇▇▇▇▇▇▇ Reserve is
no longer necessary) and any Account which:
(a) is unpaid more than 60 days after the due date set forth on the
invoice, but in no event more than 120 days after the date of such
invoice, or is unpaid more than 120 days after the date of the invoice
provided such Account is secured by a letter of credit in form reasonably
acceptable to the Agent;
(b) did not arise in the ordinary course of the Borrowers' business
as a result of services which have been performed for, or the sale of
goods which have been shipped to, the account debtor;
(c) is not the legal, valid and binding obligation of the account
debtor thereunder, is not assignable, is not owned by any of the Borrowers
free and clear of all Encumbrances (except in favor of the Agent) or is
evidenced by a promissory note or other instrument;
(d) has been reduced or against which a reduction is being sought,
as against any Borrower or its agents, by any offset, counterclaim,
adjustment, credit, allowance, contra account or other defense, or as to
which there is any (or any basis for any) return, rejection, loss or
damage of or to the goods giving rise thereto, or any request for credit
or adjustments; provided, that, all amounts remaining in such Account,
after accounting for any such reduction, return, offset, counterclaim,
adjustment, credit, allowance, contra account, other defense, rejection,
loss, damage or request for credit or adjustment, shall not be eliminated
from the aggregate amount of Net Outstanding Amount of Base Accounts;
(e) uncollectible in the ordinary course for any reason, including,
without limitation, any bankruptcy, insolvency or other financial
difficulty of the account debtor, or any impediment to the assertion of a
claim or commencement of an action against the account debtor (including
as a consequence of a failure of a Borrower to be qualified or licensed in
any jurisdiction where such qualification or licensing is required), all
as determined by the Agent in its reasonable discretion;
(f) is owing from any Affiliate, supplier or Ineligible Account
Party to any Borrower;
(g) is owing from an account debtor not located in one of the fifty
United States, Canada (provided that the aggregate amount of Net
Outstanding Amount of Base Accounts from account debtors in Canada shall
not exceed $7,500,000) or the United Kingdom (provided that the aggregate
Net Outstanding Amount of Base Accounts from account debtors in the United
Kingdom shall not exceed $1,000,000) other than an Account secured by a
letter of credit from a bank or other financial institution reasonably
acceptable to the Agent in form reasonably acceptable to the Agent, or an
Account in which the Agent's security interest is duly and properly
perfected in the appropriate jurisdiction(s) subject to the Agent's sole
and absolute discretion;
(h) is owing from an account debtor which is the United States of
America, the federal Government of Canada, the government of any Canadian
province, or any department, agency or instrumentality of any of the
foregoing, unless the Account has been properly assigned to the Agent in
compliance with the federal Assignment of Claims Act, the Financial
Administration Act (Canada) or any applicable Canadian provincial
legislation; and
(i) is owing from an account debtor where 35% or more of the
Accounts due from such account debtor to the Borrower are excluded under
subparagraph (a) of this definition.
Net Outstanding Amount of Canadian Base Accounts. The Net
Outstanding Amount of Base Accounts solely in relationship to Canadian
Base Accounts.
Net Outstanding Amount of U.S. Base Accounts. The Net Outstanding
Amount of Base Accounts solely in relationship to U.S. Base Accounts.
Net Proceeds. With respect to the sale, transfer, insured casualty
loss or other disposition by a Borrower of any asset or group of assets
(other than Inventory wholly in the ordinary course of business, but
including, without limitation, any sale of Equity Securities), means the
amount of cash (freely convertible into United States dollars) received by
such Borrower, its agents or the Agent, from such sale or other
disposition (including, without limitation, any tax refund), after, other
than in the case of insurance proceeds (i) provision for all income or
other taxes of such Borrower measured by or resulting from such sale or
other disposition, (ii) payment of all reasonable third party brokerage
commissions and other reasonable out-of-pocket fees and expenses to third
parties related to such sale or other disposition, and (iii) deduction of
appropriate amounts approved by the Agent to be provided by such Borrower
as a reserve, in accordance with GAAP, against any liabilities associated
with such sale, transfer or other disposition and retained by such
Borrower after such sale or other disposition.
Net Security Value of Base Inventory. For each type of Base
Inventory, the net value of such Base Inventory, calculated at the lesser
of fair market value or cost determined on the "first in, first out"
basis, after subtracting (i) reserves, established in a manner consistent
with USL's present practices, for the value of any such Base Inventory
which is damaged, defective, used or otherwise not in first-class
condition, obsolete or on consignment and after taking into account
charges and liens, other than those of the Agent, of all kinds against
such Base Inventory (including, without limitation, third-party processing
liens), changes in the market value thereof, and transportation and other
handling charges affecting the value thereof; and (ii) any such Base
Inventory which has otherwise been designated by the Agent in its
reasonable discretion as unacceptable because of any material change in
the value of such Inventory by notice to USL; all as determined in good
faith by the Agent consistent with customary practices in the banking
industry, which determination shall be final and binding upon the
Borrowers.
Net Security Value of Canadian Base Inventory. The Net Security
Value of Base Inventory solely in relation to Canadian Base Inventory.
Net Security Value of U.S. Base Inventory. The Net Security Value of
Base Inventory solely in relation to U.S. Base Inventory.
Notice of Borrowing or Conversion. See Section 2B.1.
Obligations. Any and all obligations of the respective Borrowers to
the Agent or any Bank, arising under any of the Loan Documents, of every
kind and description, direct or indirect, absolute or contingent, primary
or secondary, due or to become due, now existing or hereafter arising,
regardless of how they arise, and including obligations to perform acts
and refrain from taking action as well as obligations to pay money.
Overadvances. See Section 2.3.
Overadvance Spread. See Section 2B.2(d).
Participant. See Section 9.10.
Patent and Trademark Office. The United States Department of
Commerce Patent and Trademark Office, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and the
Canadian Intellectual Property Office, Ottawa, Canada..
Patent and Trademark Security Agreement. The Patent and Trademark
Security Agreement dated as of the date hereof, executed and delivered by
USL to the Agent, for the ratable benefit of the Banks and the Agent, and
to be filed with the United States Patent and Trademark Office.
PBGC. The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
PCBs. See definition of Hazardous Material.
Permitted Encumbrances. See Section 6.5.
Person. An individual, a company, a corporation, an association, a
partnership, a limited liability company, a joint venture, an
unincorporated trade or business enterprise, a trust, an estate, or a
government (national, regional or local) or an agency, instrumentality or
official thereof.
Plan. At any time, any employee pension or other benefit plan that
is subject to Title IV of ERISA or subject to the minimum funding
standards under Section 302 of ERISA or Section 412 of the Code and either
(i) if such Plan is maintained by a Borrower or any member of the
Controlled Group for employees of such Borrower or any member of the
Controlled Group, or (ii) if such Plan is a Multi-Employer Plan or any
other arrangement under which more than one employer makes contributions
and to which (in either case) a Borrower or any member of the Controlled
Group is then making or accruing an obligation to make contributions or
has within the preceding six (6) plan years made contributions.
Qualified Investments. As applied to the Borrowers, investments in
(i) marketable notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America;
(ii) certificates of deposit or other deposit instruments or accounts of
the Agent, any other Bank or any other financial institution executing and
delivering with the Borrower and the Agent a Cash Management Agreement in
form and substance reasonably satisfactory to the Agent, that has capital
and surplus of at least $100,000,000; (iii) commercial paper of the Agent
or any other U.S. Bank that is rated not less than prime-one or A-1 or
their equivalents by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or their successors; (iv) any repurchase
agreement secured by any one or more of (i), (ii) or (iii); (v) shares of
money market, mutual or similar funds of the Agent or any other U.S. Bank,
provided, that such funds have assets in excess of $100,000,000 and the
investments of which are limited to investment grade securities (i.e.,
securities rated at least Baa by ▇▇▇▇▇'▇ Investors Service, Inc., or at
least BBB by Standard & Poor's Corporation); and (vi) any one or more
Joint Venture/Investment in an amount not to exceed, in the aggregate,
$5,000,000 so long as (a) Excess Availability exceeds Minimum Availability
after taking into account the investment in the Joint Venture/Investment,
(b) such Joint Venture/Investment results in USL acquiring at least a 50%
equity interest in any such Joint Venture/Investment, and (c) such
Borrower, immediately upon acquiring the equity interest, pledges to the
Agent, for the ratable benefit of the Banks (including U.S. Banks only to
the extent such interest in such Joint Venture/Investment is held by the
U.S. Borrower) and the Agent, a properly perfected security interest in
all of such Borrower's right, title and interest in such Joint
Venture/Investment.
Rate Period. The period beginning on the day following delivery to
the Agent of the quarterly financial statements required to be delivered
pursuant to Section 5.1(b) and ending on the day on which the next such
quarterly financial statements are delivered.
Real Property or Real Properties. Collectively, the several
parcel(s) of land located at the addresses set forth on Exhibit F hereto,
being all of the real property locations owned or leased, or otherwise
occupied, by any of the Borrowers.
Reference Rate. A fluctuating interest rate per annum (calculated on
the basis of actual days elapsed over a 360 day year) as shall be in
effect from time to time, which rate per annum shall at all times be equal
to the rate of interest announced publicly by the Canadian Bank from time
to time as its prime rate for Canadian dollar loans, such rate to change
when and as such announced rate changes.
Release. See definition of Hazardous Material.
Reportable Event. See Section 5.1(i).
Reserve Percentage. See definition of Adjusted Eurodollar Rate.
Responsible Party Sites. See Section 4.15.
Restricted Payment. (i) Any cash or property dividend, distribution
or payment, direct or indirect, to any Person (other than a Borrower) who
now or in the future may hold an equity interest in a Borrower, whether
evidenced by a security or not, other than regular compensation and
bonuses paid to employees of USL or ▇▇▇▇▇▇ in the ordinary course of
business and consistent with past practices, and (ii) any payment on
account of the purchase, redemption, retirement or other acquisition for
value of any capital stock of USL or ▇▇▇▇▇▇, or any other payment or
distribution made in respect thereof, either directly or indirectly.
Revenue Depository Account. Any checking or other depository account
maintained for the receipt of proceeds from Accounts and other assets by a
Borrower at a Depository Bank (excluding payroll and ▇▇▇▇▇ cash accounts
maintained by any Borrower in the ordinary course of business).
Revolving Credit Commitments. Collectively, the U.S. Credit
Commitments and the Canadian Credit Commitments.
Revolving Credit Notes. Collectively, the U.S. Revolving Credit
Notes and the Canadian Revolving Credit Note.
Revolving Loans. Collectively, the loans, including, without
limitation, outstanding Base Rate Loans, Eurodollar Loans and
Overadvances, made or to be made to the U.S. Borrower by the U.S. Banks
pursuant to this Agreement (including Sections 2.1 and 2.3 hereof) and
Base Rate Loans, Eurodollar Loans and Bankers' Acceptance Loans made or to
be made to the Canadian Borrower by the Canadian Bank pursuant to this
Agreement (including Section 2A.1 hereof); subject to the limitations
contained herein.
Security Documents. Collectively, the U.S. Security Agreement, the
Patent and Trademark Security Agreement, the Canadian Security Agreements,
the Canadian Patent and Trademark Security Agreement, the USL Stock
Pledge, any and all UCC-1 filings, filings under the Personal Property
Security Act (Ontario) or other instruments or documents necessary to
enable the Agent to perfect a legal, valid and enforceable first-priority
security interest in the U.S. and Canadian Collateral, and all other
agreements, instruments or contracts under or in respect of which the
Agent and Banks with respect to U.S. Collateral, and the Canadian Bank or
the Agent on behalf of the Canadian Bank with respect to Canadian
Collateral, or any of their respective nominees, agents, or
representatives, shall have, at such time, any rights or interests as
security for the payment or performance of all or any part of the
Obligations.
Senior Notes. USL's 10-1/4% Senior Notes due July 31, 2003.
Solvency Certificates. Collectively, the certificates, substantially
in the form and substance of Exhibit J, dated as of the date hereof and
executed and delivered by the chief financial officer of each of the
Borrowers to the Agent, for the ratable benefit of the Banks and the
Agent.
Subject Month. See Section 5.1(d).
Subsidiary. Any corporation, association, joint stock company,
business trust or other similar organization of which 50% or more of the
ordinary voting power for the election of a majority of the members of the
board of directors or other governing body of such entity is held or
controlled by any of the Borrowers or a Subsidiary of any Borrower; or any
other such organization the management of which is directly or indirectly
controlled by any of the Borrowers or a Subsidiary of any Borrower through
the exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which any Borrower has at least a 50% ownership
interest.
Total Commitment. As of any date, the sum of the then-current
Revolving Credit Commitments of the Banks, provided that the Total
Commitment shall not at any time exceed the Maximum Amount.
Total Commitment Percentages. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate of the respective U.S. Credit Commitments and Canadian Credit
Commitments of all the Banks. Schedule 1 may be amended from time to time
unilaterally by the Agent to reflect any changes to the Total Commitment
Percentages occurring in accordance with the terms of this Agreement as
any of the Revolving Credit Commitments of the Banks may change in
accordance with the terms of this Agreement, including as the result of
assignments contemplated by Section 9.10.
Uniform Commercial Code. Shall mean, collectively, the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts and, as
to particular Collateral, the state in which such Collateral is located
for purposes of filing UCC-1 financing statements.
U.S. Banks. Collectively, (i) Bank of Boston, and (ii) each of the
other Persons which may provide additional U.S. Credit Commitments and
become a party to this Agreement as a U.S. Bank hereunder.
U.S. Base Account. Any Base Account to which title is held by, and
in which a security interest is granted to the Agent on behalf of the U.S.
Banks by, the U.S. Borrower.
U.S. Base Inventory. Any Base Inventory to which title is held by,
and in which a security interest is granted to the Agent on behalf of the
U.S. Banks By, the U.S. Borrower.
U.S. Borrower. USL.
U.S. Borrowing Base. The Borrowing Base solely in relation to the
U.S. Borrower.
U.S. Collateral. Collateral to which title is held by, and in which
a security interest is granted to the Agent on behalf of the U.S. Banks
by, the U.S. Borrower.
U.S. Commitment Fee. The Commitment Fee payable by the U.S. Borrower
to the U.S. Banks pursuant to Section 2.4.
U.S. Commitment Percentage. With respect to each U.S. Bank, the
percentage set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate U.S. Credit Commitments of all the Banks. Schedule 1 may be
amended from time to time unilaterally by the Agent to reflect any changes
to the U.S. Commitment Percentages occurring in accordance with the terms
of this Agreement, including as the result of assignments contemplated by
Section 9.10.
U.S. Credit Commitment. In relation to any U.S. Bank, the maximum
dollar amount of U.S. Loans that such Bank shall be committed to make to
the U.S. Borrowers upon the terms and subject to the conditions contained
in this Agreement. The amount of each U.S. Bank's U.S. Credit Commitment
shall be equal to the product of the Maximum Amount times such Bank's U.S.
Commitment Percentage as set forth on Schedule 1 hereto.
U.S. Eurodollar Loan. Any U.S. Loan bearing interest at a rate
determined with reference to the Adjusted Eurodollar Rate.
USL. See Preamble, and shall include all divisions.
USL Common Stock. The Equity Securities of USL.
U.S. Loan Account. The account or accounts on the books of the Agent
in which will be recorded U.S. Loans and advances (including issued and
outstanding Letters of Credit) made by the Banks to the U.S. Borrower
pursuant to this Agreement, payments made on such U.S. Loans and other
appropriate debits and credits as provided by this Agreement.
U.S. Letters of Credit. Letters of Credit issued at site or at time
(including documentary bankers acceptances), in the form customarily
issued by the Agent as standby, documentary or commercial letters of
credit, issued by the Agent at the request of the U.S. Borrower and for
the account of the U.S. Borrower.
U.S. Loans. Base Rate Loans, Eurodollar Loans, Overadvances and
advances (including issued and outstanding U.S. Letters of Credit) made by
the U.S. Banks to the U.S. Borrower pursuant to this Agreement.
USL Stock Pledges. The USL Stock Pledge to the Agent and the USL
Stock Pledge to the Canadian Bank.
USL Stock Pledge to the Agent. The Stock Pledge Agreement, dated as
of the date hereof, between USL and the Agent, pursuant to which USL shall
pledge to the Agent, for the ratable benefit of the Banks and the Agent,
66% of the ▇▇▇▇▇▇ Common Stock.
USL Stock Pledge to the Canadian Bank. The Stock Pledge Agreement,
dated as of the date hereof, between USL and the Canadian Bank, pursuant
to which USL shall pledge to the Canadian Bank 34% of the ▇▇▇▇▇▇ Common
Stock.
U.S. Operating Account. See Section 2.8.
U.S. Revolving Credit Notes. See Section 2.2.
U.S. Security Agreement. The Security Agreement, dated as of the
date hereof and executed and delivered by the U.S. Borrower to the Agent,
for the ratable benefit of the Banks and the Agent.
Voluntary Reduction. See Section 2.7.
Weekly Base Report. See Section 5.1(d).
Welfare Plan. At any time, any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA if such plan is maintained by any
Borrower or any member of the Controlled Group for employees of such
Borrower or any member of the Controlled Group or if such plan is a Multi-
Employer Plan or any other arrangement under which more than one employer
makes contributions, and to which (in either case) such Borrower or any
member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding six (6) plan years made
contributions.
1.2. Accounting Terms. All terms of an accounting character shall
have the meanings assigned thereto by GAAP applied on a basis consistent
with the financial statements referred to in Section 4.7 of this
Agreement, modified to the extent, but only to the extent, that such
meanings are specifically modified herein.
1.3 References to Dollar Amounts: United States or Canadian
Dollars. All references to dollar amounts set forth in this Agreement
shall refer to United States dollars unless expressly provided in a
specific provision of this Agreement that such reference is to Canadian
dollars.
SECTION II
DESCRIPTION OF U.S. CREDIT
2.1. The U.S. Loans.
(a) U.S. Loans. Subject to the terms and conditions set forth in
this Agreement, each of the U.S. Banks severally agrees to lend to the
U.S. Borrower and the U.S. Borrower may borrow, repay and reborrow from
time to time between the Closing Date and the Maturity Date, such amounts
as requested by the U.S. Borrower up to a maximum aggregate principal
amount outstanding (after giving effect to all amounts requested and
outstanding Letters of Credit) at any one time equal to such Bank's U.S.
Credit Commitment; provided, however, that (A) the maximum aggregate
principal amount of all U.S. Loans outstanding (including the aggregate
face amount of U.S. Letters of Credit outstanding), after giving effect to
amounts requested, shall not at any time exceed the lesser of (i) the
Maximum Amount and (ii) the amount of Availability; (B) the maximum
aggregate principal amount of all Revolving Loans (including the aggregate
face amount of U.S. Letters of Credit and Canadian Letters of Credit
outstanding), after giving effect to amounts requested, shall not at any
time exceed the Maximum Amount; and (C) at the time the U.S. Borrower
requests a U.S. Loan and after giving effect to the making thereof, no
Default or Event of Default has occurred and is continuing.
The U.S. Loans shall be made pro rata in accordance with each U.S.
Bank's U.S. Commitment Percentage. If the aggregate principal amount of
U.S. Loans outstanding (including the aggregate face amount of U.S.
Letters of Credit outstanding at such time) shall at any time exceed the
lesser of (i) the Maximum Amount, or (ii) the amount of Availability,
including without limitation or duplication on account of the making of
any Canadian Loans or the issuance of any Canadian Letters of Credit, the
U.S. Borrower shall immediately pay to the Agent for the respective
accounts of the U.S. Banks the amount of such excess. Failure to make
such payment on demand shall be an Event of Default hereunder.
(b) U.S. Loan Account. The Agent shall enter U.S. Loans and
advances made by the U.S. Banks to the U.S. Borrower pursuant to this
Agreement (including, without limitation, Letters of Credit that are
outstanding) as debits in the U.S. Loan Account. The Agent shall also
record in the U.S. Loan Account all payments made by the Borrower on
account of the U.S. Loans and may also record therein, in accordance with
customary accounting practices, other debits and credits, including
customary banking charges and all interest, fees, charges and expenses
chargeable to the U.S. Borrower under this Agreement. The debit balance
of the U.S. Loan Account shall reflect the amount of the U.S. Borrower's
Obligations hereunder and shall be considered prima facie evidence
thereof.
2.2. The U.S. Revolving Credit Notes.
(a) The U.S. Revolving Credit Notes. The U.S. Loans shall be
evidenced by separate U.S. Revolving Credit Notes of the U.S. Borrower to
each U.S. Bank in or substantially in the form of Exhibit A-1 hereto (the
"U.S. Revolving Credit Notes"), with appropriate insertions.
(b) Note Schedules. The Agent shall, and is hereby irrevocably
authorized by the U.S. Borrower to, enter in its records, appropriate
notations evidencing the date and the amount of each U.S. Loan, as
applicable, the interest rate applicable thereto and the date and amount
of each payment of principal made by the U.S. Borrower with respect
thereto; and in the absence of manifest error, such notations shall
constitute conclusive evidence thereof. No failure on the part of the
Agent to make any notation as provided in this subsection (b) shall in any
way affect any U.S. Loan or the rights of the U.S. Banks or Obligations of
the U.S. Borrower with respect thereto.
2.3. Overadvances.
(i) The U.S. Borrower may request of the Agent in writing from time
to time that the U.S. Banks make U.S. Loans to the U.S. Borrower at a
time, or the Agent may permit U.S. Loans, when the debit balance in the
U.S. Loan Account plus the aggregate face amount of U.S. Letters of Credit
outstanding exceeds the U.S. Borrowing Base or which U.S. Loans will cause
the debit balance in the U.S. Loan Account plus the aggregate face amount
of U.S. Letters of Credit outstanding to exceed the U.S. Borrowing Base.
Any such written request from the U.S. Borrower to the Agent shall set
forth the dollar amount of such contemplated overadvance, and such written
notice shall be delivered to the Agent at least three (3) Business Days
prior to the U.S. Borrower's intended borrowing creating the overadvances.
Any such overadvances shall be made for the debit account of each of the
U.S. Banks and the U.S. Banks shall reimburse the Agent for the making of
any such U.S. Loan as though such U.S. Loan were a U.S. Loan duly made in
accordance with the terms of this Agreement (any such U.S. Loan being
herein referred to individually as an "Overadvance" and collectively as
"Overadvances"). The Agent shall enter such Overadvances, along with all
applicable interest, expenses and charges relating thereto, as debits on
the U.S. Loan Account.
(ii) In no event shall: (a) the aggregate amount of Overadvances
pursuant to Section 2.3(i) at any one time outstanding exceed the maximum
aggregate amount of (Y) $15,000,000 during the period from the Closing
Date through and including October 15, 1997; and (Z) $10,000,000 during
the period from October 16, 1997 to the Maturity Date; (b) the aggregate
principal amount of Revolving Loans and Letters of Credit outstanding at
any one time exceed the Maximum Amount; and (c) any Overadvance be made at
such time as there exists a Default or Event of Default. Failure of the
Borrowers to maintain any of the foregoing conditions shall constitute a
payment Event of Default pursuant to Section 7.1(a), and shall be deemed
to be a failure to perform an Obligation hereunder.
(iii) In the event of any Voluntary Reduction pursuant to
Section 2.7(a) hereof or Mandatory Reduction pursuant to Section 2.7(b)
hereof, the maximum aggregate amount of Overadvances permitted pursuant to
Section 2.3(ii) hereof shall be reduced by an amount equal to the product
of (x/y) times "z", where "x" equals the maximum aggregate amount of
Overadvances then permitted pursuant to Section 2.3(ii) hereof, "y" equals
the Maximum Amount immediately prior to such Voluntary or Mandatory
Reduction, and "z" equals the amount of such Voluntary or Mandatory
Reduction. In the event of any Mandatory Reduction pursuant to Section
2.7(c) hereof, the maximum aggregate amount of Overadvances permitted
pursuant to Section 2.3(ii) hereof shall be reduced by the same dollar
amount as such Mandatory Reduction.
2.4. U.S. Commitment Fee. The U.S. Borrower shall pay to the Agent,
for the benefit of the U.S. Banks in accordance with their respective U.S.
Commitment Percentages, from the Closing Date through the Maturity Date, a
U.S. Commitment Fee computed at the rate of 0.375% per annum on the
average daily amount of the unborrowed portion of the Total Commitment
minus the average daily amount of the unborrowed portion of the Canadian
Credit Commitment during each quarter or portion thereof. Outstanding
U.S. Letters of Credit shall be counted as part of the "borrowed" portion
of the U.S. Loans, for the purpose of calculating the U.S. Commitment Fee.
The U.S. Commitment Fee shall be payable (i) quarterly in arrears, on the
last day of March, June, September and December of each year beginning
December 31, 1996, and (ii) on the Maturity Date.
2.5. Facility Fee. The U.S. Borrower shall pay to the Agent on the
Closing Date, a non-refundable facility fee (the "Facility Fee") in an
amount agreed upon between the U.S. Borrower and the Agent.
2.6. Agent's Administration Fee. The U.S. Borrower shall pay to the
Agent, for its own account, a fee (the "Agent's Fee") in an amount agreed
upon between the U.S. Borrower and the Agent, which fee shall be payable
quarterly in advance, on (i) the Closing Date pro rated for the fiscal
quarter in which said Closing Date occurs, and (ii) the first Business Day
of each fiscal quarter thereafter (with the amount thereof pro rated for
the calendar quarter in which the Maturity Date occurs).
2.7. Reduction of Aggregate U.S. Credit Commitment.
(a) The U.S. Borrower may from time to time by written notice
delivered to the Agent at least 1 Business Day prior to the date of
the requested reduction, reduce by integral multiples of $500,000,
any unborrowed portion of the aggregate U.S. Credit Commitment (a
"Voluntary Reduction").
(b) Without prejudice to Section 6.6 of this Agreement, in the
event of a sale or other disposition by the U.S. Borrower of any of
its assets (including without limitation the ▇▇▇▇▇▇ Common Stock),
except for (x) sales of Inventory in the ordinary course of business,
(y) sales of non-functioning, obsolete or surplus Equipment that is
replaced by assets of equal or greater value, and (z) sales not in
the ordinary course of business in an aggregate amount not to exceed
$1,000,000 in any fiscal year of the U.S. Borrower, the U.S.
Borrower: (a) may, subject to and in accordance with Section 4.14 of
the Indenture Agreement and provided that at such time there exists
no Default or Event of Default, use up to the first $5,000,000 of the
aggregate Net Proceeds to (X) repurchase the Senior Notes, (Y)
permanently reduce the U.S. Credit Commitment allocable as set forth
below in this Section 2.7(ii), or (Z) reinvest such amount in
operating assets to be used in one or more lines of business
permitted hereunder in which the U.S. Borrower is engaged, or plans
to engage (subject to the approval of the Agent), at the time of such
sale or disposition of assets, provided, however, that until the time
of such reinvestment of Net Proceeds, the U.S. Borrower shall apply
the amount of Net Proceeds to be reinvested to temporarily repay the
U.S. Loans in accordance with Section 2B.12 hereof, or with respect
to Eurodollar Loans, Section 2B.8 hereof; and (b) shall be required
to make a mandatory reduction of the U.S. Credit Commitment (the
"Mandatory Reduction") in an amount equal to at least 50% of the
aggregate Net Proceeds in excess of the first $5,000,000 received by
the U.S. Borrower from the sale or other disposition of such assets.
The balance of the Net Proceeds after payment of the
Mandatory Reduction (provided that at such time there exists no
Default or Event of Default) may be used by the U.S. Borrower, to (a)
repurchase the Senior Notes, (b) prepay the U.S. Loans in accordance
with Section 2B.12 of this Agreement and, with respect to Eurodollar
Loans, subject to the provisions of Section 2B.8 hereof, or (c)
reinvest such Net Proceeds in operating assets to be used in one or
more lines of business permitted hereunder in which the U.S. Borrower
is engaged, or plans to enter into (subject to the approval of the
Agent), at the time of such sale or disposition of assets; provided,
however, the U.S. Borrower's application of the balance of the Net
Proceeds after payment of the Mandatory Reduction shall be subject to
and in accordance with Section 4.14 of the Indenture Agreement.
(c) In the event of an insured casualty loss, the U.S. Borrower
may, subject to and in accordance with the terms of the Security
Documents, and provided that at such time there exists no Default or
Event of Default, use up to the first $3,500,000 of the aggregate Net
Proceeds from insurance coverage to reinvest such amounts in
operating assets to repair or replace such assets as were damaged or
destroyed. Any insurance proceeds in excess of $3,500,000 on account
of an insured casualty shall be applied directly to make a Mandatory
Reduction in an amount equal to the excess of such insurance proceeds
over the portion thereof utilized by the Borrower for repairs or a
replacement (such portion not to exceed $3,500,000).
(d) All Voluntary Reductions and Mandatory Reductions shall
reduce the U.S. Credit Commitments pro rata with respect to each U.S.
Bank and the Maximum Amount. Any Mandatory Reduction arising out of
the sale of ▇▇▇▇▇▇ Common Stock pursuant to this Section 2.7, or
arising out of the sale of ▇▇▇▇▇▇'▇ assets to the extent permitted by
Section 6.6, shall reduce the Canadian Credit Commitment with respect
to the Canadian Bank and the Canadian Maximum Amount. No Voluntary
Reduction or Mandatory Reduction of the U.S. Credit Commitment, the
Maximum Amount, the Canadian Credit Commitment or the Canadian
Maximum Amount shall be subject to reinstatement.
2.8. U.S. Cash Management. The U.S. Borrower shall deposit all cash,
cash equivalents, checks, receipts and proceeds arising out of the sale of
any of the Collateral into the Revenue Depository Accounts to be held in
trust by the U.S. Borrower for the Agent and the U.S. Banks in accordance
with the Cash Management Agreements. Immediately upon receipt of revenues
in the Revenue Depository Accounts, all sums deposited in such Revenue
Depository Accounts shall be transferred to the First National Bank of
Chicago for deposit into account no. 94-7648 (the "U.S. Operating
Account"). By 12:00 noon on each Business Day, all funds remaining in the
U.S. Operating Account shall be transferred to the Agent in accordance
with the Cash Management Agreements to be applied towards the U.S.
Borrower's Obligations in accordance with this Agreement and the other
Loan Documents. So long as Excess Availability equals or exceeds Minimum
Availability and no Default or Event of Default has occurred, the U.S.
Borrower shall be entitled to use the funds in the U.S. Operating Account
to pay obligations arising in the ordinary course of the Borrowers'
business and to make Qualified Investments.
SECTION IIA
DESCRIPTION OF CANADIAN CREDIT
2A.1. The Canadian Loans.
(a) Canadian Loans. Subject to the terms and conditions set forth
in this Agreement, the Canadian Bank agrees to lend to the Canadian
Borrower and the Canadian Borrower may borrow, repay and reborrow from
time to time between the Closing Date and the Maturity Date, such amounts
as requested by the Canadian Borrower up to a maximum aggregate principal
amount outstanding (after giving effect to all amounts requested and
outstanding Canadian Letters of Credit) at any one time equal to such
Bank's Canadian Credit Commitment; provided, however, that (A) the maximum
aggregate principal amount of all Canadian Loans outstanding plus the
aggregate face amount of Canadian Letters of Credit outstanding (after
giving effect to amounts requested), shall not at any time exceed the
Canadian Maximum Amount; (B) the maximum aggregate principal amount of all
Revolving Loans (including the aggregate face amount of U.S. Letters of
Credit and Canadian Letters of Credit outstanding), after giving effect to
amounts requested, shall not at any time exceed the Maximum Amount; and
(C) at the time the Canadian Borrower requests a Canadian Loan and after
giving effect to the making thereof, no Default or Event of Default has
occurred and is continuing.
The Canadian Loans shall be made pro rata in accordance with each
Bank's Canadian Commitment Percentage. If the aggregate principal amount
of Canadian Loans outstanding plus the aggregate face amount of Canadian
Letters of Credit outstanding at such time shall at any time exceed the
Canadian Maximum Amount, the Canadian Borrower shall immediately pay to
the Canadian Bank the amount of such excess. Failure to make such payment
on demand shall be an Event of Default hereunder.
(b) Canadian Loan Account. The Canadian Bank shall enter Canadian
Loans and advances made by the Canadian Bank to the Canadian Borrower
pursuant to this Agreement (including, without limitation, Canadian
Letters of Credit that are outstanding) as debits in the Canadian Loan
Account. The Canadian Bank shall also record in the Canadian Loan Account
all payments made by the Canadian Borrower on account of the Canadian
Loans and may also record therein, in accordance with customary accounting
practices, other debits and credits, including customary banking charges
and all interest, fees, charges and expenses chargeable to the Canadian
Borrower under this Agreement. The debit balance of the Canadian Loan
Account shall reflect the amount of the Canadian Borrower's Obligations
hereunder and shall be considered prime facie evidence thereof.
2A.2. The Canadian Revolving Credit Notes.
(a) The Canadian Revolving Credit Note. The Canadian Loans shall be
evidenced by a separate Canadian Revolving Credit Note of the Canadian
Borrower to the Canadian Bank in or substantially in the form of Exhibit
A-2 hereto (the "Canadian Revolving Credit Note"), with appropriate
insertions.
(b) Note Schedules. The Canadian Bank shall, and is hereby
irrevocably authorized by the Canadian Borrower to enter in its records
appropriate notations evidencing the date and the amount of each Canadian
Loan, as applicable, the interest rate applicable thereto and the date and
amount of each payment of principal made by the Canadian Borrower with
respect thereto; and in the absence of manifest error, such notations
shall constitute conclusive evidence thereof. No failure on the part of
the Canadian Bank to make any notation as provided in this subsection (b)
shall in any way effect any Canadian Loan or the rights of the Canadian
Bank or Obligations of the Canadian Borrower with respect thereto.
2A.3. Canadian Commitment Fee. The Canadian Borrower shall pay
to the Canadian Bank, for the account of the Canadian Bank, from the
Closing Date through the Maturity Date, a Canadian Commitment Fee computed
at the rate of [0.375]% per annum on the average daily amount of the
unborrowed portion of the Canadian Credit Commitment, during each quarter
or portion thereof. Outstanding Letters of Credit shall be counted as
part of the "borrowed" portion of the Canadian Loans, for the purpose of
calculating the Canadian Commitment Fee. The Canadian Commitment Fee
shall be payable (i) quarterly in arrears, on the last day of March, June,
September and December of each year beginning December 31, 1996, and (ii)
on the Maturity Date.
2A.4. Reduction of Aggregate Canadian Credit Commitment.
The Canadian Borrower may from time to time by written notice
delivered to the Canadian Bank at least 1 Business Day prior to the date
of the requested reduction, reduce by integral multiples of $500,000, any
unborrowed portion of the Canadian Credit Commitment. No reduction of the
aggregate Canadian Revolving Credit Commitment shall be subject to
reinstatement.
2A.5. Canadian Cash Management. The Canadian Borrower shall
deposit all cash, cash equivalents, checks, receipts and proceeds arising
out of the sale of any of the Collateral into the Revenue Depository
Accounts with the Canadian Bank known as Account No. 537-60 and Account
No. 6501-23 in accordance with a Cash Management Agreement. Immediately
upon receipt of revenues in Account No. 537-60, all sums deposited in such
Revenue Depository Account shall be transferred for deposit into Account
No. 6501-23 (the "Canadian Operating Account"). So long as Excess
Availability equals or exceeds Minimum Availability and no Default or
Event of Default has occurred, the Canadian Borrower shall be entitled to
use the funds in the Canadian Operating Account to repay Canadian Base
Rate Loans, and to otherwise transfer funds out of the Canadian Operating
Account all in accordance with the terms hereof (including to make
Qualified Investments). During the existence of a Default or an Event of
Default, all sums deposited in the Revenue Depository Accounts with the
Canadian Bank or the Canadian Operating Account shall be deposited with
the Agent by depository transfer check or by wire transfer at the Canadian
Borrower's expense to be held for the benefit of the Canadian Bank for
application to the Canadian Loan Account.
SECTION IIB
PROVISIONS APPLICABLE TO ALL REVOLVING LOANS
2B.1. Notice of Borrowing or Conversion.
(a) Except for a Revolving Loan made upon a draw under a Letter of
Credit pursuant to Section 2B.5 hereof, whenever a Borrower desires to
make a borrowing of a Revolving Loan, the U.S. Borrower shall give the
Agent, at its address set forth in Section 9.1 hereof, not later than
12:00 noon (Boston time), and the Canadian Borrower shall give the
Canadian Bank, at its address provided in accordance with the terms of
Section 9.1 hereof, not later than 12:00 noon (Toronto time), at least
three (or, in the case of a Revolving Loan which shall be a Base Rate
Loan, one) Business Days' prior written notice via telecopy or telephonic
notice from an authorized representative confirmed promptly in writing
(which notice shall be irrevocable) of its desire to make a borrowing of a
Revolving Loan. Each notice of borrowing under this Section 2B.1 shall be
substantially in the form of Exhibit B-1 or B-2 hereto (each a "Notice of
Borrowing or Conversion") and specify the date on which the Borrower
desires to make a borrowing of a Revolving Loan (which in each instance
shall be a Business Day), the amount of such borrowing, whether such
borrowing shall be a Base Rate Loan, a Eurodollar Loan, a Bankers'
Acceptance Loan, or a combination thereof, and in the case of the
selection of a Eurodollar Loan or Bankers' Acceptance Loan, the proposed
Interest Period therefor, and, shall refer to the most recent Borrowing
Base Report delivered by the U.S. Borrower to the Agent pursuant to
Section 5.1(d) hereof, and set forth the Borrowing Base and U.S. Borrowing
Base provided therein. Following the expiration of the earlier of the
time periods described in clauses (A)(i) and (ii) of the definition of
Interest Period, if such notice shall be with respect to a borrowing of a
Eurodollar Loan or Bankers' Acceptance Loan but fails to state an
applicable Interest Period therefor, then such notice shall be deemed to
be a request for a one-month Interest Period. If (x) the Borrower shall
fail to state in any such notice whether such Revolving Loan shall be a
Base Rate Loan, a Eurodollar Loan or a Bankers' Acceptance Loan, or (y)
the Borrower shall be deemed to have made a borrowing of a Revolving Loan
pursuant to Sections 2.1 and 2A.1 hereof, then the Borrower shall be
deemed to have selected a Base Rate Loan. Subject to the other provisions
of this Agreement, Base Rate Loans, Eurodollar Loans and Bankers'
Acceptance Loans of more than one type may be outstanding at the same
time; provided, however, that Eurodollar Loans and Bankers' Acceptance
Loans shall be available for election by the Borrower only if the Interest
Periods therefor expire at least one (1) Business Day before the Maturity
Date for a Revolving Loan and such Loans shall be for $100,000 or
CD$100,000, as applicable, or any integral multiple of $100,000 or
CD$100,000, as applicable; and provided further that no more than five (5)
Interest Periods in the aggregate for U.S. Loans which are Eurodollar
Loans and three (3) Interest Periods in the aggregate for Canadian Loans
which are Eurodollar Loans or Bankers' Acceptance Loans may be outstanding
at any one time. The Agent shall promptly give each U.S. Bank telephonic
notice (confirmed promptly in writing) of the proposed U.S. Revolving
Loan, of such Bank's pro rata share thereof, and of the other matters
covered by the Notice of Borrowing or Conversion.
(b) The Borrower shall not be permitted to select a borrowing of a
Eurodollar Loan or Bankers' Acceptance Loan in any Notice of Borrowing or
Conversion (x) to the extent such selection would be prohibited by Section
2B.7 hereof, or (y) if a Default or an Event of Default shall be in
existence as of the date of selection of the applicable Interest Period.
2B.2 Interest. (a) Interest on Eurodollar Loans. The U.S. Borrower
and the Canadian Borrower shall, as applicable, pay interest on all
Eurodollar Loans at the aggregate of the Adjusted Eurodollar Rate or
Canadian Eurodollar Rate, as applicable for the Interest Period in effect,
plus the Applicable Eurodollar Margin. Except as provided in Section
2B.2(e) hereof, each Borrower shall pay interest on the unpaid principal
amount of each Eurodollar Loan made to it outstanding from time to time
(i) on each Interest Payment Date with respect to such Eurodollar Loan
with an Interest Period that does not exceed three months, (ii) at the end
of every three months from the commencement of the applicable Interest
Period with respect to such Eurodollar Loan with an Interest Period longer
than three months, (iii) at the date of conversion of such Eurodollar Loan
(or portion thereof) to a Base Rate Loan or Bankers' Acceptance Loan, (iv)
at maturity of each such Eurodollar Loan, and (v) after maturity of such
Eurodollar Loan (whether by acceleration or otherwise) upon demand.
(b) Interest on Base Rate Loans. The U.S. Borrower and the Canadian
Borrower each shall, as applicable, pay interest on all Base Rate Loans at
the aggregate of the Base Rate or the Reference Rate, as applicable, in
effect from time to time, plus the Applicable Base Rate Margin. Except as
provided in Section 2B.2(e) hereof, the Borrower shall pay interest on the
unpaid principal amount of Base Rate Loans made to it hereunder
outstanding from time to time (i) monthly in arrears on the first day of
each calendar month commencing with December 1, 1996, (ii) at the Maturity
Date, and (iii) after the Maturity Date of such Base Rate Loan (whether by
acceleration or otherwise) upon demand.
(c) Interest on Bankers' Acceptance Loans. The Canadian Borrower
shall pay interest on all Bankers' Acceptance Loans at the aggregate of
the Bankers' Acceptance Rate plus the Applicable Eurodollar Margin.
Except as provided in Section 2B.2(e) hereof, the Canadian Borrower shall
pay interest on the unpaid principal amount of each Bankers' Acceptance
Loan made to it outstanding from time to time (i) on each Interest Payment
Date with respect to such Bankers' Acceptance Loan, (ii) at the date of
conversion of such Bankers' Acceptance Loan (or portion thereof) to a Base
Rate Loan or Eurodollar Loan, (iii) at maturity of each such Bankers'
Acceptance Loan, and (iv) after maturity of such Bankers' Acceptance Loan
(whether by acceleration or otherwise) upon demand.
(d) Interest on Overadvances. Each Overadvance shall bear interest
on the outstanding principal amount thereof at a rate per annum equal to
0.50% over the sum of the applicable interest rate and margin for Base
Rate Loans or Eurodollar Loans, respectively, (the "Overadvance Spread"),
which rate shall change contemporaneously with any change in the
applicable interest rate.
(e) Default Interest. Overdue principal (whether at maturity,
by reason of acceleration or otherwise) and, to the extent permitted by
applicable law, overdue interest and fees or any other amounts payable
hereunder or under the U.S. Revolving Credit Notes or the Canadian
Revolving Credit Note, respectively, shall upon the occurrence of an Event
of Default, at the election of the Agent or the Canadian Bank,
respectively, or upon the request of the Majority Banks, bear interest
from and including the due date thereof until paid, compounded daily and
payable on demand, at a rate per annum equal to, in the case of
outstanding U.S. Loans, 2% above the interest rate otherwise applicable to
such Revolving Loans pursuant to Sections 2B.2(a), (b), or (d) hereof, and
in all other cases, 2% above the rate then applicable to Base Rate Loans,
which interest shall be compounded daily and payable to the Agent or the
Canadian Bank, respectively, on demand.
(f) For purposes of this Section 2B.2, (i) the "Applicable Base
Rate Margin" for U.S. Loans constituting Base Rate Loans shall be equal to
(A) from the Closing Date through September 30 1997, a percentage equal to
0.25%, and (B) thereafter, the percentage determined for each Rate Period
by reference to Table 1 below; (ii) the "Applicable Base Rate Margin" for
Canadian Loans constituting Base Rate Loans shall be equal to 1.5%' and
(iii) the "Applicable Eurodollar Margin" shall be (A) from the Closing
Date through September 30, 1997, a percentage equal to 2.00%, and (B)
thereafter, the percentage determined for each Rate Period by reference to
Table 1 below:
Table 1
Prior Four Quarters'
EBITDA to Cash Applicable Base Applicable
Interest Expense Ratio Rate Margin Eurodollar Margin
a) less than 1.50 0.50% 2.25%
b) less than or equal to 0.25% 2.00%
2.00 but greater than
or equal to 1.50
c) greater than 2.00 0.00% 1.75%
For purposes of determining the Applicable Base Rate Margin and the
Applicable Eurodollar Margin, the EBITDA to Cash Interest Expense Ratio
will be tested quarterly, commencing with the first full fiscal quarter of
the Borrowers following September 30, 1997, with Cash Interest Expense and
EBITDA being determined as at the last day of the applicable fiscal
quarter for the four consecutive fiscal quarters then ended, in each case
as evidenced by the annual or quarterly financial statements required to
be delivered pursuant to Section 5.1(a) or Section 5.1(b), respectively.
2B.3 Duration of Interest Periods.
(a) Subject to the provisions of the definition of Interest Period,
the duration of each Interest Period applicable to a Eurodollar Loan or
Bankers' Acceptance Loan shall be as specified in the applicable Notice of
Borrowing or Conversion. The Borrower shall have the option to elect a
subsequent Interest Period to be applicable to such Loan by giving notice
of such election to the Agent or the Canadian Bank, as applicable,
received no later than 12:00 noon (Boston time or Toronto time, as the
case may be) on the date 3 Business Days before the end of the then
applicable Interest Period if such Revolving Loan is to be continued as or
converted to a Eurodollar Loan or Bankers' Acceptance Loan.
(b) Notwithstanding the foregoing, no Borrower may select an
Interest Period that would end, but for the provisions of the definition
of Interest Period, after the Maturity Date.
2B.4 Conversion of Borrowings; Renewals. (a) Unless otherwise
prohibited under Section 2B.5 hereof, any Borrower may, from time to time
following the Closing Date and prior to the Maturity Date, convert (i) all
or a portion of its outstanding Base Rate Loans to one or more Eurodollar
Loans, and with respect to the Canadian Borrower, Bankers' Acceptance
Loans as well, in aggregate amounts and integral multiples of $100,000 or
CN $100,000, or (ii) all or a portion of its outstanding Eurodollar Loans
to one or more Base Rate Loans, and with respect to the Canadian Borrower,
Bankers' Acceptance Loans as well, so long as the aggregate principal
balance of the portion of the Eurodollar Loans made to the Borrower not
being converted, if any, is an integral multiple of $100,000 or CN
$100,000; (iii) all or a portion of the Canadian Borrower's outstanding
Bankers' Acceptance Loans to one or more Eurodollar Loans or Base Rate
Loans in aggregate amounts of or any integral multiple of $100,000 or CN
$100,000; provided, however, that the Borrowers shall not be entitled to
convert any Base Rate Loan, or portion thereof, to a Eurodollar Loan or
Bankers' Acceptance Loan, or any Eurodollar Loan, or portion thereof, to a
Bankers' Acceptance Loan, or any Bankers' Acceptance Loan, or portion
thereof, to a Eurodollar Loan, unless all accrued interest on the Base
Rate Loan, or portion thereof, or Eurodollar Loan or portion thereof, or
Bankers' Acceptance Loan, or portion thereof, as the case may be, to be
converted through the date of such conversion shall have been paid in
full; and provided further that no more than five (5) Interest Periods
(with respect to U.S. Loans) and three (3) Interest Periods (with respect
to Canadian Loans) in the aggregate for Loans which are Eurodollar Loans
or Bankers' Acceptance Loans may be outstanding at any one time. Each
conversion by any Borrower of any advance or portion thereof (other than a
conversion pursuant to Section 2B.7 hereof) shall be made not later than
12:00 noon (Boston time or Toronto time, as applicable) on a Business Day
on at least three (3) Business Day's prior written notice or telephonic
notice from an authorized representative confirmed promptly in writing to
the Agent (which shall promptly notify each U.S. Bank thereof in writing
or by telephone confirmed promptly in writing) or the Canadian Bank, as
applicable, from such Borrower. Each such notice (which notice shall be
irrevocable) shall specify (i) the date of the conversion and the amount
to be converted, (ii) the particular Revolving Loan, or portion thereof,
to be converted, and (iii) in the case of conversion of any Revolving Loan
to a Eurodollar Loan or a Bankers' Acceptance Loan, the duration of the
Interest Period for such Eurodollar Loan or such Bankers' Acceptance Loan.
Notwithstanding the above, the Borrowers shall not be permitted to convert
any Revolving Loan, or portion thereof, to a Eurodollar Loan or a Bankers'
Acceptance Loan if a Default or Event of Default shall have occurred and
be continuing. Except as provided in Section 2B.4 or 2B.5 hereof, any
conversion of a Eurodollar Loan or a Bankers' Acceptance Loan, or portion
thereof, to a Base Rate Loan or a Revolving Loan of any other type shall
be made only on the last day of the Interest Period with respect to such
Eurodollar Loan or Bankers' Acceptance Loan.
(b) Each renewal by the Borrower of an outstanding Eurodollar Loan
or Bankers' Acceptance Loan or portion thereof (in an integral multiple of
$100,000) shall be made on notice to the Agent (which shall promptly
notify each Bank thereof in writing or by telephone confirmed promptly in
writing) or the Canadian Bank, as applicable given not later than 12:00
noon (Boston time or Toronto time, as applicable) on the third Business
Day prior to the last day of the Interest Period just ending for such
Eurodollar Loan or Bankers' Acceptance Loan. Each notice (which notice
shall be irrevocable) by a Borrower of the renewal of a Eurodollar Loan or
Bankers' Acceptance Loan or portion thereof, shall be in writing or by
telephone from an Authorized Representative of the Borrower confirmed
promptly in writing by delivery of a Notice of Borrowing or Conversion and
shall specify (i) the amount of such renewal of the Eurodollar Loan or
Bankers' Acceptance Loan or portion thereof and (ii) the duration of the
Interest Period for such renewal; provided, however, that, following the
expiration of the earlier of the time periods described in clauses (A)(i)
and (ii) of the definition of Interest Period, if a Borrower fails to
select the duration of any Interest Period for the renewal of such
Eurodollar Loan or Bankers' Acceptance Loan or portion thereof (in an
integral multiple of $100,000), the duration of such Interest Period shall
be one month. Notwithstanding the above, the Borrower shall not be
entitled to renew a Eurodollar Loan or Bankers' Acceptance Loan or portion
thereof, (i) if at any time of the selection of such renewal there shall
exist a Default or an Event of Default, or (ii) to the extent such renewal
would be prohibited by Section 2B.7 hereof.
(c) Any Eurodollar Loan or Bankers' Acceptance Loan or portion
thereof as to which the Agent or Canadian Bank, as applicable, shall not
have received a proper Notice of Borrowing or Conversion as provided in
Sections 2B.1 or 2B.4(a) or (b) hereof or notice of payment or prepayment
by 12:00 noon (Boston time or Toronto time, as applicable) at least three
Business Days prior to the last day of the Interest Period just ending for
such Eurodollar Loan or Bankers' Acceptance Loan shall (whether or not any
Default or Event of Default has occurred) automatically be converted to a
Base Rate Loan on the last day of the Interest Period for such Eurodollar
Loan or Bankers' Acceptance Loan.
(d) All references to dollar amounts for purposes of this Section
2B.4 shall refer to Canadian Dollars for the Canadian Borrower.
2B.5. Letters of Credit. Upon the terms and subject to the
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants of the Borrowers made herein, the Agent (as agent
for and under the joint responsibilities of the U.S. Banks) and the
Canadian Bank each agrees to issue, to the extent permitted by law or the
Uniform Customs Practices of the International Chamber of Commerce
governing Letters of Credit (Publication No. 500 or any successor
thereto), Letters of Credit upon the application of the U.S. Borrower or
the Canadian Borrower, as applicable, during the period from the date
hereof to the Maturity Date; provided that the aggregate principal amount
of Letters of Credit outstanding for the account of the U.S. Borrower and
the Canadian Borrower at any time shall not (i) exceed the Letter of
Credit Maximum Amount, or (ii) with respect to U.S. Letters of Credit,
cause the aggregate amount of outstanding U.S. Loans, including the
aggregate face amount of U.S. Letters of Credit outstanding, to exceed the
lesser of (y) the Maximum Amount or (z) the Availability; and provided,
further that at the time any Borrower requests the issuance of a Letter of
Credit and after giving effect to the issuance thereof, there has not
occurred and is not continuing any Default or Event of Default. All
Letters of Credit shall expire not later than the Maturity Date; provided,
however, that documentary Letters of Credit shall expire within 180 days
after issuance. Without limiting the foregoing, if any Letter of Credit
would by its terms expire after the Maturity Date, the U.S. Borrower or
the Canadian Borrower, as applicable, shall, on the Maturity Date, cause
another letter of credit issued by another bank to be substituted therefor
or cause another bank satisfactory to the Agent or the Canadian Bank, as
applicable, to indemnify the Agent (for the benefit of the U.S. Banks) or
the Canadian Bank, as applicable, to its satisfaction against any and all
liabilities and obligations in respect to such Letter of Credit and, in
such event, this Agreement shall continue in full force and effect until
all of the Obligations under any such Letters of Credit have been paid in
full to the Agent (for the account of the U.S. Banks) or the Canadian
Bank, as applicable.
Amounts drawn under the Letters of Credit shall become immediately
due and payable by the U.S. Borrower to the Agent for the benefit of the
U.S. Banks, or by the Canadian Borrower to the Canadian Bank, and, if not
paid in accordance with the terms of any such Letter of Credit, shall be
added to the U.S. Loan Account as U.S. Loans, or to the Canadian Loan
Account as Canadian Loans, as of the date funds are advanced under such
Letter of Credit and shall be immediately due and payable upon the
Maturity Date.
In order to evidence such Letters of Credit, the U.S. Borrower or the
Canadian Borrower shall enter into, with the Agent or the Canadian Bank,
as applicable, such agreements and execute such instruments and documents
as the Agent or the Canadian Bank, as applicable, customarily requires in
like transactions, including, but not limited to, a letter of credit
application and agreement. The U.S. Borrower and the Canadian Borrower
hereby acknowledges and agrees that each of its respective chief executive
officer, president, assistant secretary, controller and chief financial
officer acting alone is authorized to sign applications for the issuance
of Letters of Credit and that the execution and submission thereof to the
Agent or the Canadian Bank, as applicable, by any such officer for the
account of the U.S. Borrower or the Canadian Borrower shall be for the
benefit and liability hereunder of the U.S. Borrower or the Canadian
Borrower.
2B.6. Letters of Credit Fees. The U.S. Borrower and the Canadian
Borrower, as applicable, shall pay:
(a) for issuance of each standby Letter of Credit, (i) to
the Agent for the accounts of the U.S. Banks in proportion to
their respective U.S. Commitment Percentages, or to the Canadian
Bank, as applicable, a fee quarterly in arrears equal to the
Applicable Eurodollar Margin per annum, (ii) to the issuer of
such Letter of Credit, for its own account, an additional fee
quarterly in arrears equal to 0.25% per annum of the face amount
of such standby Letter of Credit, and (iii) such normal and
customary costs, expenses and fees in connection with issuing,
affecting payment under, amending or otherwise administering any
Letter of Credit issued by the Agent or the Canadian Bank, as
applicable; and
(b) for the issuance of documentary Letter of Credit, (i)
a fee quarterly in arrears equal to 3/8ths of 1% of the average
daily balance of the undrawn face amount of such documentary
Letter of Credit (which fee, in the case of a U.S. Letter of
Credit, shall be allocated 1/4% to the U.S. Banks in proportion
to their respective U.S. Commitment Percentages and 1/8th% to
the Agent for its own account), and (ii) such normal and
customary costs, expenses and fees in connection with issuing,
affecting payment under, amending or otherwise administering any
Letter of Credit issued by the Agent or the Canadian Bank, as
applicable.
2B.7. Changed Circumstances. In the event that:
(i) on any date on which the Adjusted Eurodollar Rate or the
Canadian Eurodollar Rate would otherwise be set, the Agent or
the Canadian Bank, as applicable, shall have determined in good
faith (which determination shall be final and conclusive) that
adequate and fair means do not exist for ascertaining the
Interbank Offered Rate or the Canadian Eurodollar Rate, as the
case may be, or
(ii) at any time the Agent or the Canadian Bank, as applicable, shall
have determined in good faith (which determination shall be
final and conclusive) that:
(A) the making or continuation of, or conversion of any
Revolving Loan to, a Eurodollar Loan has been made
impracticable or unlawful by (l) the occurrence of a
contingency that materially and adversely affects the
Interbank Eurodollar Market or (2) compliance by the Agent
or any Bank in good faith with any applicable law or
governmental regulation, guideline or order or
interpretation or change thereof by any governmental
authority charged with the interpretation or administration
thereof or with any request or directive of any such
governmental authority (whether or not having the force of
law); or
(B) the Adjusted Eurodollar Rate or Canadian Eurodollar Rate
shall no longer represent the effective cost to any U.S.
Bank for United States dollar deposits, or to the Canadian
Bank for Canadian dollar deposits, as applicable, in the
Interbank Eurodollar Market in which it regularly
participates;
then, and in any such event, the Agent or the Canadian Bank, as
applicable, shall forthwith so notify the U.S. or Canadian Borrower
thereof. Until the Agent or the Canadian Bank, as applicable, notifies
such Borrower that the circumstances giving rise to such notice no longer
apply, the obligation of each Bank to allow selection by the Borrower of
the Eurodollar Loan affected by the contingencies described in this
Section 2B.7 (herein called "Affected Loans") shall be suspended. If at
the time the Agent or the Canadian Bank, as applicable, so notifies such
Borrower, such Borrower has previously given the Agent or the Canadian
Bank a Notice of Borrowing or Conversion with respect to one or more
Affected Loans but such Affected Loans have not yet gone into effect, such
notification shall be deemed to be void and such Borrower may borrow
Revolving Loans of a non-affected type by giving a substitute Notice of
Borrowing or Conversion pursuant to Section 2B.1.
Upon such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given) such Borrower shall, with
respect to the outstanding Affected Loans, prepay the same, together with
interest thereon and any amounts required to be paid pursuant to Section
2B.8, and may borrow a Base Rate Loan in accordance with Section 2.1
hereof, as applicable, by giving a Notice of Borrowing or Conversion
pursuant to Section 2B.1 hereof.
Notwithstanding the foregoing, to the extent reasonably possible,
each Bank will designate an alternate office with respect to its advances
of Eurodollar Loans as may be reasonably required to reduce any liability
of any Borrower to such Bank under Sections 2B.7, 2B.10 or 2B.11, so long
as such designation is not disadvantageous to such Bank in any way.
2B.8. Payments Not at End of Interest Period. If a Borrower for any
reason makes any payment of principal with respect to any Eurodollar Loan
or Bankers' Acceptance Loan on any day other than the last day of an
Interest Period applicable to such Eurodollar Loan or Bankers' Acceptance
Loan, or fails to borrow or continue or convert to a Eurodollar Loan or
Bankers' Acceptance Loan after giving a Notice of Borrowing or Conversion
pursuant to Section 2B.1, such Borrower shall pay to the Agent for the
respective accounts of the U.S. Banks, or to the Canadian Bank, as
applicable, an amount computed pursuant to the following formula:
L = (R - T) x P x D
_______________
360
Where:
L = amount payable to the Agent for the accounts of the U.S. Banks
or to the Canadian Bank
R = interest rate on such Revolving Loan
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the Agent's sole discretion, or other obligation of
Canada, selected at the Canadian Bank's sole discretion,
maturing on or near the last day of the then applicable Interest
Period of such Revolving Loan and in approximately the same
amount as such Revolving Loan can be purchased by the Agent or
the Canadian Bank on the day of such payment of principal or
failure to borrow or continue or convert
P = the amount of principal prepaid or the amount of the requested
Revolving Loan
D = the number of days remaining in the Interest Period as of the
date of such payment or the number of days of the requested
Interest Period
The U.S. Borrower or Canadian Borrower, as the case may be, shall pay such
amount upon presentation by the Agent or the Canadian Bank of a statement
setting forth in reasonable detail the amount and the Agent's or the
Canadian Bank's calculation thereof pursuant hereto, which statement shall
be prima facie evidence thereof. In the event a Borrower elects to make
any payment of principal with respect to any Eurodollar Loan or Bankers'
Acceptance Loan prior to the last day of the applicable Interest Period,
such payment shall be made solely upon at least three (3) days prior
written notice of the Borrower's intention to make such payment.
2B.9. Computation of Interest. Interest on all Revolving Loans and
fees and other amounts calculated on the basis of a rate per annum shall
be computed on the basis of actual days elapsed over a 360-day year with
respect to U.S. Loans and over a 365-day year with respect to Canadian
Loans. If the due date for any payment of principal is extended by
operation of law, interest shall be payable for such extended time. If
any payment required by this Agreement becomes due on a day that is not a
Business Day such payment may be made on the next succeeding Business Day
(subject to clause (i) of the definition of Interest Period), and such
extension shall be included in computing interest in connection with such
payment. Any rate of interest on the Base Rate Loans shall change when
and as the Base Rate or the Reference Rate changes, as applicable. If and
to the extent that the laws of Canada are applicable to interest payable
under this Agreement, for the purpose of the Interest Act (Canada) the
yearly rate of interest to which interest calculated on the basis of a 360
or 365 day year is equivalent, is the rate of interest determined as
herein provided multiplied by the number of days in such year divided by
360 or 365, as the case may be.
2B.10. Changes in Laws, Etc. With respect to any countries in which
any Borrower is engaged in business, in case any law, regulation, treaty
or official directive or the interpretation or application thereof by any
court or by any Governmental Body charged with the administration thereof
or the compliance with any guideline or request of any central bank or
other Governmental Body (whether or not having the force of law):
(i) subjects the Agent or any Bank to any tax with respect to
payments of principal or interest or any other amounts payable
hereunder by any of the Borrowers or otherwise with respect to
the transactions contemplated hereby (except for taxes on the
income of the Agent or such Bank imposed by the United States of
America, Canada or any Governmental Body), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets
held by, or deposits in or for the account of, or loans by, the
Agent or any Bank (other than such requirements as are already
included in the determination of the Adjusted Eurodollar Rate or
Canadian Eurodollar Rate, as applicable), or
(iii) imposes upon the Agent or any Bank any other condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to the
Agent or such Bank, reduce the income receivable by the Agent or such Bank
or impose any expense upon the Agent or such Bank with respect to any
Revolving Loans, the Agent and the Canadian Bank, as applicable, shall
notify the Borrowers thereof within fifteen (15) months of the incurrence
of such increased cost or expense or reduction in income. The Borrowers
agree to pay to the Agent or such Bank the amount of such increase in
cost, reduction in income or additional expense as and when such cost,
reduction or expense is incurred or determined, upon presentation by the
Agent or such Bank of a statement in the amount and setting forth in
reasonable detail the Agent's or such Bank's calculation thereof, which
statement shall be prima facie evidence thereof. Any payments pursuant to
this Section 2B.10 shall be without duplication with respect to payments
made under Section 2B.11.
2B.11. Capital Requirements. If after the date hereof the Agent or
any Bank determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change in the interpretation or application
thereof by any Governmental Body charged with the administration thereof,
or (ii) compliance by the Agent or any Bank or its parent bank holding
company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has
the effect of reducing the return on the Agent's or such Bank's or such
holding company's capital as a consequence of the Agent's or such Bank's
U.S. Credit Commitment or Canadian Credit Commitment to make Revolving
Loans hereunder to a level below that which the Agent or such Bank or such
holding company could have achieved but for such adoption, change or
compliance (taking into consideration the Agent's or such Bank's or such
holding company's then existing policies with respect to capital adequacy
and assuming the full utilization of such entity's capital) by any amount
deemed by the Agent or such Bank to be material, then the Agent or such
Bank shall notify the Borrowers thereof. The Borrowers agree to pay to
the Agent or such Bank the amount of such reduction of capital as and when
such reduction is determined, upon presentation by the Agent or such Bank
of a statement in the amount and setting forth in reasonable detail the
Agent's or such Bank's calculation thereof, which statement shall be
deemed true and correct absent manifest error. In determining such
amount, the Agent or such Bank may use any reasonable averaging and
attribution methods. Any payments pursuant to this Section 2B.11 shall be
without duplication with respect to payments made under Section 2B.10.
2B.12. Payments and Prepayments of the Revolving Loans.
(a) The entire principal of the U.S. Revolving Credit Notes and the
Canadian Revolving Credit Note, together with any accrued but unpaid
interest, fees, charges, costs and expenses, shall be absolutely due and
payable by the U.S. Borrower and the Canadian Borrower, respectively, to
the U.S. Banks and the Canadian Bank, respectively, on the Maturity Date.
All of the other indebtedness evidenced by the U.S. Revolving Credit Notes
and the Canadian Revolving Credit Note shall, if not sooner paid, also be
absolutely due and payable by the U.S. Borrower and the Canadian Borrower,
respectively, to the U.S. Banks and the Canadian Bank, respectively, on
the Maturity Date.
(b) Revolving Loans that are Base Rate Loans may be voluntarily
prepaid at any time, without premium or penalty, upon same Business Day's
written notice to the Agent or the Canadian Bank, respectively. Revolving
Loans that are Eurodollar Loans may be voluntarily prepaid at any time,
without premium or penalty, on the last day of any Interest Period
applicable thereto, and may be prepaid prior to the last day of the
applicable Interest Period subject to and in accordance with the terms of
Section 2B.8, upon prior written notice received by the Agent no later
than 12:00 noon (Boston time), or upon prior written notice received by
the Canadian Bank no later than 12:00 noon (Toronto time), as applicable,
on the same Business Day as the prepayment. Any interest accrued on the
amounts so prepaid to the date of such payment must be paid at the time of
any such payment. Subject to the terms of Section 2.7 and 2A.4 hereof, no
prepayment of the Revolving Loans prior to the Maturity Date shall affect
the Total Commitment or impair the U.S. Borrower's or the Canadian
Borrower's right to borrow as set forth in Section 2.l and 2A.1,
respectively. In the case of any partial payment of the U.S. Loans, the
total amount of such partial payment shall be allocable among the U.S.
Loans, subject to adjustment as provided in Section 8.5, pro rata in
accordance with the U.S. Commitment Percentage of each U.S. Bank.
2B.13. Indemnities. (a) The U.S. Borrower hereby agrees to indemnify
each U.S. Bank, and the Canadian Borrower hereby agrees to indemnify the
Canadian Bank, on demand against any loss or expense which such Bank or
its branch or Affiliate may sustain or incur as a consequence of: (i) any
default in payment or prepayment of the principal amount of any Eurodollar
Loan or Bankers' Acceptance Loan made to it or any portion thereof or
interest accrued thereon, as and when due and payable (at the due date
thereof, by irrevocable notice of payment or prepayment, or otherwise); or
(ii) the effect of the occurrence of any Event of Default upon any
Eurodollar Loan or Bankers' Acceptance Loan made to it; in each case
including, but not limited to, any loss or expense sustained or incurred
in liquidating or employing deposits from third parties acquired to effect
or maintain such Eurodollar Loan or Bankers' Acceptance Loan or any
portion thereof. Each Bank shall provide to the Borrowers and the Agent a
statement, supported when applicable by documentary evidence, explaining
the amount of any such loss or expense it incurs, which statement shall be
prima facie evidence thereof.
2B.14. Telephonic Notice. Without in any way limiting any
Borrower's obligation to confirm in writing any telephonic notice of a
borrowing, conversion or renewal, the Agent and the Canadian Bank may act
without liability upon the basis of a telephonic notice believed by the
Agent or the Canadian Bank in good faith to be from an authorized
representative of such Borrower prior to receipt of written confirmation
2B.15. Maximum Interest.
(a) No provision of this Agreement or any Revolving Credit Note shall
require the payment to any Bank or permit the collection by any Bank of
interest in excess of the maximum rate of interest from time to time
permitted (after taking into account all consideration which constitutes
interest) by laws applicable to the Obligations and binding on any Bank
(such maximum rate being such Bank's "Maximum Permissible Rate").
(b) If the amount of interest computed without giving effect to this
Section 2B.15 and payable on any Interest Payment Date in respect of the
preceding Interest Period would exceed the amount of interest computed in
respect of such period at the Maximum Permissible Rate, the amount of
interest payable to such Bank on such date in respect of such period shall
be computed at such Bank's Maximum Permissible Rate and the Banks shall
determine the payments that are to be reduced or refunded, as the case may
be.
(c) If and to the extent that the laws of Canada are applicable to
interest payable under this Agreement, no interest on the credit advanced
will be payable in excess of that permitted by the laws of Canada. If the
effective annual rate of interest, calculated in accordance with generally
accepted actuarial practices and principles, would exceed 60% (or such
other rate as the Parliament of Canada may determine from time to time as
the criminal rate) on the credit advanced, then, (i) the amount of any
charges for the use of money, expenses, fees, bonuses, commissions or
other charges payable in connection therewith will be reduced to the
extent necessary to eliminate such excess; (ii) any remaining excess that
has been paid will be credited towards repayment of the principal amount;
and (iii) any overpayment that may remain after such crediting will be
returned forthwith on demand. In this paragraph the terms "interest,"
"criminal rate" and "credit advanced" have the meanings ascribed to them
in Section 347 of the Criminal Code of Canada.
(d) If at any time and from time to time: (i) the amount of
interest payable to any Bank on any Interest Payment Date shall be
computed at such Bank's Maximum Permissible Rate pursuant to the preceding
subsection (b); and (ii) in respect of any subsequent Interest Period the
amount of interest otherwise payable to such Bank would be less than the
amount of interest payable to such Bank computed at such Bank's Maximum
Permissible Rate, then the amount of interest payable to such Bank in
respect of such subsequent interest computation period shall continue to
be computed at such Bank's Maximum Permissible Rate until the amount of
interest payable to such Bank shall equal the total amount of interest
which would have been payable to such Bank if the total amount of interest
had been computed without giving effect to the preceding subsection (b),
provided, however, that if subsection (c) above applies no such adjustment
shall be made.
2B.16. Procedures for Payment. (a) Each payment or prepayment
hereunder and under the Revolving Credit Notes shall be made not later
than 12:00 noon (Boston time or Toronto time, as applicable) on the day
when due in lawful money of the United States of America or Canada, as
applicable, to the Agent or the Canadian Bank, as applicable, in
immediately available funds, without counterclaim, offset, claim or
recoupment of any kind. Each payment or prepayment hereunder and under
the Revolving Credit Notes shall be made free and clear of, and without
deduction for, any present or future withholding or other taxes, duties or
charges of any nature imposed on such payments or prepayments by or on
behalf of any Governmental Body thereof or herein, except for taxes on the
income of any Bank and except for any withholding tax under [Part XIII] of
the Income Tax Act (Canada) as in effect on the date hereof. If any such
taxes, duties or charges are so levied or imposed on any payment or
prepayment to any Bank, the U.S. Borrower or the Canadian Borrower, as
applicable, will make additional payments in such amounts as may be
necessary so that the net amount received by such U.S. Bank or Canadian
Bank, as applicable, after withholding or deduction for or on account of
all taxes, duties or charges, including deductions applicable to
additional sums payable under this Section 2B.16 (which additional sums
payable shall not include any sums payable on account of a Bank's failure
to perform its obligations pursuant to Sections 9.10(v) and (vi) hereof),
will be equal to the amount provided for herein or in such Bank's
Revolving Credit Note. Whenever any taxes, duties or charges are payable
by a Borrower with respect to any payments or prepayments hereunder or
under any of the Revolving Credit Notes, such Borrower shall furnish
promptly to the Agent for the account of the applicable U.S. Bank, or to
the Canadian Bank, as applicable, information, including certified copies
of official receipts (to the extent that the relevant Governmental Body
delivers such receipts), evidencing payment of any such taxes, duties or
charges so withheld or deducted. If such Borrower fails to pay any such
taxes, duties or charges when due to the appropriate taxing authority or
fails to remit to the Agent for the account of the applicable Bank, or to
the Canadian Bank, as applicable, the required information evidencing
payment of any such taxes, duties or charges so withheld or deducted, the
U.S. Borrower and the Canadian Borrower shall indemnify jointly and
severally the affected U.S. Bank and the Canadian Bank for any incremental
taxes, duties, charges, interest or penalties that may become payable by
such Bank as a result of any such failure. The U.S. Borrower authorizes
the Agent and each U.S. Bank, in the Agents' or such Bank's sole
discretion, to charge to any deposit account which the U.S. Borrower may
maintain with the Agent or such Bank the principal, interest, fees,
charges, taxes, costs and expenses provided for in this Agreement or any
other document executed and delivered in connection herewith, or to
advance to the U.S. Borrower and to charge to it as a U.S. Loan a sum
sufficient to pay such principal, interest, fees, charges, taxes, costs
and expenses, with advice thereafter sent to the U.S. Borrower's chief
financial officer in accordance with the Agent's or such Bank's customary
practice.
SECTION III
CONDITIONS OF REVOLVING LOANS
3.1. Conditions Precedent to Initial Revolving Loan. The obligation
of the Banks to make the initial Revolving Loan is subject to the
fulfillment on the date hereof of each of the following conditions
precedent:
3.1.1 Loan Documents, Etc.
(i) Each of (A) the Loan Documents, and (B) the Ancillary Documents,
shall have been duly and properly authorized, executed and delivered to
the Agent, on behalf of itself and the Banks, or to the Canadian Bank, as
the case may be by the respective parties thereto and shall be in full
force and effect on and as of the Closing Date; provided, however, that,
subject to Section 6.5(d) hereof, USL shall have 30 days after the Closing
Date to obtain and deliver to the Agent, for the ratable benefit of the
Agent and the Banks, Bailee Waivers from the "Domestic Third Party
Locations" listed on Exhibit D hereto, and USL shall have 90 days after
the Closing Date to obtain and deliver to the Agent, for the ratable
benefit of the Agent and the Bank, a Landlord Waiver from the lessor of
USL's premises located at ▇▇▇▇-▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇. Failure to
timely obtain and deliver to the Agent such Bailee Waivers and Landlord
Waiver shall constitute an Event of Default.
(ii) Executed original counterparts of each of the Loan Documents,
and copies of each of the Ancillary Documents, as executed and delivered
by the respective parties thereto, shall have been furnished to the Agent,
on behalf of itself and the Banks, or to the Canadian Bank, as the case
may be.
3.1.2 Legality of Transactions. No change in applicable law or
regulation shall have occurred as a consequence of which it shall have
become and continue to be unlawful (i) for the Banks to perform any of
their agreements or obligations under any of the Loan Documents to which
they are a party on the Closing Date, or (ii) for any of the Borrowers to
perform any of their respective agreements or Obligations under any of the
Loan Documents or Ancillary Documents to which any of them is a party on
the Closing Date; provided, that, if it shall have become and continue to
be unlawful for the Banks to make, continue or convert to a Eurodollar
Loan, or a Borrower to accept, continue or convert to a Eurodollar Loan,
then the Banks may, if otherwise permitted under the Loan Documents, make
a Base Rate Loan.
3.1.3 Representations and Warranties. Each of the
representations and warranties made by or on behalf of the Borrowers to
the Agent and the Banks in this Agreement, the other Loan Documents or the
Ancillary Documents shall be true and correct in all material respects
when made, shall, for all purposes of this Agreement, be deemed to be
repeated on and as of the Closing Date, and shall be true and correct in
all material respects on and as of such date.
3.1.4 Performance, Etc. Each Borrower shall have in all
material respects duly and properly performed, complied with and observed
each of its respective covenants, agreements and obligations contained in
any of the Loan Documents or Ancillary Documents to which it is a party or
by which it is bound which are required to be performed on or prior to the
Closing Date. No event shall have occurred on or prior to the Closing
Date and be continuing on such Closing Date, and no condition shall exist
on such Closing Date, which constitutes a Default or an Event of Default.
3.1.5 Certified Copies of Charter Documents. The Agent shall
have received from each of the Borrowers, Leather U.S. and Holdings a
copy, certified by a duly authorized officer of the respective company to
be true and complete on the Closing Date, of (i) its charter or other
incorporation documents, as in effect on such date of certification,
certified by the Secretary of State or other appropriate governmental
official, and (ii) its by-laws as in effect on such date.
3.1.6 Proof of Corporate Action. The Agent shall have received
from each of the Borrowers and Holdings a copy, certified by a duly
authorized officer of the respective company to be true and complete on
the Closing Date, of records of all corporate action taken by each to
authorize (i) its execution and delivery of the Loan Documents and the
Ancillary Documents to which it is or is to become a party, (ii) its
performance of all of its agreements and Obligations under each of such
documents, and (iii) any borrowings, pledges, guarantees and other
transactions contemplated by this Agreement.
3.1.7 Incumbency Certificate. The Agent shall have received
from each of the Borrowers and Holdings an incumbency certificate, dated
the Closing Date and signed by a duly authorized officer of the respective
company, giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on
behalf of such company, each of the Loan Documents and each of the
Ancillary Documents to which it is or is to become a party; (ii) with
respect to the Borrowers, to make application for the Revolving Loans or
conversion thereof; and (iii) to give notices to take other action on its
behalf under the Loan Documents.
3.1.8 Proceedings and Documents. All corporate, governmental
and other proceeding in connection with the transactions contemplated by
the Loan Documents, the Ancillary Documents and all instruments and
documents incidental thereto, shall be in form and substance reasonably
satisfactory to the Agent and the Agent shall have received all such
counterpart originals or certified or other copies of all such instruments
and documents as the Agent shall have reasonably requested.
3.1.9 Good Standing, Etc. The Agent shall have received a
long-form certificate of the Secretary of State of the state of Wisconsin
and the Ministry of Consumer and Commercial Relations, Ontario as to the
Borrowers' legal existence and good standing in such state or province and
listing all documents on file in the offices of said Secretaries of State
or Ministry. The Agent shall also have received certificates of
qualification to do business from any jurisdictions in which any of the
Borrowers or Holdings is required to be qualified and a doing business
filing for the Borrowers (including each of USL's divisions), to the
extent such doing business filings are made by the Borrowers, from the
appropriate jurisdictions. The Agent shall have received a long-form
certificate of the appropriate Secretary of State or other Governmental
Body evidencing legal existence and good standing of Holdings, including a
listing of all documents on file in said office.
3.1.10 Facility and Agent's Fee. The U.S. Borrower shall have
complied with its obligation under Sections 2.5 and 2.6 to pay the
Facility Fee and Agent's Fee.
3.1.11 Legal Opinions. The Agent shall have received favorable
written legal opinions in form and substance satisfactory to the Agent,
addressed to the Agent and the Banks, dated the Closing Date, from each of
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel
to the Borrowers, in or substantially in the form of Exhibit K hereto.
3.1.12 Financial Condition. The Banks shall be satisfied that
the financial statements referred to in Section 4.7 fairly present the
business and financial condition of each of the Borrowers as at the close
of business on the date thereof and the results of operations for the
periods then ended, and that there has been no material adverse change in
the assets, business, income, prospects, operations or financial condition
of any of the Borrowers since the most recent financial statements
referred to therein.
3.1.13 Security Documents; U.C.C. Search Reports; Insurance;
Patents, Trademarks and Copyrights. The Security Documents and the
appropriate financing statements (in the name of the Borrowers, USL's
divisions and Holdings, as the case may be) and other documents in respect
thereto that are necessary to enable the Agent to perfect a legal, valid
and enforceable first-priority security interest thereunder for the
benefit of the U.S. Banks and the Canadian Banks, as applicable, shall
have been duly executed by each of the Borrowers and Holdings, and filed
or recorded, as applicable, in all appropriate filing offices or other
locations necessary for the perfection of such first-priority interests,
and all other actions necessary for the perfection of such interests shall
have been completed. For the purpose of this Section 3.1.13 only, in
addition to provisions of the Borrowers' legal counsels' opinion letters
pursuant to Section 3.1.11, evidence of perfection shall mean for filings
made in the states of North Carolina, Indiana and Nebraska receipt by the
Agent's counsel of written facsimile notices setting forth the appropriate
UCC-1 filing numbers, for filings in Wisconsin, receipt by the Agent's
counsel of oral notice from the individuals who actually made the UCC-1
filings that such filings were in fact made in accordance with the laws of
the State of Wisconsin, and for filings in the Province of Ontario,
receipt by the Agent's counsel of a receipted copy of a financing
statement from the Ministry of Consumer and Commercial Relations, Ontario,
and a certified Personal Property Security Act (Ontario) search result
confirming such registration. The Agent shall have received reports
concerning the results of searches made no more than 30 days prior to the
Closing Date of the Patent and Trademark Office and Uniform Commercial
Code filing offices for the Borrowers and USL's divisions, as the case may
be, in each appropriate jurisdiction where Collateral is located. The
Agent shall have received satisfactory evidence that such insurance as is
required by the Security Documents to be in effect in respect of all
property and fixtures of the Borrowers is in effect and the interest of
the Agent as loss payee and additional insured has been duly endorsed upon
all instruments of insurance issued in respect of such property. All such
insurance shall provide for 30 days' advance written notice to the Agent
of any cancellation or failure to renew thereof. Arrangements completely
satisfactory to the Agent shall have been made for the due filing of the
Patent and Trademark Security Agreement in the United States Patent and
Trademark Office and appropriate Canadian trademark office.
3.1.14 Environmental Site Assessments. The Agent and the Banks
shall have completed a review of environmental site assessment reports
provided by the Borrowers, at the Borrowers' sole expense, for all Real
Properties, which reports must be satisfactory to the Agent and the Banks
in their discretion. As deemed necessary by the Agent or any Bank,
further studies and reports may be required by the Agent from time to time
at the Borrowers' expense and the Borrowers shall provide such access to
all Real Properties as may be necessary to prepare such studies and
reports.
3.1.15 Borrowing Base Report. The Borrowers shall have
delivered to the Agent a borrowing base report in form and substance
reasonably satisfactory to the Banks, dated as of the Closing Date and
evidencing Excess Availability under the Borrowing Base of at least
$20,000,000.
3.1.16 First Chicago Payoff. The Agent shall have received a
payoff and release letter (and a commitment in writing to deliver related
UCC-3 termination statements or other discharges) in form and substance
satisfactory to the Agent and the Banks from First National Bank of
Chicago, and arrangements completely satisfactory to the Banks shall have
been made by the Borrowers with respect thereto.
3.1.17 Completion of Due Diligence. The Agent shall have
completed its due diligence review of the Borrowers, Leather U.S. and
Holdings, and the results of such due diligence review shall have been
satisfactory to the Agent in its sole and absolute discretion.
3.1.18 Commercial Finance Examination. The Agent shall have
completed to its full satisfaction a commercial finance examination
performed by the Agent's field examiners.
3.1.19 Disclosure. All matters which the Agent deems material
to its credit decision in its sole and absolute discretion will have been
disclosed to the Agent by the Borrowers and all exceptions to the
representations and warranties made in this Agreement shall be acceptable
to the Agent in its sole and absolute discretion.
3.1.20 No Existing Defaults. At the time of the closing, there
shall exist no Defaults or Events of Default under the terms of this
Agreement, the Loan Documents and the Ancillary Documents.
3.1.21 Reimbursement of Expenses and Payment of Fees. The U.S.
Borrower shall have reimbursed the Agent for all of the reasonable fees
and disbursements of Goulston & Storrs, counsel to the Agent, which shall
have been incurred by the Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Loan Documents
and the closing of the transactions contemplated hereby.
3.1.22 Single Purpose Entity Provisions. The Agent shall have
received from Holdings amended articles of incorporation containing the
Single Purpose Entity Provisions in substantially the same form as is set
forth in Exhibit I hereto.
3.1.23 Cash Management System. The Agent shall be satisfied,
as determined in its reasonable discretion, with the cash management
system of each of the Borrowers.
3.2. Conditions Precedent to Initial Canadian Loan. In addition to
the conditions for the making of any initial or other Revolving Loan
hereunder, the making of any Canadian Loan shall be subject to the
designation by the Agent of the Canadian Bank and the execution by the
Canadian Bank of this Agreement and any other Loan Documents to which it
is a party.
3.3. Conditions Precedent to all Revolving Loans and Letters of
Credit. The obligation of each Bank to make each Revolving Loan,
including the initial U.S. Loan and Canadian Loan, or to continue a
Revolving Loan as a Eurodollar Loan past the expiration of an Interest
Period, or to convert a Revolving Loan to a Eurodollar Loan, or the
obligation of the Agent or the Canadian Bank to issue Letters of Credit,
is further subject to the following conditions:
(a) with respect to U.S. Loans, timely receipt by the Agent of the
Notice of Borrowing or Conversion, and with respect to Canadian Loans,
timely receipt by the Canadian Bank, of a Notice of Borrowing or
Conversion, all as provided in Section 2B.1;
(b) the representations and warranties contained in Section IV shall
be true and accurate in all material respects (except for changes in the
ordinary course not otherwise prohibited by this Agreement) on and as of
the date of such Notice of Borrowing or Conversion and on the effective
date of the making, continuation (of a Eurodollar Loan past the expiration
of an Interest Period) or conversion of each Revolving Loan to a
Eurodollar Loan as though made at and as of each such date (except to the
extent that such representations and warranties expressly relate to an
earlier date), and no Default or Event of Default shall have occurred and
be continuing, or would result from such Revolving Loan;
(c) the resolutions referred to in Section 3.1.6 shall remain in
full force and effect; and
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Agent or
any Bank, would make it illegal or against the policy of any Governmental
Body for such Bank to make, convert or continue such Revolving Loan
hereunder; provided, that, if it shall have become and continue to be
unlawful for the Banks to make, continue or convert to a Eurodollar Loan,
or a Borrower to accept, continue or convert to a Eurodollar Loan, then
the Banks may, if otherwise permitted under the Loan Documents, make a
Base Rate Loan.
The making or conversion of each Revolving Loan, or the continuation
of a Eurodollar Loan or a Bankers' Acceptance Loan past the expiration of
an Interest Period, shall be deemed to be a representation and warranty by
each of the Borrowers on the date of the making, continuation or
conversion of such Revolving Loan as to the accuracy of the facts referred
to in subsection (b) of this Section 3.3.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this
Agreement and to make Revolving Loans hereunder, the Borrowers, jointly
and severally, represent and warrant to the Agent and each Bank that:
4.1. Organization and Qualification. Each of the Borrowers (a) is a
corporation duly organized, validly existing and in good standing under
the laws of the state or Province in which it is organized as listed on
Exhibit D hereto, (b) has all requisite corporate power to own its
property and conduct its business as now conducted and as presently
contemplated, and (c) is duly qualified and in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction
listed on Exhibit D hereto, which are all the jurisdictions where the
nature of its properties or business requires such qualification or
authorization, except where the failure to be so qualified or authorized
would not have a material adverse effect on the business, income,
financial condition, assets, operations, prospects or properties of any of
the Borrowers.
4.2. Corporate Authority. The execution, delivery and performance
of each of the Loan Documents and Ancillary Documents to which any of the
Borrowers is a party and the transactions contemplated hereby and thereby
are within the corporate power and authority of such Borrower who is a
party thereto and have been authorized by all necessary corporate
proceedings, and do not (a) require any consent or approval of any
creditors, trustees for creditors or shareholders of any of the Borrowers
including without limitation the Indenture Trustee or any other party
pursuant to the terms of the Indenture Agreement (other than any such
consent that has been obtained and provided in writing to the Agent prior
to the Closing Date), (b) contravene any provision of the charter
documents or by-laws of any of the Borrowers or any law, rule or
regulation applicable to any of the Borrowers, (c) contravene any
provision of, or constitute an event of default or event that, but for the
requirement that time elapse or notice be given, or both, would constitute
an event of default under, any other agreement, instrument, order or
undertaking binding on any of the Borrowers, including, without
limitation, the Indenture Agreement, or (d) result in or require the
imposition of any Encumbrance on any of the properties, assets or rights
of any of the Borrowers other than Permitted Encumbrances.
4.3. Valid Obligations. Each of the Loan Documents and Ancillary
Documents to which any of the Borrowers is a party and all of their
respective terms and provisions are the legal, valid and binding
obligations of the Borrower who is a party thereto, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
laws affecting the enforcement of creditors' rights generally, and except
for general principles of equity, including, without limitation, the
remedy of specific performance or of injunctive relief which is subject to
the discretion of the court before which any proceeding therefor may be
brought.
4.4. Consents or Approvals. The execution, delivery and performance
of each of the Loan Documents and Ancillary Documents to which any of the
Borrowers is a party and the transactions contemplated herein and therein
do not require any approval or consent of, or filing or registration with,
any Governmental Body or any other party, except filings under the Uniform
Commercial Code and the Personal Property Security Act (Ontario), and with
the Patent and Trademark Office in connection with the Collateral
consisting of personalty and fixtures; and to the extent any approval or
consent or filing or registration was required for any existing Ancillary
Document, or is or will be required for any future Ancillary Document,
such approval or consent has been or will be timely given, and/or such
filing or registration has been or will be timely made.
4.5. Title to Properties; Absence of Encumbrances. Each of the
Borrowers has good and marketable title to all of the material properties,
assets and rights of every name and nature now purported to be owned by
it, including, without limitation, such properties, assets and rights as
are reflected in the Initial Financial Statement (except such properties,
assets or rights as have been disposed of in the ordinary course of
business since the date thereof), free from all Encumbrances, except
Permitted Encumbrances, and, except as so disclosed, free from all defects
of title that might materially adversely affect any of such properties,
assets or rights or the business, financial condition, assets or
properties of any of the Borrowers. All such properties and assets are
free and clear of all title defects or objections, liens, claims, charges,
security interests and other Encumbrances of any nature whatsoever, except
Permitted Encumbrances. The rights, properties and other assets presently
owned, leased or licensed by any of the Borrowers and described elsewhere
in this Agreement include all rights, properties and other assets
necessary to permit any of the Borrowers to conduct its businesses in all
material respects in the same manner as its businesses have been conducted
prior to the date hereof. At the time any of the Borrowers pledge, sell,
assign or transfer to the Agent or the Canadian Bank, as the case may be,
any instrument, document of title, security, chattel paper or other
property (including Base Inventory, Equipment, Base Accounts, contract
rights, patents, trademarks, copyrights, Accounts and any other
Collateral) or any proceeds or products thereof, or any interest therein,
such Borrower shall be the lawful owner thereof and shall have good right
to pledge, sell, assign or transfer the same; none of such properties
shall have been pledged, sold, assigned or transferred to any Person other
than the Agent or the Canadian Bank, as the case may be, or in any way
encumbered (other than Permitted Encumbrances and asset sales permitted
under Section 6.6 hereof); and the Borrowers shall defend the same against
the claims and demands of all Persons.
4.6 Location of Records and Collateral; Name Change. Each of the
Borrowers shall give the Agent written notice of any change in location at
which Collateral is or will be kept and each office of the Borrowers at
which the records of any of the Borrowers pertaining to Accounts
Receivable and contract rights are kept. Except as such notice is given,
all Collateral owned by a Borrower is and shall be kept, and all records
of a Borrower pertaining to Accounts and contract rights are and shall be
kept, at such location as appears with respect to such Borrower on
Exhibit D hereto. The Borrowers shall give the Agent 30 days' prior
written notice of any change in the name or corporate form of any of them
or any change in the name or names under which any Borrower's business is
transacted.
4.7. Financial Statements. USL has furnished the Agent the
Consolidated balance sheet of the Borrowers as of December 31, 1995 and
the Consolidated statements of income, changes in stockholders' equity and
cash flow of the Borrowers for the fiscal year then ended, and related
footnotes, audited and certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and USL's Form
10-K filed with the Securities and Exchange Commission for the year ended
December 31, 1995. USL has also furnished to the Agent the unaudited
Consolidated balance sheet of the Borrowers as of August 31, 1996, and
unaudited Consolidated statements of income, and cash flow for the eight
months then ended (the "Initial Financial Statement"), as certified by the
chief financial officer of USL, but subject, however, to normal, recurring
year-end adjustments that shall not in the aggregate be material in
amount. In addition, USL has provided Consolidated financial projections
in the Confidential Financing Proposal dated August, 1996 portions of
which were subsequently updated on September 23, 1996 and represent USL's
most recent financial projections. The Borrowers have also furnished
Consolidating balance sheets as of December 31, 1995 and August 31, 1996
as well as Consolidating statements of income and cash flows for the
fiscal year then ended and the eight months then ended, respectively.
Consolidating information is consistent with internal reporting and in
detail as agreed with the Agent but does show separate full balance
sheets, statements of income and cash flows for each of the Borrowers.
All such financial statements were prepared in accordance with GAAP and
present fairly the financial positions of each of the Borrowers as of such
dates and the results of the operations of each of the Borrowers for such
periods. There are no liabilities, contingent or otherwise, not disclosed
in any of such financial statements or Form 10-K that involve a material
amount.
4.8. Changes. Since the date of the Initial Financial Statement,
there have been no changes in the assets, liabilities, financial
condition, business, income, operations or prospects of any of the
Borrowers, the effect of which has, in the aggregate, had a material
adverse effect on the assets, properties, business, prospects, income,
operations or financial condition of the Borrowers.
4.9. Defaults. As of the date of this Agreement, no Default or
Event of Default exists under the Loan Documents, Indenture Agreement
(other than arising out of any default or event of default under the First
Chicago Credit Agreement which have been fully disclosed to the Agent) or
the Ancillary Documents.
4.10. Taxes. Each of the Borrowers has filed all federal, state and
other tax returns required to be filed in the United States, Canada or
other jurisdiction, and all taxes, assessments and other governmental
charges due from any of the Borrowers have been fully paid or adequate
reserves have been established therefor, unless extensions for such
filings or payments have been granted, or such taxes, assessments or other
governmental charges are being contested in good faith, provided that
adequate reserves have been established. None of the Borrowers has
executed any waiver of limitations in respect of tax liabilities. Each of
the Borrowers has established on its books reserves adequate for the
payment of all material federal, state and other tax liabilities.
4.11. Litigation. Except as set forth on Exhibit D hereto, there is
no litigation, arbitration, proceeding or investigation pending or, to the
knowledge of the Borrowers, threatened against any one or more of the
Borrowers, Leather U.S. or Holdings which could reasonably result in a
material judgment not fully covered by insurance, which could reasonably
result in a forfeiture of all or any substantial part of the property of
any of the Borrowers, Leather U.S. or Holdings, or which could reasonably
otherwise have a material adverse effect on the assets, properties,
business, financial condition or prospects of any of the Borrowers,
Leather U.S. or Holdings.
4.12. Subsidiaries. Except as otherwise permitted under this
Agreement, none of the Borrowers has any Subsidiaries other than those
listed on Exhibit E hereto.
4.13. Investment Company Act. None of the Borrowers is subject to
regulation under the Investment Company Act of l940, as amended.
4.14. Compliance with ERISA and Employee Benefit Legislation. Each
of the Borrowers and each member of the Controlled Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and any Employee Benefit Legislation with respect to
any Employee Benefit Plan and, together with each Plan, Welfare Plan and
Employee Benefit Plan, is in compliance in all material respects with the
applicable provisions of ERISA, the Code and any Employee Benefit
Legislation, and has not incurred any liability to the PBGC, any trustees
or a Plan under Title IV of ERISA or under Employee Benefit Legislation;
and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA and the Code) has occurred with respect to any Plan or
Welfare Plan or any analogous provision of any Employee Benefit Plan that
is not a Multi-Employer Plan. To the best of the knowledge and belief of
each of the Borrowers and each member of the Controlled Group, each Plan,
Welfare Plan or Employee Benefit Plan and Employee Benefit Plan that is a
Multi-Employer Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and any Employee Benefit
Legislation; and neither any of the Borrowers nor any member of the
Controlled Group knows or has reason to know of the occurrence of a
"prohibited transaction" or "reportable event" with respect to any Plan,
Welfare Plan that is a Multi-Employer Plan, or any analogous provision in
any provision of any Employee Benefit Plan.
4.15. Environmental Matters.
(a) Each of the Borrowers has obtained all permits, licenses and
other authorizations which are required under all Environmental Laws,
except to the extent failure to have any such permit, license or
authorization would not have a material adverse effect on the assets,
properties, business, financial condition, income, prospects, affairs or
operations of such Borrower. Each of the Borrowers is in compliance with
(i) the terms and conditions of all such permits, licenses and
authorizations, and (ii) all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, except,
in each case or in the aggregate, to the extent failure to comply would
not have a material adverse effect on the assets, properties, business,
financial condition, income, prospects, affairs or operations of such
Borrower.
(b) Except as set forth in Exhibit D hereto, no notice,
notification, demand, request for information, citation, summons or order
has been issued, no complaint has been filed, no penalty has been assessed
and no investigation or review is pending or, to the best knowledge of any
Borrower, threatened by any Governmental Body or other Person with respect
to any alleged failure by any Borrower to have any permit, license or
authorization required in connection with the conduct of its business or
with respect to any Environmental Laws, including, without limitation,
Environmental Laws relating to the generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous Materials,
except to the extent such notice, notification, demand, request for
information, citation, summons, order, complaint, penalty or investigation
would not have a material adverse effect on the assets, properties,
business, financial condition, income, prospects, affairs or operations of
the Borrowers. Certain of the Borrowers have been identified in writing
as a potentially responsible party (as that term has been construed
pursuant to CERCLA, or any similar applicable Environmental Law) at the
sites listed and described in Exhibit D hereto (collectively, the
"Responsible Party Sites") and at no other sites.
(c) Except as set forth in Exhibit D hereto, no material oral or
written notification of a release of a Hazardous Material has been filed
by or on behalf of any Borrower, except to the extent such notification
would not have a material adverse effect on the assets, properties,
business, financial condition, income, prospects, affairs or operations of
the Borrowers. No property now owned, leased or used by any Borrower is
listed or proposed for listing on the National Priorities List under
CERCLA or on any similar applicable foreign or state list of sites
requiring investigation or clean-up. No property previously owned,
leased, or used by the Borrower is listed or is proposed for listing on
the National Priorities List under CERCLA or on any similar applicable
foreign or state list of sites requiring investigation or clean-up for any
Hazardous Material, actually or allegedly, generated, treated, stored,
recycled, transported, disposed or released on the property during the
time of Borrower's ownership, lease or use.
(d) There are no liens or Encumbrances arising under or pursuant to
any Environmental Laws on any of the real or personal property or
properties now owned, leased or used by any Borrower and no governmental
actions have been taken or are in process which could subject any of such
properties to such liens or Encumbrances or, as a result of which any
Borrower would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any
deed to such property, except for deed restrictions listed and described
in Exhibit D hereto and Permitted Encumbrances.
(e) Neither any Borrower nor any previous owner, tenant, occupant or
user of (1) any property now owned, leased or used by any Borrower or (2)
any property formerly owned, leased or used by any Borrower, during the
time of Borrower's ownership, lease or use has (i) engaged in or permitted
any operations or activities upon or any use or occupancy of such
property, or any portion thereof, for the purpose of or in any way
involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal (whether legal or
illegal, accidental or intentional) of any Hazardous Materials on, under,
in or about such property, except to the extent commonly used in day-to-
day operations of such property or in the ordinary course of business of
any Borrower as disclosed to the Agent and, in such case, only in
compliance with all Environmental Laws except to the extent failure to
comply would not have a material adverse effect on the property, assets,
financial condition, business, income, operations, prospects or affairs of
any of the Borrowers, or (ii) transported any Hazardous Materials to, from
or across such property except to the extent commonly used in day-to-day
operations of such property or in the ordinary course of business of any
Borrower as disclosed to the Agent and, in such case, in compliance with
all Environmental Laws except to the extent failure to comply would not
have a material adverse effect on the property, assets, financial
condition, business, income, operations, prospects or affairs of any of
the Borrowers; nor, to the best knowledge of the Borrowers, have any
Hazardous Materials migrated from other properties upon, about or beneath
such property, nor, to the best knowledge of the Borrowers, are any
Hazardous Materials presently constructed, deposited, stored or otherwise
located on, under, in or about such property except to the extent commonly
used in day-to-day operations of such property or in the ordinary course
of business of any Borrower as disclosed to the Agent and, in such case,
in compliance with all Environmental Laws except to the extent failure to
comply would not have a material adverse effect on the property, assets,
financial condition, business, income, operations, prospects or affairs of
any of the Borrowers.
4.16 Disclosure. No representations and warranties made by any of
the Borrowers in this Agreement, any other Loan Document or in any other
agreement, instrument, document, certificate, statement or letter
furnished to the Agent or the Banks by or on behalf of any of the
Borrowers, and no other factual information heretofore or
contemporaneously furnished by or on behalf of any of the Borrowers to the
Agent or the Banks (other than financial projections furnished to the
Agent prior to those delivered in accordance with Section 4.7), in
connection with any of the transactions contemplated by any of the Loan
Documents or Ancillary Documents, contains any material untrue statement
of fact or omits to state a fact necessary in order to make the statements
contained therein not misleading in light of the circumstances in which
they are made. Except as disclosed herein, there is no fact known to any
of the Borrowers which materially adversely affects, or which would in the
future materially adversely affect, the property, assets, financial
position, business, income, operations, prospects or affairs of any of the
Borrowers.
4.17 Solvency. Both before and after giving effect to all
Indebtedness incurred by the Borrowers on the Closing Date and at the time
any Revolving Loan is made, each of Borrowers (i) is not Insolvent, and
will not be rendered Insolvent by the Indebtedness incurred in connection
herewith, (ii) will not be left with unreasonably small capital with which
to engage in its business, (iii) will not have incurred Indebtedness
beyond its ability to pay such Indebtedness as it matures, (iv) has assets
having a present fair salable value in excess of the amount required to
pay the probable liability on its existing matured debt as well as all
existing debt as it matures during the term of this Agreement (whether
liquidated or unliquidated, absolute, fixed or contingent), and (v) is
receiving reasonably equivalent value under this Loan Agreement in
exchange for the pledges of Collateral and the assumption of the
Obligations.
4.18 Compliance with Statutes, etc. Each of the Borrowers is in
compliance with all applicable statutes, regulations and orders of, and
all applicable restrictions imposed by, all Governmental Bodies, domestic
or foreign, in respect of the conduct of its business and the ownership of
its property, except such noncompliances as will not, in the aggregate,
have a material adverse effect on the business, operations, property,
assets, nature of assets, condition (financial or otherwise) or prospects
of the Borrowers.
4.19 Capitalization. On and as of the Closing Date (i) USL Common
Stock consists of only 100 shares of issued and outstanding common stock
of USL, 100% of which are held by Holdings, and (ii) ▇▇▇▇▇▇ Common Stock
consists of only 1,000 shares of issued and outstanding common stock of
▇▇▇▇▇▇, 100% of which are held by USL. All such outstanding shares have
been duly and validly issued, and are fully paid and non-assessable. None
of the Borrowers has outstanding any other securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe
for or to purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock.
4.20 Labor Relations. None of the Borrowers are engaged in any
unfair labor practice. Except as disclosed on Exhibit D hereto, and
unless it would not have a material adverse effect on the property,
assets, financial condition, business, income, operations, prospects or
affairs of any of the Borrowers, there is (i) no unfair labor practice
complaint pending or threatened against any of the Borrowers before the
National Labor Relations Board or analogous Governmental Body in Canada,
and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against any of the Borrowers
or, to the knowledge of the Borrowers, threatened against any of them,
(ii) no labor dispute, slowdown or stoppage pending against the Borrowers
or, to the knowledge of any of the Borrowers, threatened against any of
them, and (iii) to the best knowledge of any of the Borrowers, no union
representation question exists with respect to the employees of any of the
Borrowers and no union organizing activities are taking place.
4.21 Certain Transactions. Except as set forth on Exhibit D hereto,
none of the officers, partners, directors, or employees of any of the
Borrowers is presently a party to any transaction with any of the
Borrowers (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, partner, director or such employee or, to the knowledge of any of
the Borrowers, any corporation, partnership, trust or other entity in
which any officer, partner, director, or any such employee or natural
person related to such officer, partner, director or employee or other
Person in which such officer, partner, director or employee has a direct
or indirect beneficial interest has a substantial interest or is an
officer, director, trustee or partner.
4.22 Restrictions on the Borrowers. None of the Borrowers is a party
to or bound by any contract, agreement or instrument, or subject to any
charter or other corporate restriction, materially and adversely affecting
the business, property, assets, operations or condition (financial or
otherwise) of any of the Borrowers.
4.23 Capital Leases. Except as to future Capital Leases permitted
hereunder, Exhibit D hereto contains a complete list of all capital leases
and all amendments thereto and all other documents affecting rights and
obligations thereunder, including without limitation, assignments and
subleases pursuant to which any of the Borrowers lease equipment (herein
individually referred to as a "Capital Lease" and collectively referred as
the "Capital Leases"). Except as to future Capital Leases permitted
hereunder, there are no capital leases other than the Capital Leases,
affecting the personal property or the interests of any of the Borrowers.
The copies of the Capital Leases heretofore delivered by the Borrowers to
the Agent are true, correct and complete copies thereof and each of such
Capital Leases is in full force and effect in accordance with the terms
thereof. None of the Borrowers nor, to the best knowledge of any of the
Borrowers, the lessor, under any Capital Lease is in default under the
applicable Capital Lease or has given or received any notice of
cancellation or termination of such Capital Lease other than the
cancellation or termination of a Capital Lease by the Borrower party
thereto in the ordinary course of its business and not due to or arising
out of the occurrence of a default by such Borrower thereunder. No
Borrower has assigned any of their interest in any of the Capital Leases,
as collateral or otherwise, or granted any license with respect thereto,
except as may be otherwise disclosed on Exhibit D hereto.
4.24 Franchises, Patents, Copyrights, Etc. Except as otherwise set
forth on Exhibit D hereto, each of the Borrowers possesses all franchises,
patents, copyrights, trademarks, tradenames, service marks, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct
of its business substantially now conducted without known conflict with
any rights of others and, in each case, free of any lien or other
Encumbrance not permitted by Section 6.5.
4.25 Collateral. All of the Obligations of the Borrowers to the
Agent and the Banks under or in respect of the Loan Documents will, at all
times from and after the execution and delivery of each of the Security
Documents, be entitled to the benefits of and be secured by each of such
Security Documents to the extent provided therein.
SECTION V
AFFIRMATIVE COVENANTS
So long as any Bank has any commitment to lend hereunder or any
Revolving Loan or other Obligation hereunder remains outstanding, the
Borrowers jointly and severally covenant as follows:
5.1. Financial Statements and other Reporting Requirements. The
Borrowers shall furnish to the Agent and, as to clauses (a), (b) and (c)
below, the Banks:
(a) as soon as available to USL, but in any event within 90 days
after the end of each fiscal year of the Borrowers, a Consolidated and
Consolidating balance sheet as of the end of, and a related Consolidated
and Consolidating statement of income, changes in stockholders' equity
(Consolidated only) and cash flow for, such year, prepared in accordance
with GAAP and audited and certified in the case of the Consolidated
statements by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent certified public
accountants reasonably acceptable to the Agent; and, concurrently with
such financial statements, a copy of such certified public accountants'
management report and a written statement by such accountants that, in the
making of the audit necessary for their report and opinion upon such
financial statements they have obtained no knowledge of any Default or
Event of Default or, if in the opinion of such accountants any such
Default or Event of Default exists, they shall disclose in such written
statement the nature and status thereof;
(b) as soon as available to the Borrowers, but in any event within
45 days after the end of each fiscal quarter of the Borrowers, a
Consolidated and Consolidating balance sheet as of the end of, and a
related Consolidated and Consolidating statement of income and cash flow
for, the portion of the fiscal year then ended and for the fiscal quarter
then ended, each of which shall contain a comparison of that quarter's
balance sheet, income statement or cash flow, as the case may be, to that
of the same quarter in the prior year and to the Borrowers' financial
projections, all as prepared in accordance with GAAP and certified on
behalf of the Borrowers by the chief financial officer of USL, but
subject, however, to normal, recurring year-end adjustments that shall not
in the aggregate be material in amount;
(c) as soon as practical and, in any event, within 30 days after the
end of each fiscal month (other than the last month of each fiscal
quarter), a Consolidated and Consolidating balance sheet as of the end of
such month, statement of income and statement of cash flow, each of which
shall contain a comparison of that month's balance sheet, income
statement, or cash flow, as the case may be, to that of the same month in
the prior year and to the Borrowers' financial projections, all as
prepared in accordance with GAAP and certified on behalf of the Borrowers
by the chief financial officer of USL, but subject, however, to normal,
recurring year-end adjustments that shall not in the aggregate be material
in amount;
(d) as soon as practical and, in any event, within (i) 14 days after
the end of each fiscal month (the "Subject Month"), a written report in
the form of Exhibit G hereto (such report being hereinafter referred to as
a "Borrowing Base Report"), setting forth, inter alia, the Accounts
Receivable balance, aging summary, setoffs, contra accounts, Ineligible
Accounts, Inventory availability by category and other information
regarding the Canadian Borrowing Base and the U.S. Borrowing Base as of
the last day of such Subject Month, certified on behalf of the Borrowers
by the chief financial officer of USL, provided that at any time Excess
Availability is less than Minimum Availability, the Borrowers shall
deliver to the Agent, on the Wednesday of the week immediately following
the day on which Excess Availability became less than Minimum
Availability, and on the Wednesday of each week thereafter until Excess
Availability exceeds Minimum Availability, a written report in
substantially the same form as the Borrowing Base Report setting forth the
Canadian Borrowing Base and the U.S. Borrowing Base as to Canadian Base
Accounts and U.S. Base Accounts as at the last Business Day of the
immediately prior week (the "Weekly Base Report"), which Weekly Base
Report may incorporate Ineligible Accounts from the last Business Day of
the week two weeks immediately prior to the week in which the Weekly Base
Report is delivered. In addition to the foregoing, in the event that the
U.S. Borrower repurchases Senior Notes in accordance with the terms of
Section 5.8 hereof, on the day of such repurchase the Borrowers shall
deliver to the Agent an update of the then most recently delivered
Borrowing Base Report revised to set forth the Accounts Receivable
balance, aging summary, setoffs, contra accounts and Ineligible Accounts
through such date (the "Bond Repurchase Base Report") and a certification
disclosing whether there have been any material adverse changes in
Inventory since the original delivery of such Borrowing Base Report. The
Weekly Base Report and the Bond Repurchase Base Report shall be in
addition to the monthly Borrowing Base Report required under this Section
5.1(d). In addition to the foregoing, the Borrowers shall also, if the
Agent so requests, accompany each of the Borrowing Base Reports, the
Weekly Base Reports and the Bond Repurchase Base Report with pledges or
designations of Inventory in form and substance satisfactory to the Agent;
(e) on or before January 31 of each fiscal year of the Borrowers,
pro forma projections of the Borrowers, on a Consolidated and
Consolidating basis, for such fiscal year on a month-to-month basis (it
being recognized by the Banks that projections as to future results are
not to be viewed as facts and that the actual results for the period or
periods covered by the projections may differ from the projected results);
(f) concurrently with the delivery of each financial statement
pursuant to subsections (a) and (b) of this Section 5.l, a report in
substantially the form of Exhibit H hereto signed on behalf of the
Borrowers by the chief financial officer of each of the Borrowers, and
including, without limitation, computations in reasonable detail
evidencing compliance with the covenants contained in Sections 6.7, 6.8
and 6.9;
(g) promptly after the receipt thereof by any of the Borrowers,
copies of any reports submitted to any of the Borrowers by independent
public accountants in connection with any interim review of the accounts
of any of the Borrowers made by such accountants;
(h) promptly after the same are available, copies of all financial
statements and reports as any of the Borrowers shall send to its
stockholders, holders of the Senior Notes, or the Indenture Trustee, or
that any of the Borrowers may file with the Securities Exchange Commission
or the Ontario Securities Commission, as the case may be;
(i) if and when any of the Borrowers gives or is required to give
notice to the PBGC of any "Reportable Event" (as defined in Section 4043
of ERISA) with respect to any Plan that might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that any member
of the Controlled Group or the plan administrator of any Plan has given
or is required to give notice of any such Reportable Event, a copy of the
notice of such Reportable Event given or required to be given to the PBGC
or, if such notice is not given to the PBGC, a description of the content
of the notice that would be required to be given;
(j) immediately upon becoming aware of the existence of any
condition or event (i) that constitutes a Default or Event of Default,
written notice thereof specifying the nature and duration thereof and the
action being or proposed to be taken with respect thereto, or (ii)
affecting any of the Borrowers which would reasonably be expected to have
a material adverse effect on the assets, properties, business, income,
operations, condition (financial or otherwise) or prospects of USL,
written notice thereof specifying the nature thereof and the action being
or proposed to be taken with respect thereto;
(k) promptly upon becoming aware of any litigation or of any
investigative proceedings by a Governmental Body commenced or threatened
against any of the Borrowers, or of any material labor problem, dispute,
slowdown, stoppage, or of any unfair labor practice complaint commenced or
threatened against any Borrower, the outcome of which, if adversely
determined, would or reasonably might have a materially adverse effect on
the assets, properties, business, income, operations, condition (financial
or otherwise) or prospects of any of the Borrowers, written notice thereof
and the action being or proposed to be taken with respect thereto;
(l) promptly upon becoming aware of any investigative proceedings by
a Governmental Body commenced or threatened against any of the Borrowers
regarding any potential violation of Environmental Laws or any spill,
Release, discharge or disposal of any Hazardous Material, the outcome of
which, if adversely determined, would or reasonably might have a
materially adverse effect on the assets, properties, business, income,
operations, condition (financial or otherwise) or prospects of any of the
Borrowers, written notice thereof and the action being or proposed to be
taken with respect thereto; and
(m) from time to time, with reasonable promptness, such other
financial data and other information about any of the Borrowers as the
Agent or any Bank may reasonably request.
5.2. Conduct of Business. Each of the Borrowers shall:
(a) duly observe and comply in all material respects with all
applicable laws and requirements of any Governmental Bodies relative to
its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including without limitation all
Environmental Laws and ERISA), and shall maintain and keep in full force
and effect all licenses and permits necessary in any material respect to
the proper conduct of its business;
(b) provide to the Agent copies of all notices regarding the Real
Properties by any Governmental Bodies of material noncompliance with any
Environmental Law, permit, license or authorization;
(c) provide to the Agent copies of all notices which the Borrowers
are required by law to deliver to Governmental Bodies regarding any
material noncompliance of the Real Properties with any Environmental Law,
permit, license or authorization;
(d) not permit any liens or Encumbrances, other than Permitted
Encumbrances, to be placed on any Real Property or personal property of
the Borrowers arising under or pursuant to any Environmental Laws;
(e) complete all environmental remediation work which is required of
any of the Borrowers by Environmental Laws in connection with the Real
Properties on or before any applicable deadlines established by
Environmental Laws unless otherwise extended by the appropriate
Governmental Body. However, none of the Borrowers shall be responsible
for delays in completing environmental remediation work that are
attributable to acts of God, weather conditions which are not reasonably
foreseeable, delays in receiving, or the failure to receive necessary
permits or approvals from state and/or local agencies (where complete
applications for such permits and/or approvals were submitted in a timely
fashion, including all appropriate and required information), intervention
by Governmental Bodies, and/or other conditions or events which are beyond
the Borrowers' reasonable control, provided that the Borrowers shall have
given prompt written notice to the Agent and the Banks upon the occurrence
of any such delay and the reason therefor;
(f) maintain its corporate existence (subject to sales permitted
under Sections 6.6(a)(iii) and 6.6(b));
(g) remain engaged substantially in the same fields of business as
those in which it is now engaged, except that the Borrowers may withdraw
from any business activity which their respective Boards of Directors
reasonably deem unprofitable or unsound, provided that prior to such
withdrawal, the Borrowers shall provide the Agent with written notice
thereof; and
(h) subject to Sections 4.12 and 6.6, upon forming any Subsidiary,
to the extent and in the manner required by the Agent, deliver to the
Agent such Borrower's and such Subsidiary's agreement, satisfactory to
counsel for the Agent, that the Subsidiary shall be bound by the terms of
this Agreement, the other Loan Documents and the related documents and
instruments thereunder, and such other agreements and documents as the
Agent and Banks may reasonably request.
5.3. Maintenance and Insurance. Each of the Borrowers shall
maintain its properties in good repair, working order and condition or
replace such properties as required for the normal conduct of its business
and from time to time each of the Borrowers will make or cause to be made
all needful and proper repairs, renewals, replacements, additions and
improvements thereto to the extent required for the business of the
Borrowers to be properly and advantageously conducted at all times and
shall maintain or cause to be maintained all Leases and replacement Leases
as may be required for the conduct of the Borrowers' business. Each of
the Borrowers shall at all times maintain liability and casualty insurance
with financially sound and reputable insurers in such amounts as the
officers of such Borrower in the exercise of their reasonable judgment
deem to be adequate. The Agent shall be named as loss payee and
additional insured and shall be given 30 days' prior written notice of any
cancellation of or failure to renew such insurance. If any of the
Borrowers fails to provide such insurance, the Agent, in its sole and
complete discretion, may provide such insurance and charge the cost
thereof to the Loan Account or to the U.S. Borrower's deposit account with
the Agent. Any payment not recovered from the Borrowers shall bear
interest at the Base Rate plus Applicable Base Rate Margin then in effect.
The Agent shall not, by the fact of approving, disapproving, accepting,
obtaining or failing to obtain any such insurance, incur liability for the
form or legal sufficiency of insurance contracts, solvency of insurance
companies or payment of lawsuits, and the Borrowers, jointly and
severally, hereby expressly assume full responsibility therefor and
liability, if any, thereunder. USL, on behalf of the Borrowers, shall
furnish to the Agent certificates or other evidence reasonably
satisfactory to the Agent of compliance with the foregoing insurance
provisions. The provision of this Section 5.3 shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of the
Security Documents that require the maintenance of insurance.
5.4. Taxes. Each of the Borrowers shall pay or cause to be paid all
taxes, assessments or governmental charges on or against it or its
properties on or prior to the time when they become due; provided that
this covenant shall not apply to any tax, assessment or charge that is
being contested in good faith by appropriate proceedings and with respect
to which no lien in excess of $250,000 shall have been filed to secure
such tax, assessment or charge and adequate reserves have been established
and are being maintained in accordance with GAAP.
5.5. Inspection by the Agent. Each of the Borrowers shall permit
the Banks, through the Agent or the Agent's designee, at any reasonable
time and from time to time, to (a) visit and inspect the properties
(including the Real Properties) of such Borrower and/or conduct a field
examination, audit (other than environmental audit) or other on-site
examination of the Borrower's operations, books, records and property,
provided that prior to the occurrence of an Event of Default, the number
of audits of the Borrowers' books and records that the Agent or its
designee may conduct in each fiscal year at the Borrowers' sole cost and
expense shall be limited to 4 (it being understood that there shall be no
limit on the number of audits that may be conducted by the Agent or its
designee at the expense of the Agent or the Banks, or at the Borrowers'
sole expense after the occurrence of and during the continuation of an
Event of Default); (b) after the occurrence and during the continuation of
a Default or an Event of Default, conduct one or more environmental audits
of the Real Properties or of any real property hereafter acquired or
leased by either of the Borrowers, and of the Borrowers' operations, books
and records; (c) appraise the value of any of the Collateral, provided
that prior to the occurrence of an Event of Default, the Agent or its
designee may conduct in each fiscal year only one appraisal at the sole
expense of the Borrowers (it being understood that there shall be no limit
on the number of appraisals that may be conducted at the expense of the
Agent or the Banks, or by the Agent or its designee at the Borrowers' sole
expense after the occurrence and during the continuation of an Event of
Default); (d) examine and make copies of and take abstracts from the books
and records of any of the Borrowers, and (e) discuss the affairs, finances
and accounts of any of the Borrowers with its appropriate officers,
employees and accountants. In handling such information the Agent and the
Banks shall exercise the same degree of care that each exercises with
respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received, except
that disclosure of such information may be made (i) to the subsidiaries or
affiliates of the Agent or any Bank in connection with their present or
prospective business relations with the Borrower, (ii) to prospective
transferees or purchasers of an interest in the Revolving Loans, (iii) as
required by law, regulation, rule or order, subpoena, judicial order or
similar order and (iv) as may be required in connection with the
examination, audit or similar investigation of the Agent or any Bank.
5.6. Maintenance of Books and Records. Each of the Borrowers shall
keep adequate books and records of account, in which true and complete
entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with GAAP and
applicable law.
5.7. Environmental Indemnification. Each of the Borrowers, jointly
and severally, covenant and agree, at their sole cost and expense, to
indemnify, defend (at trial and appellate levels and with attorneys,
consultants and experts acceptable to the Agent and the Banks) and hold
the Agent and each Bank harmless against and from any and all liens,
damages, losses, liabilities, obligations, settlement payments, penalties,
assessments, citations, directives, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses of any
kind or of any nature whatsoever (including, without limitation,
reasonable attorneys', consultants' and experts' fees and disbursements
incurred in investigating, defending against, settling or prosecuting any
claim, litigation or proceeding) which may at any time be imposed upon,
incurred by or asserted or awarded against the Agent and any Bank or the
Real Property and arising directly or indirectly from or out of: (A) the
Release or threat of Release of any Hazardous Materials on, in, under or
affecting all or any portion of the Real Property or any surrounding
areas, regardless of whether or not caused by or within the control of a
Borrower; (B) a Borrower's actual or alleged use, generation, manufacture,
storage, disposal, transportation, handling or other disposition of any
Hazardous Materials at any location; (C) the violation of any
Environmental Laws relating to or affecting the Real Property or any
Borrower, whether or not caused by or within the control of a Borrower;
(D) the failure of a Borrower to comply fully with the terms and
conditions of this Agreement; (E) the violation of any Environmental Laws
in connection with other real property of a Borrower which gives or may
give rise to any rights whatsoever in any party with respect to the Real
Property by virtue of any Environmental Laws; or (F) the enforcement of
this Agreement, including, without limitation, (i) the costs of
assessment, containment and/or removal of any and all Hazardous Materials
from all or any portion of the Real Property or any surrounding areas,
(ii) the costs of any actions taken in response to a Release or threat of
Release of any Hazardous Materials on, in, under or affecting all or any
portion of the Real Property or any surrounding areas to prevent or
minimize such Release or threat of Release so that it does not migrate or
otherwise cause or threaten danger to present or future public health,
safety, welfare or the environment, and (iii) costs incurred to comply
with the Environmental Laws in connection with all or any portion of the
Real Property or any surrounding areas. The rights of the Agent and each
Bank under this Agreement shall be in addition to all rights under the
Loan Documents (as such documents or instruments may be amended or
modified from time to time) and payments by any Borrower under this
Agreement shall not reduce any Borrower's obligations and liabilities
under any of the Loan Documents. The Borrowers' joint and several
Obligations to indemnify, defend and hold harmless under this Section 5.7
shall not apply to liens, damages, losses, liabilities, judgments or costs
to the extent caused by the gross negligence or willful misconduct of the
Agent or the Banks.
5.8. Use of Proceeds. The proceeds of the U.S. Loans will be used
by the U.S. Borrower (i) to repay in full the U.S. Borrower's obligations
for borrowed money under the First Chicago Credit Agreement, (ii) to
repurchase Senior Notes subject to the terms of Section 6.16 (provided,
however, that the U.S. Borrower shall be prohibited from purchasing any of
the Senior Notes if and to the extent that the amount of any such
repurchase, when aggregated with the amount of any other repurchase of
Senior Notes from and after October 31, 1996, would exceed $5,000,000.00,
if at the time such repurchase is to be made the Borrowers shall have
failed to have attained EBITDA in excess of $12,500,000.00 during the two
consecutive calendar quarters ending immediately prior to such
repurchase), (iii) to provide working capital for the U.S. Borrower and
general corporate purposes, and (iv) to pay fees, charges, costs and
expenses incurred or sustained by the U.S. Borrower in connection with the
consummation of the transactions referred to herein or contemplated
hereby. The proceeds of the Canadian Loans will be used by the Canadian
Borrower (x) to repay in full the Canadian Borrower's obligations for
borrowed money under the First Chicago Credit Agreement, (y) to provide
working capital for the Canadian Borrower and (z) for general corporate
purposes. Except as may be provided in this Section, no portion of any
Revolving Loans shall be used for the purpose of purchasing or carrying
any "margin security" or "margin stock" as such terms are used in
Regulations G, U or X of the Board of Governors of the Federal Reserve
System.
5.9. Pension Plans. With respect to any Plan, the benefits under
which are guaranteed, in whole or in part, by the PBGC or any Governmental
Body succeeding to any or all of the functions of the PBGC or serving an
analogous role in Canada, each of the Borrowers and each member of the
Controlled Group will (i) fund each Plan or Employee Benefit Plan as
required by the provisions of Section 302 of ERISA and Section 412 of the
Code or any provision of any Employee Benefit Legislation; (ii) furnish
the Agent, no later than the date of submission in the case of any request
or notice relating to any such Plan or Employee Benefit Plan other than a
Multi-Employer Plan, and no later than acquiring knowledge or having
reason to know thereof in the case of any request or notice relating to a
Multi-Employer Plan, (a) a copy of any request for a waiver of the funding
standards or an extension of the amortization periods required under
Section 302 of ERISA or Section 412 of the Code or any provision of any
Employee Benefit Legislation and (b) a copy of any notice of intent to
terminate any Plan sent to the PBGC or any analogous Governmental Body in
Canada, (iii) furnish to the Agent notice of any event described in Title
IV of ERISA or any analogous provision of any Employee Benefit Legislation
that could cause any Borrower or any member of the Controlled Group to
become liable for any withdrawal liability, immediately upon knowing or
having reason to know of such event, and (iv) furnish to the Agent, if and
when any Borrower or any member of the Controlled Group gives or is
required to give notice to the PBGC or analogous Governmental Body in
Canada of any "reportable event" (as defined in Section 4043 of ERISA)
with respect to any Plan that might constitute grounds for a termination
of such Plan under Title IV of ERISA or any analogous provision of any
Employee Benefit Legislation, or knows or has reason to know that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC or analogous Governmental Body in
Canada or, if such notice is not given to the PBGC or analogous
Governmental Body in Canada, a description of the content of the notice
that would be required to be given; and the Borrower and each member of
the Controlled Group will comply, and will cause each Plan, Welfare Plan
and Employee Benefit Plan maintained by it to comply, in all material
respects with the applicable provisions of ERISA, the Code and any
Employee Benefit Legislation, and cause each Plan, Welfare Plan and
Employee Benefit Plan maintained by it to pay all benefits when due.
5.10. Fiscal Year. Each of the Borrowers shall have a fiscal year
ending on December 31 of each year and shall notify the Agent of any
change in such fiscal year. All of the Borrowers shall have the identical
fiscal year end. In the event any of the Borrowers changes its fiscal
year end, the Agent and the Banks shall have the right to modify the
timing of the financial covenants hereunder accordingly in order to
correspond to any such change in the fiscal year of such Borrower.
5.11. Further Assurances. At any time and from time to time each of
the Borrowers shall execute and deliver such further instruments and take
such further action as may reasonably be requested by the Agent to effect
the purposes of the Loan Documents.
5.12. Location of Records and Collateral; Name Change. Each of the
Borrowers shall give the Agent written notice of any change in location at
which Collateral is or will be kept and each office of the Borrowers at
which the records of any of the Borrowers pertaining to Accounts
Receivable and contract rights are kept. Except as such notice is given,
all Collateral owned by the Borrowers shall be kept, and all records of
the Borrowers pertaining to Accounts and contract rights shall be kept, at
such location(s) as appears on Exhibit D hereto. The Borrowers shall give
the Agent 30 days' prior written notice of any change in the name or
corporate form of any of them or any change in the name or names under
which any Borrower's business is transacted.
SECTION VI
NEGATIVE COVENANTS
So long as any Bank has any commitment to lend hereunder or any
Revolving Loan or other Obligation hereunder remains outstanding, the
Borrowers, jointly and severally, covenant as follows:
6.1. Indebtedness. No Borrower shall create, incur, assume,
guarantee or be or remain liable with respect to any Indebtedness other
than the following:
(a) Indebtedness of the Borrowers to the Agent or the Banks or any
of their respective Affiliates under the Loan Documents;
(b) Indebtedness in respect of current liabilities, other than for
borrowed money, of any Borrower incurred in the ordinary course of
business and of a type and magnitude consistent with past practices;
(c) Indebtedness in respect of Capital Leases and purchase money
security interests of any Borrower representing obligations permitted to
be incurred by the terms of Section 6.17 and incurred in the ordinary
course of business and consistent with past practices;
(d) Indebtedness existing on the date of this Agreement and
disclosed on Exhibit C hereto or in the financial statements referred to
in Section 4.7;
(e) Indebtedness secured by Permitted Encumbrances which is
otherwise non-recourse against any Borrower;
(f) Indebtedness of any Borrower owed to another Borrower;
(g) Indebtedness arising out of the issuance of letters of credit by
a lending institution other than one of the Banks, provided that no letter
of credit shall be secured by any of the property of any of the Borrowers,
and, provided, further, that the aggregate face amount of such letters of
credit outstanding at one time pursuant to this Section 6.1(g) shall not
exceed $5,000,000; and
(h) Indebtedness permitted under Section 6.2 of this Agreement.
6.2. Contingent Liabilities. No Borrower shall create, incur,
assume or remain liable with respect to any Guarantees other than the
following:
(a) Guarantees in favor of the Agent or the Banks or any of their
respective Affiliates under the Loan Documents;
(b) Guarantees existing on the date of this Agreement and disclosed
on Exhibit C hereto or in the financial statements referred to in Section
4.7;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business; and
(d) Guarantees with respect to surety, appeal, performance and
return-of-money and other similar obligations incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed
money) not exceeding in the aggregate at any time $500,000.
6.3. Leases. No Borrower shall during any fiscal year enter into
any leases of real or personal property as lessee, except for capital and
operating leases of Equipment and real property acquired after the date
hereof and renewals of existing Leases providing for total Indebtedness of
less than or equal to $10,000,000 over and above total Indebtedness under
Leases existing as of the date hereof, or requiring payments in any one
fiscal year (whether or not such payments are termed rent) in the
aggregate of less than $2,500,000 over and above payment obligations under
Leases existing as of the date hereof. The Borrowers shall cause the
landlord of any premises leased by any of the Borrowers after the Closing
Date to deliver to the Agent simultaneously with the execution of any
Lease, at the option of the Agent, a Landlord Waiver in form and substance
acceptable to the Agent.
6.4. Sale and Leaseback. None of the Borrowers shall enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property owned by it in order to lease such property or lease other
property that any Borrower intends to use for substantially the same
purpose as the property being sold or transferred.
6.5. Encumbrances. None of the Borrowers shall create, incur,
assume or suffer to exist any mortgage, pledge, security interest, lien or
other charge or encumbrance, including the lien or retained security title
of a conditional vendor upon or with respect to any of its property or
assets ("Encumbrances"), or assign or otherwise convey any right to
receive income, including the sale or discount of Accounts Receivable with
or without recourse, except the following ("Permitted Encumbrances"):
(a) Encumbrances in favor of the Agent or the Banks or any of their
respective Affiliates under the Loan Documents;
(b) Encumbrances existing on the date of this Agreement and
disclosed in Exhibit C hereto;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in default,
to the extent Landlord Waivers shall have been delivered to the Agent and
the Banks, provided, however, that Landlord Waivers shall not be required
for leased premises located outside of the United States, or if the value
of all assets on or in all such leased premises in the aggregate (measured
at the greater of cost or fair market value) is less than $1,000,000,
provided further that the Borrower shall have ninety (90) days from the
date hereof to provide a Landlord Waiver with respect to the U.S.
Borrower's chief executive office set forth in the preamble hereto
(failure to timely obtain or deliver such Landlord Waiver or to provide
the notice required under Section 5.12 that the U.S. Borrower has changed
its chief executive office shall constitute an Event of Default
hereunder); or liens in respect of pledges or deposits under workmen's
compensation, unemployment insurance, social security laws, or similar
legislation (other than ERISA) or in connection with appeal and similar
bonds incidental to litigation; mechanics', laborers' and materialmen's
and similar liens, if the obligations secured by such liens are not then
delinquent or are being contested by a Borrower in good faith; liens
securing the performance of bids, tenders, contracts (other than for the
payment of money); third party possessory liens, to the extent Bailee
Waivers shall have been delivered to the Agent and the Banks, provided,
however, that Bailee Waivers shall not be required if the value of all
assets subject to all third party possessory liens in the aggregate
(measured at the greater of cost or fair market value) is less than
$1,000,000; and statutory obligations incidental to the conduct of
business of any Borrower and that do not in the aggregate materially
detract from the value of the property of any Borrower or materially
impair the use thereof in the operation of such Borrower's business;
(e) judgment liens up to and including (i) $500,000 for any single
judgment, or (ii) $2,000,000 in the aggregate, that shall not have been in
existence for a period longer than 30 days after the creation thereof or,
if a stay of execution shall have been obtained, for a period longer than
30 days after the expiration of such stay;
(f) Encumbrances securing Indebtedness for the purchase price of
capital assets to the extent such Indebtedness is permitted by Section
6.17, provided that (i) each such Encumbrance is given solely to secure
the purchase price of such property, does not extend to any other property
and is given at the time of acquisition of the property, and (ii) the
Indebtedness secured thereby does not exceed the lesser of the cost of
such property or its fair market value at the time of acquisition; and
(g) easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in a
material way with the ordinary conduct of its business.
6.6. Merger; Consolidation; Sale or Lease of Assets; Acquisitions.
None of the Borrowers shall (a) sell, lease or otherwise dispose of assets
or properties without the prior written consent of the Agent and the
Banks, other than (i) sales of Inventory wholly in the ordinary course of
business (including the sale of Inventory from discontinued operations
that were previously in the ordinary course), (ii) sales of non-
functioning, obsolete or surplus equipment that is replaced by assets of
equal or greater value, and (iii) sales of assets not in the ordinary
course of business in an aggregate amount, measured on a cumulative basis
until the Maturity Date or earlier termination of this Agreement, not to
exceed 10% of the value of the Borrower's FIFO Tangible Assets, or (b)
liquidate, or merge or consolidate into or with any other Person, provided
that ▇▇▇▇▇▇ may merge or consolidate into or with (x) USL if no Default or
Event of Default has occurred and is continuing or would result from such
merger and if USL is the surviving company, or (y) any other wholly-owned
Subsidiary of USL, if no Default or Event of Default has occurred and is
continuing or would result from such merger, and if ▇▇▇▇▇▇ is the
surviving company. None of the Borrowers shall, without the prior written
consent of the Agent and the Banks, acquire all or substantially all of
the assets or capital stock of any Person other than by means of a
Qualified Investment. The Agent shall provide UCC-3 partial termination
statements and such other releases of its Liens as the Borrowers may
reasonably require in the event of a sale pursuant to Sections 6.6(a)(ii)
or (iii).
6.7. EBITDA to Cash Interest Expense Ratio. The Borrowers shall not
at any time permit the EBITDA to Cash Interest Expense Ratio of the
Borrowers to be less than the following ratios for the following fiscal
periods:
Minimum
Period Ratio
For each fiscal period consisting of four 0.90
consecutive calendar quarters ending on
December 31, 1996, March 31, 1997 and
June 30, 1997
For the fiscal period consisting of four 1.00
consecutive calendar quarters ending on
September 30, 1997
For each fiscal period consisting of four 1.25
consecutive calendar quarters ending on
December 31, 1997 and March 30, 1998
For any fiscal period consisting of four 1.50
consecutive calendar quarters ending on or
after June 30, 1998
6.8. Leverage Covenant. The Borrowers shall not permit the Debt to
Tangible Assets Ratio of the Borrowers to be greater than the following
ratios as of the following points in time:
Period Ratio
At any time after October 31, 1996 1.25
through and including May 31, 1998
At any time after June 1, 1998 1.20
6.9. Minimum EBITDA. The Borrowers shall not permit EBITDA to be
less than ("Minimum EBITDA"):
Period Amount
For each fiscal period consisting of four $15,000,000
consecutive calendar quarters ending on
December 31, 1996, March 31, 1997 and
June 30, 1997
For the fiscal period consisting of four $17,500,000
consecutive calendar quarters ending on
September 30, 1997
For the fiscal period consisting of four $20,000,000
consecutive calendar quarters ending on
December 31, 1997
For the fiscal period consisting of four $22,500,000
consecutive calendar quarters ending on
March 31, 1998
For each fiscal period consisting of four $25,000,000
consecutive calendar quarters ending on
and after June 30, 1998
Provided, however if any of the Borrowers sells or disposes of assets
in accordance with the terms of Section 6.6(a)(iii), the Minimum EBITDA
shall be reduced by an amount equal to the lesser of (i) the EBITDA during
the 12 months then ending derived from the assets or properties then sold
(such EBITDA to be determined in a manner consistent with GAAP and the
Borrowers' past practices), and (ii) $2,500,000.
6.10. Restricted Payments. None of the Borrowers shall pay, make or
declare any Restricted Payment; provided, however, that so long as no
Default or Event of Default shall have occurred and be continuing and
Excess Availability exceeds Minimum Availability (after taking into
account payments to Holdings or USL permitted under this Section) (i) USL
may make a cash or property dividend, distribution or payment to Holdings
in an amount not to exceed $50,000 per fiscal year, (ii) USL may make
loans or capital contributions to ▇▇▇▇▇▇ provided that the aggregate
outstanding amount of any such loans or capital contributions shall not
exceed $7,500,000 at any point in time, each such loan is evidence by a
promissory note, and that such promissory note shall be pledged and
delivered to the Agent as security for the U.S. Borrower's Obligations,
and (iii) ▇▇▇▇▇▇ or any other Subsidiary of USL may make cash or property
dividends, loans, distributions or payments to USL.
6.11. Investments. None of the Borrowers shall make or maintain any
Investments other than as may be permitted by Section 6.10 and Qualified
Investments.
6.12. ERISA and Employee Benefit Legislation. None of the Borrowers
nor any member of the Controlled Group shall permit any Plan, Welfare Plan
or Employee Benefit Plan maintained by it to (i) engage in any "prohibited
transaction" (as defined in Section 406 of ERISA, Section 4975 of the Code
or any analogous definition contained in any provision of any Employee
Benefit Legislation), (ii) incur any "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code or any
analogous definition contained in any provision of any Employee Benefit
Legislation) whether or not waived, or (iii) terminate in a manner that
could result in the imposition of a lien or Encumbrance on the assets of
the Borrower pursuant to Section 4068 of ERISA or any analogous provision
under any Employee Benefit Legislation.
6.13. Transactions with Affiliates. None of the Borrowers shall
enter into or participate in any agreements or transactions of any kind
with any Affiliate, except (i) agreements or transactions contemplated,
required or allowed by any Loan Document or any Ancillary Document as in
effect on the date of this Agreement, including, without limitation, the
▇▇▇▇▇▇ Consulting Agreement, provided that such agreements or transactions
are not otherwise prohibited by this Agreement or any of the Security
Documents; or (ii) agreements or transactions (in each case) in the
ordinary course of business and on an arms-length basis which (A) include
only terms which are fair and equitable to the Borrowers, (B) do not
violate or otherwise conflict with any of the terms of any of the Loan
Documents, (C) require the payment of no fees, charges or commissions by
any of the Borrowers to any Affiliate, except those which are reasonable
and disclosed to the Agent, (D) are disclosed on the books, accounts and
records of the Borrower, and (E) involve terms no less favorable to the
Borrowers than would be the terms of a similar agreement or transaction
with any Person other than an Affiliate.
6.14. Loans. None of the Borrowers shall make to any Person any
loan, advance or other transfer with the anticipation of repayment other
than as may be permitted by Section 6.10, Qualified Investments, or loans
or advances to employees of any Borrower so long as no Default or Event of
Default shall have occurred and be continuing at the time of such loan or
advance, provided that the amount of such loans or advances to employees
outstanding at any one time shall not exceed $100,000.
6.15. Borrowing Base. Except for Overadvances as set forth in
Section 2.3 of this Agreement, none of the Borrowers shall cause or permit
the aggregate principal amount of all Revolving Loans and the aggregate
face amount of Letters of Credit outstanding at any time to exceed the
Borrowing Base at such time.
6.16. Minimum Excess Availability. The Borrowers shall not
repurchase one or more Senior Notes at any time if at the time of the
repurchase the amount of Excess Availability is less than or equal to
$30,000,000, taking into account the costs of such repurchase.
6.17. Capital Expenditures. None of the Borrowers shall make any
Capital Expenditures in excess of $10,000,000 in the aggregate during any
fiscal year from and after the date hereof without the prior written
consent of the Agent and the Banks.
6.18. No Amendments to Certain Documents. None of the Borrowers
shall at any time cause or permit (i) any of the Ancillary Documents
(other than the Labor Union Agreements) to be modified, amended or
supplemented in any respect whatsoever, except for such modification or
amendment as would not effect any change materially adverse to the Agent
or the Banks, or have a material adverse effect on the business, property,
assets, operations or condition (financial or otherwise) of any of the
Borrowers, or (ii) any of the charter or other incorporation documents or
by-laws of any of the Borrowers or Holdings, or the incorporation
documents of Leather U.S., to be modified, amended or supplemented in any
material respect whatsoever, without (in each case) the express prior
written agreement, consent or approval of the Agent.
6.19. Labor Union Agreements. None of the Borrowers shall engage in
any unfair labor practice. Except as disclosed on Exhibit D hereto, and
unless it would not have a material adverse effect on the property,
assets, financial condition, business, income, operations, prospects or
affairs of any Borrower, there is (i) no unfair labor practice complaint
pending or to the knowledge of any of the Borrowers threatened against any
Borrower before the National Labor Relations Board or analogous
Governmental Body in Canada, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against any Borrower or, to the knowledge of any Borrower, threatened
against it, (ii) no labor dispute, slow-down or stoppage pending against
any Borrower or, to the knowledge of any Borrower, threatened against any
Borrower, and (iii) to the best knowledge of any Borrower, no union
representation question exists with respect to the employees of any
Borrower and no union organizing activities are taking place.
SECTION VII
DEFAULTS
7.1. Events of Default. There shall be an Event of Default
hereunder if any of the following events occurs:
(a) Any of the Borrowers shall fail to perform any Obligation for
payment of money under the Loan Documents, including without limitation to
pay any amount of principal of any Revolving Loans when due or any amount
of interest thereon or any fees, costs or expenses payable hereunder or
under any Revolving Credit Note or Letter of Credit; or
(b) Any of the Borrowers shall fail to perform, comply with or
observe or shall otherwise breach any one or more of the terms,
obligations, covenants or agreements contained in Sections 5.1, 5.3, 5.5,
6.1 through 6.3, inclusive, 6.5 through 6.11, inclusive, and 6.13 through
6.17, inclusive; or
(c) Any of the Borrowers shall fail to perform, comply with or
observe or shall otherwise breach any one or more of the terms, covenants,
obligations or agreements (other than in respect of subsections 7.1(a) and
(b) hereof) contained in this Agreement or in any other Loan Document and
such failure shall continue for 17 days; or
(d) any representation or warranty of any of the Borrowers made in
any Loan Document or any other documents or agreements executed in
connection with the transactions contemplated by this Agreement or in any
certificate delivered hereunder shall prove to have been false in any
material respect upon the date when made or deemed to have been made; or
(e) there shall occur any material adverse change in the assets,
properties, liabilities, financial condition, business or prospects of any
of the Borrowers;
(f) any of the Borrowers shall fail to pay at maturity, or within
any applicable period of grace, any obligations or Indebtedness (other
than under the Loan Documents) in excess of $750,000 in the aggregate for
borrowed monies or advances, or for the use of real or personal property,
or fail to observe or perform any term, covenant or agreement evidencing
or securing such obligations for borrowed monies or advances, or relating
to such use of real or personal property, the result of which failure is
to permit the holder or holders of such Indebtedness to cause such
Indebtedness to become due prior to its stated maturity upon delivery of
required notice, if any; or
(g) any of the Borrowers shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts
as such debts become due, (iii) make a general assignment for the benefit
of its creditors, (iv) commence a voluntary case under the United States
Bankruptcy Code (as now or hereafter in effect) or similar Canadian
legislation, (v) commence any case or proceeding under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors,
(vi) take any action under the laws of its jurisdiction of incorporation
or organization similar to any of the foregoing, (vii) be Insolvent, or
(viii) take any corporate action for the purpose of effecting any of the
foregoing; or
(h) a proceeding or case shall be commenced, without the application
or consent of any Borrower in any court of competent jurisdiction, seeking
(i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or
any substantial part of its assets, or (iii) similar relief in respect of
it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law
providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of 60 days;
or an order for relief shall be entered in an involuntary case under the
United States Bankruptcy Code (as now or hereafter in effect), against any
of the Borrowers; or action under the laws of the jurisdiction of
incorporation or organization of any of the Borrowers or any of their
respective Subsidiaries similar to any of the foregoing shall be taken
with respect to any such Borrower or such Subsidiary and shall continue
unstayed and in effect for any period of 60 days; or
(i) a judgment, verdict or order for the payment of money shall be
entered against any Borrower by any court, or a warrant of attachment or
execution or similar process shall be issued or levied against property of
such Borrower, that individually exceeds $500,000 or in the aggregate
exceeds $2,000,000 in value and such judgment, verdict, order, warrant or
process shall continue undischarged or unstayed for 30 days; or
(j) any Borrower or any member of the Controlled Group shall fail to
pay when due a material amount which it shall have become liable to pay to
the PBGC or to a Plan under Title IV of ERISA or to any Plan under Section
302 of ERISA or Section 412 of the Code or any analogous provision under
any Employee Benefit Legislation; or a proceeding shall be instituted by a
fiduciary of any Plan against any Borrower or any member of a Controlled
Group and such proceeding shall not have been dismissed within sixty (60)
days thereafter; or notice of intent to terminate a Plan shall be filed
under Title IV of ERISA or any analogous provision under any Employee
Benefit Legislation by any Borrower, any member of the Controlled Group,
any plan administrator or any combination of the foregoing, if termination
of a Plan could cause any of the Borrowers or any member of the Controlled
Group to become liable for a material amount with respect to the Plan, or
the PBGC or analogous Governmental Body shall institute proceedings under
Title IV of ERISA or any analogous provision under any Employee Benefit
Legislation to terminate or to cause a trustee to be appointed to
administer any Plan, otherwise, or a condition shall exist by reason of
which the PBGC or analogous Governmental Body would be entitled to obtain
a decree adjudicating that any Plan or Plans must be terminated; or
(k) The Equitable Life Assurance Society and its Affiliates shall
hold directly or indirectly less than 51% of the Equity Securities of, or
shall not have the direct or indirect ability to appoint a majority of the
Board of Directors of, USL; or
(l) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or an individual reasonably acceptable to the
Agent, shall no longer serve as the chief executive officer of USL,
provided that USL shall have 30 days from the date ▇▇. ▇▇▇▇▇▇ ceases
serving as chief executive officer of USL to appoint a successor or acting
successor reasonably acceptable to the Agent; or
(m) any Loan Document, or covenant, agreement, representation,
warranty or Obligation therein, shall be canceled, terminated, revoked or
rescinded, or cease in any material respect to be legal, valid, binding or
enforceable in accordance with the terms thereof, other than in accordance
with the express prior written agreement, consent or approval of the Agent
and the Banks; or any action at law, suit in equity or other legal
proceeding to cancel, revoke, or rescind any Loan Document shall be
commenced by or on behalf of such Borrower, or by any court or any other
Governmental Body of competent jurisdiction; or any court or any other
Governmental Body of competent jurisdiction shall make a determination
that, or shall issue a judgment, order, decree or ruling to the effect
that, any one or more of, or any part of, the Loan Documents or any one or
more of the obligations of any Borrower under any one or more of the Loan
Documents are illegal, invalid or unenforceable in accordance with the
terms thereof; or
(n) any default or event of default shall occur and be continuing
under the Indenture Agreement.
7.2. Remedies. Upon the occurrence of (i) an Event of Default
described in subsections 7.1(g) and (h), immediately and automatically,
and (ii) any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the option of the Majority Banks and
upon the Agent's declaration (which declaration shall be made at the
instruction of the Majority Banks):
(a) each Bank's Revolving Credit Commitment to make any further
Revolving Loans hereunder shall terminate;
(b) the unpaid principal amount of the Revolving Loans together with
accrued interest, fees and charges, and such other Obligations as the
Agent may elect, and all other Obligations of any of the Borrowers to the
Agent and each Bank of any kind hereunder and under the other Loan
Documents, shall become immediately due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived; and
(c) the Agent may exercise (on behalf of itself and the Banks) any
and all rights the Agent and the Banks have under this Agreement, the
other Loan Documents or any other documents or agreements executed in
connection herewith, or at law or in equity, and proceed to protect and
enforce the Agent's and the Banks' rights by any action at law, in equity
or other appropriate proceeding.
SECTION VIII
CONCERNING THE AGENT AND THE BANKS
8.1 Appointment and Authorization. Each of the Banks hereby
appoints Bank of Boston to serve as Agent under this Agreement and
irrevocably authorizes the Agent to take such action on such Bank's
behalf under this Agreement and to exercise such powers and to perform
such duties under this Agreement and the other documents and instruments
executed and delivered in connection with the consummation of the
transactions contemplated hereby as are delegated to the Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
8.2 Agent and Affiliates. Bank of Boston shall also have the same
rights and powers under this Agreement of a Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and Bank
of Boston and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Affiliate of the Borrower as if it were not the Agent hereunder. Except
as otherwise provided by the terms of this Agreement, nothing herein shall
prohibit any Bank from accepting deposits from, lending money to or
generally engaging in any kind of business with the Borrower or any
Affiliate of the Borrower.
8.3 Future Advances.
(a) (i) U.S. Loans. In order to more conveniently administer the
U.S. Loans, each U.S. Bank does hereby authorize the Agent, on
behalf of such Bank, to make all U.S. Loans to the U.S.
Borrower, which are requested by the U.S. Borrower during any
Business Day, subject to the terms and conditions of this
Agreement and not to exceed in the aggregate the sum of all of
the Banks' U.S. Credit Commitments. Each U.S. Bank does hereby
further irrevocably agree, subject to the terms of Section
8.3(b), and provided that the Agent has notified each U.S. Bank
of the amount of such advance to be made by no later than 12:00
P.M. on the day such reimbursement to the Agent is to be made,
whether or not this Agreement has been terminated, a Default or
an Event of Default has occurred, the Agent has accelerated the
Obligations or the Agent is proceeding to liquidate the
Collateral, to transfer to the Agent by 2:00 p.m. (x) with
respect to Base Rate Loans and Overadvances accruing interest
with respect to the applicable interest rate and margin for Base
Rate Loans on the last Business Day of each calendar week, (y)
with respect to Eurodollar Loans and Overadvances accruing
interest with respect to the applicable interest rate and margin
for Eurodollar Loans on the day the Agent makes any such advance
(z) or such other times as the Agent may inform the U.S. Banks
of from time to time, sufficient immediately available federal
funds to reimburse the Agent for its respective U.S. Commitment
Percentage of all U.S. Loans and other advances (not to exceed
such Bank's U.S. Credit Commitment) made through the close of
business on the immediately preceding Business Day after taking
into account payments received by the Agent and applied to the
U.S. Loan Account under Section 8.5, and subject to adjustment
in accordance with the terms of Section 8.15.
(ii) Canadian Loans. In order to more conveniently administer
the U.S. Loans, and to calculate adjustments in accordance with
the terms of Section 8.15, the Canadian Bank shall deliver to
the Agent by 2:00 P.M. (Toronto time) on each Business Day a
statement setting forth the Canadian Loans made and repayments
thereof received during the immediately preceding Business Day
as well as the outstanding balance of all Canadian Loans as of
the close of business on such immediately preceding Business
Day.
(b) Notwithstanding the terms of Section 8.3(a), at such time as (i)
the Majority Banks have exercised their option pursuant to
Section 7.2 to cause all of the Obligations to be immediately
due and payable and there is then no irrevocable prior
commitment to fund any additional Revolving Loans or other
advances hereunder, or (ii) there has occurred and is continuing
an Event of Default under clause (a), (g) or (h) of Section 7.1,
each of the U.S. Banks shall be obligated to fund additional
U.S. Loans or other advances hereunder in accordance with the
terms of Section 8.3(a), and the Canadian Bank shall be
obligated to fund additional Canadian Loans or other advances
hereunder in accordance with the terms of Section 2A.1, solely
upon the written consent or approval of the Majority Banks. In
no event shall any Bank be required to advance any amount of
U.S. Loans or Canadian Loans, respectively, in excess of its
respective U.S. Credit Commitment or Canadian Credit Commitment.
(c) Funds provided by the Agent or the Canadian Bank as payment upon
a sight or time draft presented to the Agent or the Canadian
Bank, as applicable, under a Letter of Credit issued pursuant to
the terms of Section 2B.5 hereof, and any payments made by the
Agent or the Canadian Bank on behalf of the U.S. Borrower or the
Canadian Borrower, as applicable, including, without limitation,
pursuant to the terms of Section 5.3 hereof, shall constitute
U.S. Loans or Canadian Loans, as applicable, or other advances
initially made by the Agent or the Canadian Bank, as applicable,
at such time as such funds are actually provided, or such
payments are made, by the Agent or the Canadian Bank, as
applicable. All U.S. Loans and other advances made by the Agent
on behalf of any Bank shall be, for purposes of interest income
and other charges, considered loans from such Bank to the U.S.
Borrower and reflected in the U.S. Loan Account at such time as
the Agent receives from such Bank funds as provided in this
Section 8.3, and prior to such time such U.S. Loans and advances
shall be considered, for purposes of interest income and other
charges, loans from Bank of Boston and so reflected in the U.S.
Loan Account. In addition, subject to the Security Documents,
any collection of U.S. Collateral, including, but not limited
to, any collections of Accounts, shall be applied to reduce any
debit balance in the U.S. Loan Account so that the debit balance
of the U.S. Loan Account equals the sum of each Bank's
respective U.S. Commitment Percentage of such debit balance.
The Agent may at any time upon notice to any U.S. Bank (i)
refuse to make U.S. Loans and advances on behalf of such Bank
unless such Bank shall have provided to the Agent immediately
available federal funds sufficient to cause the U.S. Loan
Account to equal and reflect such Bank's respective U.S.
Commitment Percentage; (ii) require such Bank to fund such
Revolving Loans and advances before making such U.S. Loans and
advances to the U.S. Borrower; or (iii) require that such Bank
immediately transfer to the Agent prior to the time such funds
would otherwise be required hereunder immediately available
federal funds sufficient to cause the U.S. Loan Account to equal
(subject to adjustments pursuant to the terms of Section 8.15)
the sum of each Bank's respective U.S. Commitment Percentage
times the balance of such Loan Account (it being acknowledged,
however, that the Agent will attempt to require any U.S. Bank to
fund its share of any U.S. Loan or advance prior to the time
such funding would otherwise be required hereunder to the extent
such share exceeds $100,000, provided that the foregoing shall
in no way diminish the Agent's rights under clauses (i) through
(iii), inclusive, of this sentence, which rights it may exercise
in its sole discretion). Notwithstanding the provisions hereof,
the obligations to make U.S. Loans or Canadian Loans and
advances under the terms of this Agreement shall be the several
and not joint obligation of each Bank, or the Canadian Bank, as
applicable, and any advances made by the Agent on behalf of a
U.S. Bank are strictly for the administrative convenience of the
parties and shall in no way diminish such Bank's liability to
the Agent, subject to the terms of Section 8.3(b), to repay the
Agent for such U.S. Loans and advances. Under no circumstances
shall the Agent or any U.S. Bank which is not the Canadian Bank
be obligated or otherwise required to make any Canadian Loans.
8.4 Delinquent Bank. (a) Notwithstanding anything to the contrary
contained in this Agreement, any U.S. Bank that fails to make available to
the Agent its share of any U.S. Loan when and to the full extent required
by the provisions of this Agreement shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time
as such delinquency is satisfied. A Delinquent Bank shall be deemed to
have assigned any and all payments due to it from the Borrower, whether on
account of outstanding U.S. Loans, interest, fees or otherwise, to the
remaining non-delinquent U.S. Banks for application to, and reduction of,
their respective pro rata shares of all outstanding U.S. Loans. The
Delinquent Bank hereby authorizes the Agent to distribute such payments to
the non-delinquent U.S. Banks in proportion to their respective pro rata
shares of all outstanding U.S. Loans. A Delinquent Bank shall be deemed
to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding U.S. Loans of the
non-delinquent U.S. Banks, the Banks' respective pro rata shares of all
outstanding U.S. Loans have returned to those in effect immediately prior
to such delinquency and without giving effect to the nonpayment causing
such delinquency.
(b) A Delinquent Bank shall pay to the Agent on demand an amount
equal to the product of (i) the average, computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by
the Agent for federal funds acquired by the Agent during each day included
in such period, multiplied by (ii) the amount of such Delinquent Bank's
share of such U.S. Loan, multiplied by (iii) a fraction, the numerator of
which is the number of days that elapsed from and including such date to
the date on which the amount of such Delinquent Bank's share of such U.S.
Loan shall become immediately available to the Agent, and the denominator
of which is 360. A statement of the Agent submitted to such Delinquent
Bank with respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such Delinquent
Bank.
8.5 Payments.
(a) All payments and prepayments of principal of U.S. Loans or
other advances received by the Agent shall be applied first to all fees
and charges due solely to the Agent for its own account, with the balance
to be paid promptly to each of the U.S. Banks on account of fees, charges,
interest and outstanding principal due to all U.S. Banks pro rata in
accordance with their respective U.S. Commitment Percentages. All such
payments from the U.S. Borrower to be paid to the U.S. Banks shall be held
in trust for the benefit of the U.S. Banks. As each such payment is
received by the Agent, the Agent shall promptly charge or credit each of
the U.S. Banks to the extent necessary to ensure that as between them (and
subject to adjustments pursuant to the terms of Section 8.15) each of the
U.S. Banks holds its respective U.S. Commitment Percentage of outstanding
U.S. Loans or other advances, based on the then unpaid aggregate principal
amounts of the U.S. Loans or other advances outstanding.
(b) Each of the Banks and the Agent hereby agrees that if it
should receive any amount (whether by voluntary payment, by the exercise
of the right of set-off or banker's lien, by counterclaim or cross action,
by the enforcement of any right hereunder or otherwise) in respect of
principal of, or interest on, the U.S. Loans or Canadian Loans,
respectively, or any fees which are to be shared among the Banks, which,
as compared to the amounts theretofore received by the other Banks with
respect to such principal, interest or fees, is in excess of such Bank's
pro rata share of such principal, interest or fees as provided in this
Agreement, such Bank shall share such excess, less the costs and expenses
(including reasonable attorneys' fees and disbursements) incurred by such
Bank in connection with such realization, exercise, claim or action, pro
rata with all other Banks in proportion to their respective interests
therein (taking into account any adjustments previously determined or to
be determined by the Agent pursuant to the terms of Section 8.15) and such
sharing shall be deemed a purchase (without recourse) by such sharing
party of participation interests in the Revolving Loans or such fees, as
the case may be, owed to the recipients of such shared payments to the
extent of such shared payments; provided, however, that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
(c) At such time as (i) the Majority Banks have exercised their
option pursuant to Section 7.2 to cause all of the Obligations to be
immediately due and payable and then there is no irrevocable prior
commitment to fund any additional Revolving Loans or other advances
hereunder, or (ii) there has occurred and is continuing an Event of
Default under clause (a), (g) or (h) of Section 7.1 hereof, (A) all
payments received by the Agent as proceeds of U.S. Collateral or Canadian
Collateral, to be paid to the U.S. Banks or the Canadian Bank, as
applicable, under the Security Documents, shall be held in trust for the
benefit of the US. Banks and the Canadian Banks, respectively, and the
Agent shall charge or credit each of the Banks to the extent necessary to
ensure that as between them (taking into account any adjustments pursuant
to the terms of Section 8.15) each of the Banks holds its respective Total
Commitment Percentage of outstanding Revolving Loans or other advances,
based on the then unpaid aggregate principal amounts of the Revolving
Loans or other advances outstanding, and (B) each of the Banks and the
Agent hereby agrees that any amount it may receive (whether by voluntary
payment, by the exercise of the right of set-off or banker's lien, by
counterclaim or cross-claim, by the enforcement of any right hereunder or
otherwise) in respect of principal of, or interest on the Revolving Loans
or any fees which are to be shared among the Banks, shall be provided to
the Agent to be distributed to all of the Banks so as to reimburse such
Banks for the reasonable costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by such Bank in connection
with such realization, exercise, claim or action, and the remainder shall
be shared pro rata among all of the Banks to the extent necessary to
ensure that as between them (taking into account any adjustments pursuant
to the terms of Section 8.15) each of the Banks holds its respective Total
Commitment Percentage of outstanding Revolving Loans or other advances,
based on the then unpaid aggregate principal amounts of the Revolving
Loans or other advances outstanding; provided, however, that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
8.6 Interest, Fees and Other Payments. (i) All payments of interest
received by the Agent in respect of U.S. Loans or other advances, except
as otherwise provided by the terms of this Agreement, and all other fees
and premiums received by the Agent hereunder or in respect of U.S. Loans
or other advances shall be applied first to all fees and charges due
solely to the Agent for its own account, and second to each of the U.S.
Banks on account of fees, charges, interest and outstanding principal due
to all U.S. Banks pro rata in accordance with their respective U.S.
Commitment Percentages (taking into account for purposes of determining
pro rata shares of payments on account of interest, but not of fees or
charges, any adjustments pursuant to the terms of Section 8.15; and (ii)
all payments received by the Agent pursuant to Sections 9.2 or 9.3 of this
Agreement shall be applied by the Agent to reimburse each Bank, on account
of the tax, charge or expense in respect of which such payment is made.
8.7 Action by Agent.
(a) The obligations of the Agent hereunder are only those
expressly set forth herein. The Agent shall have no duty to exercise any
right or power or remedy hereunder or under any other Loan Document or
instrument executed and delivered in connection with or as contemplated by
this Agreement or to take any affirmative action hereunder or thereunder.
(b) The Agent shall keep all records of the U.S. Loans and
payments with respect thereto, and shall give and receive notices and
other communications to be given or received by the Agent hereunder on
behalf of the Banks.
(c) Upon the occurrence of an Event of Default the Agent may,
and upon the direction of the Majority Banks pursuant to Section 7.2 the
Agent shall, exercise the option of the Banks pursuant to Section 7.2 to
declare all Revolving Loans and other Obligations immediately due and
payable and may take such action as may appear necessary or desirable to
collect the Obligations and enforce the rights and remedies of the Agent
or the Banks.
(d) Whether or not an Event of Default shall have occurred, the
Agent may from time to time exercise the rights of the Agent and Banks
hereunder or under the other documents, instrument or agreements executed
or delivered in connection with or as contemplated by this Agreement as it
may deem necessary or desirable to protect the Collateral and the
interests of the Agent and the Banks therein.
8.8 Notification of Defaults and Events of Default. Each Bank
hereby agrees that, upon learning of the existence of a Default or an
Event of Default, it shall notify the Agent thereof. The Agent hereby
agrees that upon receipt of any notice under this Section 8.8, it shall
notify the other Banks of the existence of such Default or Event of
Default.
8.9 Consultation with Experts. The Agent shall be entitled to
retain and consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable to the Banks for any
action taken, omitted to be taken or suffered in good faith by it in
accordance with the advice of such counsel, accountants or experts. The
Agent may employ agents and attorneys-in-fact and shall not be liable to
the Banks for the default or misconduct of any such agents or attorneys.
8.10 Liability of Agent. The Agent shall exercise the same care to
protect the interests of each Bank as it does to protect its own
interests, so that so long as the Agent exercises such care it shall not
be under any liability to any of the Banks, except for the Agent's gross
negligence or willful misconduct with respect to anything it may do or
refrain from doing. Subject to the immediately preceding sentence,
neither the Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection
herewith in its capacity as Agent. Without limiting the generality of the
foregoing, neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire
into or verify: (i) any statement, warranty or representation made in
connection with this Agreement, any Loan Document, or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrowers; (iii) the satisfaction of any condition
specified in Sections 3.1, 3.2 or 3.3, except receipt of items required to
be delivered to the Agent; (iv) the validity, effectiveness,
enforceability or genuineness of this Agreement, the Revolving Credit
Notes, any other Loan Document or any other document or instrument
executed and delivered in connection with or as contemplated by this
Agreement; (v) the existence, value, collectibility or adequacy of the
Collateral or any part thereof or the validity, effectiveness, perfection
or relative priority of the liens and security interests of the Banks
(through the Agent) therein; or (vi) the filing, recording, refiling,
continuing or re-recording of any financing statement or other document or
instrument evidencing or relating to the security interests or liens of
the Banks (through the Agent) in the Collateral. The Agent shall not
incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex
or similar writing) believed by it to be genuine or to be signed by the
proper party or parties.
8.11 Indemnification. Each Bank agrees to indemnify the Agent (to
the extent the Agent is not reimbursed by the Borrowers), ratably in
accordance with its Total Commitment Percentage from and against any cost,
expense (including attorneys' fees and disbursements), claim, demand,
action, loss or liability which the Agent may suffer or incur in
connection with this Agreement, or any action taken or omitted by the
Agent hereunder, or the Agent's relationship with the Borrower hereunder,
including, without limitation, the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers and duties hereunder and of taking or
refraining from taking any action hereunder, but excluding any costs,
expenses or losses directly arising from the Agent's gross negligence or
willful misconduct. No payment by any Bank under this Section shall in
any way relieve the Borrowers of their obligations under this Agreement
with respect to the amounts so paid by any Bank, and the Banks shall be
subrogated to the rights of the Agent, if any, in respect thereto.
8.12 Independent Credit Decision. Each of the Banks represents and
warrants to the Agent that it has, independently and without reliance upon
the Agent or any other Bank and based on the financial statements referred
to in Section 4.7 and such other documents and information as it has
deemed appropriate, made its own independent credit analysis and decision
to enter into this Agreement. Each of the Banks acknowledges that it has
not relied upon any representation by the Agent and that the Agent shall
not be responsible for any statements in or omissions from any documents
or information concerning the Borrower, this Agreement, the Revolving
Credit Notes, any other Loan Document or any other document or instrument
executed and delivered in connection with or as contemplated by this
Agreement. Each of the Banks acknowledges that it will, independently and
without reliance upon the Agent or other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement.
8.13 Consents of All Banks. Under any circumstances where the
consent, waiver, approval or similar decision of the Majority Banks or all
of the Banks must be requested by the Borrowers under the terms of this
Agreement, in the event that Bank of Boston, acting on its own account and
not as Agent, has given any such consent, waiver, approval or otherwise,
each of the other Banks hereby agrees with Bank of Boston to provide a
prompt response to any request for any such consent, waiver, approval or
otherwise.
8.14 Successor Agent. Bank of Boston, or any successor Agent, may
resign as Agent at any time by giving written notice thereof to the Banks
and to the Borrowers. Upon any such resignation, the Banks shall have the
right to appoint a successor Agent, (which successor Agent shall be a
commercial bank (or Affiliate thereof) or savings and loan association
organized under the laws of the United States of America or any State
thereof or under the laws of another country which is doing business in
the United States of America or any State thereof and having a combined
capital, surplus and undivided profits of at least $100,000,000 (and shall
be reasonably acceptable to the Borrowers if and only if at the time no
Default or Event of Default has occurred and is continuing and such
acceptance by the Borrowers is not unreasonably withheld or delayed). If
no successor Agent shall have been so appointed by the Banks, and shall
have accepted such appointment, within 30 days after such resignation,
then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a commercial bank (or Affiliate thereof) or savings
and loan association organized under the laws of the United States of
America or any State thereof or under the laws of another country which is
doing business in the United States of America or any State thereof and
having a combined capital, surplus and undivided profits of at least
$100,000,000 (and shall be reasonably acceptable to the Borrowers if and
only if at the time no Default or Event of Default has occurred and is
continuing and such acceptance by the Borrower is not unreasonably
withheld or delayed). Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged
from all further duties and obligations under this Agreement as Agent.
After any retiring Agent's resignation hereunder as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
8.15 Relationship among Banks Regarding U.S. Loans and Canadian
Loans.
(a) Reference is made to the fact that (i) the availability of
Canadian Loans to the Canadian Borrower pursuant to Section 2A.1 hereof is
being provided by the Canadian Bank, (ii) such Canadian Loans outstanding
from time to time constitute a sublimit under and reduction of
Availability of U.S. Loans hereunder from time to time pursuant to
Section 2.1, and (iii) pursuant to Schedule 1 attached hereto the Canadian
Bank has attributed to it a Canadian Commitment Percentage and a Total
Commitment Percentage as set forth in said Schedule 1. It is hereby
acknowledged and agreed by the Agent, the Banks and the Borrowers that the
Canadian Loans are to be administered as a separate facility in accordance
with and as contemplated by the terms of this Agreement. In furtherance
of the understandings of the Banks, during the ongoing administration of
the Canadian Loans and the U.S. Loans, neither the Agent nor the other
U.S. Banks shall be obligated or permitted to make any advances of
Canadian Loans. The Canadian Bank, however, shall be obligated and
permitted to make U.S. Loans in accordance with its U.S. Commitment
Percentage (subject to and taking into account adjustments pursuant to the
terms of this Section 8.15).
(b) In order to facilitate determinations of their respective
portions of the Loans to be made by each of the U.S. Banks, all of the
Banks hereby acknowledge and agree that determinations of such amounts
shall be made by the Agent in accordance with the terms of this Section,
such determinations to be deemed to be true and accurate in the absence of
manifest error. Such determinations shall be made based upon the
following two principles: (i) all Canadian Loans are to be made by the
Canadian Bank, and (ii) considering that the Canadian Bank's Canadian
Commitment Percentage (i.e., 100%) is greater than its U.S. Commitment
Percentage and Total Commitment Percentage (i.e., as of the original
execution and delivery of this Agreement, 15%) the Agent shall allocate to
the Canadian Bank a reduced percentage of U.S. Loans (and a pro rata
increased percentage of U.S. Loans to the other U.S. Banks) if, and to the
extent, required to cause the Canadian Bank's aggregate percentage share
of Revolving Loans then outstanding to equal as closely as possible the
Canadian Bank's Total Commitment Percentage. For example, for
illustrative purposes only: (x) at such time as the Canadian Bank has
made outstanding Canadian Loans equal to $7,500,000.00, and the U.S. Banks
in the aggregate have made outstanding U.S. Loans equal to $72,500,000.00,
the portion of the U.S. Loans that the Agent shall then allocate to the
Canadian Bank shall equal $4,500,000.00 (i.e., 6% of U.S. Loans
outstanding) so as to cause the Canadian Bank's aggregate percentage share
of the Revolving Loans then outstanding to equal 15%; (y) at such time as
the Canadian Bank has outstanding Canadian Loans equal to $7,500,000.00,
and the U.S. Banks in the aggregate have outstanding U.S. Loans equal to
$20,000,000.00, the portion of the U.S. Loans that the Agent shall then
allocate to the Canadian Bank shall equal $0.00 (since the Canadian Loans
constitute such a large portion of the total Revolving Loans that the
Canadian Bank has a percentage of outstanding Revolving Loans in excess of
15%) and the portion of the U.S. Loans that the Agent shall then allocate
to the other U.S. Banks shall be distributed among them in proportion to
such other U.S. Banks' respective U.S. Commitment Percentages; (z) at such
time as the Canadian Bank has outstanding Canadian Loans equal to $0.00,
and the U.S. Banks in the aggregate have outstanding U.S. Loans equal to
$80,000,000.00, the portion of the U.S. Loans that the Agent shall then
allocate to the Canadian Bank shall equal $12,000,000.00 so as to cause
the Canadian Bank's aggregate percentage share of the Revolving Loans then
outstanding to equal 15%.
(c) If, upon the irrevocable termination or expiration of the
commitment of the Banks to make U.S. Loans or Canadian Loans under this
Agreement because of an Event of Default or otherwise, the aggregate
percentage of Revolving Loans made by the Canadian Bank shall exceed the
Canadian Bank's Total Commitment Percentage, at the Agent's option
exercisable in its sole discretion, the U.S. Banks (including the Canadian
Bank) shall make an additional Base Rate Loan to the U.S. Borrower for
purposes of causing the U.S. Borrower to provide funds to the Canadian
Borrower so as to repay in full all of the Obligations of the Canadian
Borrower, whereupon all of the Banks shall have respective outstanding
U.S. Loans in proportion to their respective Total Commitment Percentages.
(d) Notwithstanding any other provision of this Agreement to
the contrary, upon the acceleration of the Obligations of the Borrowers in
accordance with the terms of this Agreement, in the event that the Agent
has not then exercised its option pursuant to Section 8.15(c), each of the
U.S. Banks and the Canadian Bank hereby agrees to purchase or sell a
portion of the Revolving Loans outstanding as the Agent shall direct so as
to cause the outstanding portion of each U.S. Loan and Canadian Loan held
by each of the Banks to equal such Bank's respective Total Commitment
Percentage.
SECTION IX
MISCELLANEOUS
9.1. Notices. Unless otherwise specified herein, all notices
hereunder to any party hereto shall be in writing and shall be deemed to
have been given (i) when delivered by hand, (ii) five Business Days after
being properly deposited in the United States mails postage prepaid,
certified, return receipt requested, (iii) when sent by electronic
facsimile transmission, or (iv) the next Business Day after being
delivered to a nationally recognized overnight courier, addressed to such
party at its address indicated below:
If to any of the Borrowers, at or in care of
United States Leather, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer and
President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of any notices pertaining in any way to the Canadian
Borrower or theCanadian Loans to
▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
If to the Agent or Bank of Boston, at
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director, Mail Stop: 01-09-06
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Goulston & Storrs, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Canadian Bank, at such address as the Agent shall specify
in accordance with the terms hereof
with a copy to
Goulston & Storrs, P.C.,
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or at any other address specified by such party in writing.
9.2. Expenses. (a) The Borrowers will pay on demand all reasonable
expenses of the Agent in connection with the preparation, administration,
waiver or amendment of this Agreement, the Revolving Credit Notes, the
Loan Documents or other documents executed in connection therewith, or the
administration, default or collection of the Revolving Loans or other
Obligations, or reasonable expenses of the Agent and any Banks in
connection with default, collection in connection with the Agent's or any
Bank's exercise, preservation or enforcement of any of its rights,
remedies or options thereunder, including, without limitation, reasonable
fees and costs of outside legal counsel or the allocated costs of in-house
legal counsel, accounting, consulting, brokerage or other similar
professional fees or expenses, and subject to Section 5.5, any fees or
expenses associated with any travel or other costs relating to any
appraisals, audits or examinations conducted in connection with the
Obligations or any Collateral therefor, and the amount of all such
expenses shall, until paid, bear interest at the rate applicable to a Base
Rate Loan hereunder (including any default rate).
(b) Notwithstanding anything to the contrary contained in this
Agreement, the U.S. Borrower and the Canadian Borrower each agree to pay
any present or future stamp or documentary taxes, any intangibles tax or
any other sales, excise or property taxes, charges or similar levies now
or hereafter assessed that arise from and are attributed to any payment
made hereunder, under the Revolving Credit Notes or from the execution,
delivery of, or otherwise with respect to, this Agreement, the Revolving
Credit Notes, other Loan Documents and any and all recording fees relating
to any Loan Documents.
(c) The U.S. Borrower shall indemnify each U.S. Bank and the Agent,
and the Canadian Borrower shall indemnify the Canadian Bank, for the full
amount of any taxes, duties or charges other than taxes on the net income
of a Bank duly paid or payable by such Bank or the Agent and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto. Indemnification payments shall be made immediately upon
demand therefor.
9.3. Indemnification. The Borrowers shall absolutely and
unconditionally indemnify and hold harmless the Agent and each of the
Banks against any and all claims, demands, suits, actions, causes of
action, damages, losses, settlement payments, obligations, costs, expenses
and all other liabilities whatsoever which shall at any time or times be
incurred or sustained by the Agent or any of the Banks or by any of their
shareholders, directors, officers, employees, representatives,
subsidiaries, affiliates or agents (other than as a result of the gross
negligence or willful misconduct of the Agent or any of the Banks or such
officers, directors, shareholders, employees or agents thereof) on account
of, or in relation to, or in any way in connection with, any of the
arrangements or transactions contemplated by, associated with or ancillary
to either this Agreement, any of the other Loan Documents or any of the
Ancillary Documents, whether or not all or any of the transactions
contemplated by, associated with or ancillary to this Agreement, any of
such Loan Documents or any of such Ancillary Documents, are ultimately
consummated (other than those costs and expenses incurred by the Banks
other than the Agent in connection with the syndication, preparation,
execution and delivery of the Loan Documents, and the day-to-day
administration of the transactions contemplated thereby).
9.4. Set-Off. Regardless of the adequacy of any Collateral or other
means of obtaining repayment of the Obligations, any deposits, balances or
other sums credited by or due from the Agent or any Bank or any of its
branch or affiliate offices to any of the Borrowers may, at any time and
from time to time during the existence of a Default or Event of Default,
without notice to the Borrowers or compliance with any other condition
precedent now or hereafter imposed by statute, rule of law, or otherwise
(all of which are hereby expressly waived) be set off, appropriated, and
applied by the Agent or such Bank against any and all Obligations of the
Borrowers to the Agent or such Bank or any of its affiliates in such
manner as the head office of the Agent or Bank or any of its branch
offices in their sole discretion may determine, and the Borrowers hereby
grant the Agent or such Bank a continuing security interest in such
deposits, balances or other sums for the payment and performance of all
such obligations.
9.5. Term of Agreement. This Agreement shall continue in force and
effect so long as any Bank has any commitment to make Revolving Loans
hereunder or any Revolving Loan or any Obligation shall be outstanding.
9.6. No Waivers. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any Loan
Document or under any other documents or agreements executed in connection
herewith shall operate as a waiver thereof; nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies herein and in the other Loan Documents are cumulative and not
exclusive of any rights or remedies otherwise provided by agreement or
law.
9.7. Governing Law. This Agreement and each of the other Loan
Documents shall be deemed to be contracts made under seal and shall be
construed in accordance with and governed by the laws of the Commonwealth
of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
9.8. Amendments, Waivers, Etc. Except as otherwise expressly
provided in this Agreement or any of the other Loan Documents, the
following parties, for themselves or in their representative capacity, as
the case may be, are hereby entitled and empowered to take the following
actions hereunder without the consent, acquiescence, joinder or other
agreement of any other party hereto:
(a) The Agent acting alone is hereby entitled and empowered to
do any of the following:
(i) release from the liens created hereby any of the
Collateral having a value equal to or less than $500,000.00 per annum not
to exceed $1,500,000.00 in the aggregate over the term of this Agreement;
and
(ii) amend Schedule I hereto from time-to-time to reflect
any changes to the U.S. or Canadian Credit Commitments, U.S. or Canadian
Commitment Percentages, or Total Commitment and Commitment Percentages
with any other Banks in order to reflect transactions in accordance with
Section 9.10 hereto from time-to-time (any such Schedule I as so amended
from time-to-time by the Agent to be conclusively presumed to be accurate
and correct in the absence of manifest error).
(b) The Majority Banks and the Borrowers are hereby entitled
and empowered to modify, amend or supplement each of the Loan Documents in
any respect except for those respects specifically addressed elsewhere in
this Agreement (including this Section) or any other of the Loan
Documents.
(c) The Majority Banks are hereby entitled and empowered to do
any of the following:
(i) waive the performance or observance by any Borrower of
any of its covenants, agreements or obligations under any of the Loan
Documents;
(ii) release from any liens created hereunder or under any
of the Loan Documents any Collateral having a value greater than
$1,500,000.00 in the aggregate over the term of this Agreement but less
than or equal to $5,000,000.00 in the aggregate over the term of this
Agreement;
(iii) make or give any other determinations to be made
and consents to be given by the Agent and the Banks hereunder.
(d) the Agent and all of the Banks, acting together, hereby are
entitled and empowered to do any of the following:
(i) extend or postpone the Maturity Date, or forgive any
portion or all of the Obligations;
(ii) increase the percentages or types of Collateral used
to measure the Borrowing Base or the amount of Overadvances permitted
under this Agreement;
(iii) decrease the interest rates prescribed in any of
the Revolving Credit Notes or any Letter of Credit or other fee provided
for in this Agreement;
(iv) increase the U.S. Credit Commitment, Canadian Credit
Commitment, U.S. Commitment Percentages, Canadian Commitment Percentages,
Total Commitment or Total Commitment Percentages of any of the Banks,
except as permitted by Section 9.10;
(v) release from any liens created hereunder any
Collateral having a value greater than $5,000,000.00 in the aggregate over
the term of this Agreement;
(vi) subject all of the Banks to any material obligations
not contemplated by this Agreement;
(vii) change the definition of Majority Banks hereunder;
and
(viii) modify, amend or supplement any of the terms of
Section 5.8(ii), Section 6.16 or this Section 9.8.
(e) Notwithstanding any provisions of this Agreement to the
contrary, any change to Section VIII of this Agreement or any other
provisions of this Agreement affecting the rights or obligations of the
Agent shall not be amended of modified without the prior written consent
of the Agent.
9.9. Binding Effect of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that (i) neither of the Borrowers may
assign or transfer its rights or obligations hereunder, and (ii) no Bank
may assign or transfer its rights or obligations hereunder to any Person
except in accordance with the provisions of Section 9.10.
9.10. Successors and Assigns.
(i) Any Bank may at any time grant to one or more banks or other
financial institutions (each, a "Participant") participating interests in
its Revolving Credit Commitment or any or all of its Revolving Loans in an
amount equal to not less than $5,000,000 and on such terms as such Bank
may think fit, provided, however, that prior to granting a participating
interest to a Participant, such Bank shall (x) notify the Borrowers and
the Agent in writing identifying the proposed Participant and stating the
aggregate principal amount of the proposed participating interest, and (y)
receive the prior written consent of each of the Borrowers (unless there
is then in existence a Default or Event of Default) and the Agent, which
consent may not be unreasonably withheld or delayed by either the Borrower
or the Agent. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrowers and
the Agent, such grantor Bank shall remain responsible for the performance
of its obligations hereunder, and the Borrowers and the Agent shall
continue to deal solely and directly with such grantor Bank in connection
with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating
interest shall provide that such grantor Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided,
however, that such participation agreement may provide that such grantor
Bank will not agree, without the consent of the Participant, to any
modification, amendment or waiver of this Agreement requiring the consent,
agreement or approval of all of the Banks, as described in Section 9.8.
The Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2B.7, 2B.10 and 2B.11 with respect to its
participating interest. An assignment or other transfer which is not
permitted by paragraph (ii) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted in
accordance with this paragraph (i).
(ii) Any Bank may at any time assign to one or more banks or other
financial institutions (each, an "Assignee") all, or a proportionate part
of all, of its rights, interests and obligations under this Agreement and
the Revolving Credit Notes on such terms, as between such Bank and each of
its Assignees, as such Bank may think fit, and such Assignee shall assume
such rights, interests and obligations, pursuant to an instrument executed
by such Assignee and such transferor Bank; provided, however, that (A)
prior to assigning any interest to any Assignee hereunder, such Bank shall
(x) notify the Borrowers and the Agent in writing identifying the proposed
Assignee and stating the aggregate principal amount of the proposed
interest to be assigned, and (y) receive the prior written consent of each
of the Borrowers (unless there is then in existence a Default or Event of
Default) and the Agent, which consent may not be unreasonably withheld or
delayed by either the Borrower or the Agent, and (B) no Bank will assign
to any Assignee less than an aggregate amount equal to $5,000,000 of such
Bank's Revolving Credit Commitment and interest in the Revolving Credit
Notes. It is understood and agreed that the proviso contained in the
immediately preceding sentence shall not be applicable in the case of, and
this paragraph (ii) shall not restrict, (A) an assignment or other
transfer by any Bank to an Affiliate of such Bank or to any other Bank or
(B) a collateral assignment or other similar transfer to a Federal Reserve
Bank. Upon execution and delivery of such an instrument and payment by
such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, such Assignee
shall be a Bank party to this Agreement and shall have all the rights,
interests and obligations of a Bank with a Revolving Credit Commitment as
set forth in such instrument of assumption, and the transferor Bank shall
be released from its obligations hereunder to a corresponding extent, and
no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this paragraph (ii), the
transferor Bank, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, new Revolving Credit Notes are issued
to the Assignee and such other documentation as may be reasonably required
to evidence the Assignee's rights and obligations hereunder as may be
reasonably required shall be executed and delivered among the appropriate
parties.
(iii) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under
Sections 2B.7, 2B.10 or 2B.11 than such Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is
made with the Borrowers' prior written consent or at a time when the
circumstances giving rise to such greater payment did not exist.
(iv) Assignments require a fee payable to the Agent solely for the
account of the assignor, and solely for the benefit of the Agent, in the
amount of $3,000.
(v) Each U.S. Bank (which, for purposes of this Section 9.10, shall
include any Affiliate of a U.S. Bank that makes any Eurodollar Loan to the
U.S. Borrower pursuant to the terms of this Agreement) that is not a
"United States person" (as such term is defined in Section 7701(a)(30) of
the Code) shall submit to the U.S. Borrower and the Agent in the case of a
Person that became a U.S. Bank after the Closing Date by assignment,
promptly upon such assignment, two duly completed and signed copies of
either (1) Form 1001 of the United States Internal Revenue Service
entitling such U.S. Bank to a complete exemption from withholding on all
amounts to be received by such U.S. Bank pursuant to this Agreement and/or
the U.S. Revolving Credit Notes or (2) Form 4224 of the United States
Internal Revenue Service relating to all amounts to be received by such
U.S. Bank pursuant to this Agreement and/or the U.S. Revolving Credit
Notes. Each such U.S. Bank shall, from time to time after submitting
either such form, submit to the U.S. Borrower and the Agent such
additional duly completed and signed copies of one or the other such forms
(or forms evidencing eligibility for an exemption from withholding or such
successor forms or other documents as shall be adopted from time to time
by the relevant United States taxing authorities) as may be (1) reasonably
requested in writing by the U.S. Borrower or the Agent and (2) appropriate
under then current United States law or regulations. Upon the reasonable
request of the U.S. Borrower or the Agent, each U.S. Bank that has not
provided the forms or other documents, as provided above, on the basis of
being a United States person shall submit to the U.S. Borrower and the
Agent a certificate to the effect that it is a "United States person."
(vi) Notwithstanding any other provision of this Agreement, if an
event occurs which prevents any U.S. Bank (after it has become a U.S.
Bank) which is not a "United States person" from delivering to the U.S.
Borrower or the Agent any form or certificate that such U.S. Bank is
requested to submit pursuant to the preceding paragraph, or that it is
required to withdraw or cancel any such form or certificate, or that any
such form or certificate previously submitted has otherwise become
ineffective or inaccurate, such U.S. Bank shall promptly notify the U.S.
Borrower and the Agent of such fact and the provisions of Section 2B.13
hereof shall apply.
(vii) Notwithstanding subparagraphs (i) and (ii) of this Section
9.10, so long as no Default or Event of Default has occurred and is
continuing, Bank of Boston's Revolving Credit Commitment shall at no time
be less than $15,000,000.
9.11 Syndication of the Revolving Loans. Bank of Boston, in
cooperation with the Borrowers, will manage all aspects of the syndication
of the Revolving Loans, including, without limitation, decisions as to the
selection of financial institutions to be approached, when such financial
institutions will be approached and any titles offered to proposed
financial institutions that will participate (so long as such financial
institutions are reasonably acceptable to the Borrowers), the final
allocation of Revolving Credit Commitments and the final distribution of
fees, and Bank of Boston may, on behalf of the Borrowers, accept
commitments from other financial institutions. If Bank of Boston deems
such actions advisable in order to ensure a successful syndication, Bank
of Boston may propose that this Agreement be amended, modified or
supplemented, provided that the Total Commitment and the aggregate fees
paid by the Borrowers remains the same and such changes are mutually
agreeable to the Borrowers and the Majority Banks or all of the Banks, as
applicable. The Borrowers and Claymore Partners, Ltd. agree to cooperate
reasonably with the syndication of the Revolving Loans (including
assignments and participations) and the Borrowers and Claymore Partners,
Ltd. will prepare and provide all information (including the financial
statements required to be delivered pursuant to Section 4.7 and
confidential information memoranda), reasonably requested by the Agent in
a form reasonably satisfactory to the Agent. The Borrowers will also make
their management and advisors available at reasonable times to meet with
potential banks in connection with the syndication or assignment of the
Revolving Loans. The Agent and the Borrowers will require any potential
Bank or Participant who receives such information provided by the
Borrowers to keep such information confidential.
9.12. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto
were upon the same instrument.
9.13. Partial Invalidity. The invalidity or unenforceability of any
one or more phrases, clauses or sections of this Agreement under
particular circumstances shall not affect the validity or enforceability
thereof under other circumstances or the validity or enforceability of the
remaining portions of this Agreement.
9.14. Captions. The captions and headings of the various sections
and subsections of this Agreement are provided for convenience only and
shall not be construed to modify the meaning of such sections or
subsections.
9.15. WAIVER OF JURY TRIAL. THE BORROWERS AGREE THAT NEITHER OF
THEM NOR ANY OF THEIR ASSIGNEES OR SUCCESSORS SHALL (A) SEEK A JURY TRIAL
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON,
OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL
OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THE BORROWER AND EITHER OF
THEIR ASSIGNS AND SUCCESSORS AND THE AGENT AND/OR ANY BANK, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN FULLY DISCUSSED BY THE AGENT, THE BANK AND THE BORROWERS, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. THE BORROWERS ACKNOWLEDGE
THAT NEITHER THE AGENT NOR ANY BANK HAS AGREED WITH OR REPRESENTED TO IT
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
9.16. Entire Agreement. This Agreement, the Revolving Credit Notes,
the other Loan Documents and the other documents and agreements executed
in connection herewith constitute the final agreement of the parties
hereto and supersede any prior agreement or understanding, written or
oral, with respect to the matters contained herein and therein.
9.17 Judgment Currency. If the Agent or any Bank receives an amount
with respect to the Obligations of any Borrower or if a portion of the
Obligations is converted into a claim, proof, judgment or order, in a
currency other than U.S. dollars, (i) the applicable Borrower shall
indemnify the Agent or such Bank, as applicable, as an independent
obligation against any loss, cost, expense or liability arising out of, or
as a result of, the conversion, (ii) if the amount received by the Agent
or such Bank, as applicable, when converted into U.S. dollars at a market
rate on the date of receipt by the Agent or such Bank in the usual course
of its business, as determined by the Agent, is less than the amount owed
in U.S. dollars, the applicable Borrower shall, on demand, pay to the
Agent or such Bank, as applicable, an amount in U.S. Dollars equal to the
deficit, and (iii) the applicable Borrower shall pay to the Agent or such
Bank, as applicable, on demand, any expense, cost and taxes payable in
connection with any such conversion.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first
above written.
The Borrowers:
UNITED STATES LEATHER, INC.
By: /s/
Title: Senior Vice President and Chief
Financial Officer
A. R. ▇▇▇▇▇▇ LIMITED
By: /s/
Title: Secretary
The Agent:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
Title: Vice President
The Banks:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
Title: Vice President
EXHIBIT A-1
UNITED STATES LEATHER, INC.
PROMISSORY NOTE
___________________.
1996
$________________
__________,______________
For value received, the undersigned hereby promise to pay to [The
First National Bank of Boston] (the "Bank"), or order, at the head office
of the Bank at [100 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇], the
principal amount of __________________ Dollars ($_______________), or such
lesser amount as shall equal the principal amount outstanding hereunder on
____________________, 2001 (the "Maturity Date"), on or before the
Maturity Date, in lawful money of the United States of America and in
immediately available funds, and to pay interest on the unpaid principal
balance hereof from time to time outstanding, at said office and in like
money and funds, for the period commencing on the date hereof until paid
in full, at the rates per annum and on the dates provided in the Agreement
(as hereinafter defined).
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Revolving Credit Agreement
dated as of ___________, 1996 among the undersigned, A.R. ▇▇▇▇▇▇ Limited,
The First National Bank of Boston, as agent, and the other banks party
thereto (herein, as the same may from time to time be amended or extended,
referred to as the "Agreement"), but neither this reference to the
Agreement nor any provision thereof shall affect or impair the absolute
and unconditional obligation of the undersigned maker of this Note to pay
the principal of and interest on this Note as herein provided.
As provided in the Agreement, this Note is secured by the U.S.
Collateral (as defined in the Agreement) and is subject to mandatory
prepayment in certain circumstances.
In case an Event of Default (as defined in the Agreement) shall
occur, the aggregate unpaid principal of and accrued interest on this Note
shall become or may be declared to be due and payable in the manner and
with the effect provided in the Agreement.
The undersigned may at its option prepay (subject to Sections 2B.8
and 2B.12, without premium or penalty) all or any part of the principal of
this Note before maturity upon the terms provided in the Agreement.
The undersigned maker hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts (without giving effect to any conflicts
of laws provisions contained therein).
UNITED STATES LEATHER, INC.
By:
Title:
EXHIBIT A-2
A.R. ▇▇▇▇▇▇ LIMITED
PROMISSORY NOTE
___________________,
1996
$7,500,000.00
__________,______________
For value received, the undersigned hereby promise to pay to
[____________________________] (the "Bank"), or order, at the head office
of the Bank at [______________________________________________], the
principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), or such lesser amount as shall equal the principal amount
outstanding hereunder on ____________________, 2001 (the "Maturity Date"),
on or before the Maturity Date, in lawful money of Canada and in
immediately available funds, and to pay interest on the unpaid principal
balance hereof from time to time outstanding, at said office and in like
money and funds, for the period commencing on the date hereof until paid
in full, at the rates per annum and on the dates provided in the Agreement
(as hereinafter defined).
This Note is issued pursuant to, and entitled to the benefits of, and
is subject to, the provisions of a certain Revolving Credit Agreement
dated as of ___________, 1996 among the undersigned, United States
Leather, Inc., The First National Bank of Boston, as agent, and the other
banks party thereto (herein, as the same may from time to time be amended
or extended, referred to as the "Agreement"), but neither this reference
to the Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the undersigned maker of this
Note to pay the principal of and interest on this Note as herein provided.
As provided in the Agreement, this Note is secured by the Collateral
(as defined in the Agreement) and is subject to mandatory prepayment in
certain circumstances.
In case an Event of Default (as defined in the Agreement) shall
occur, the aggregate unpaid principal of and accrued interest on this Note
shall become or may be declared to be due and payable in the manner and
with the effect provided in the Agreement.
The undersigned may at its option prepay (subject to Sections 2B.8
and 2B.12 of the Loan Agreement, without premium or penalty) all or any
part of the principal of this Note before maturity upon the terms provided
in the Agreement.
The undersigned maker hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts (without giving effect to any conflicts
of laws provisions contained therein).
A.R. ▇▇▇▇▇▇ LIMITED
By:
Title
EXHIBIT B-1
UNITED STATES LEATHER, INC.
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ________________
Re: Revolving Credit Agreement
Dated as of , 1996 (the "Agreement")
Gentlemen:
Pursuant to Section 2B.1 of the Agreement the undersigned hereby
confirms its request made on ___________________, ________ for a [Base
Rate] [Eurodollar] Loan in the amount of $_______________ on
______________________, ________.
[The Interest Period applicable to said U.S. Loan will be [one] [two]
[three] months [30] [60] [90] days.]*
[Said U.S. Loan represents a conversion of the [Base Rate]
[Eurodollar] Loan in the same amount made on ____________________.]**
The conditions set forth in Section 3.3 of the Agreement have been
fully satisfied, including without limitation the representations and
warranties contained or referred to in Section IV of the Agreement are
true and accurate in all material respects on and as of the effective date
of the U.S. Loan as though made at and as of such date (except to the
extent that such representations and warranties expressly relate to an
earlier date); and no Default or Event of Default has occurred and is
continuing or will result from the U.S. Loan.
UNITED STATES LEATHER, INC.
_______________________________
Title:
Date: ______________________
_______________
* To be inserted in any request for a Eurodollar Loan.
** To be inserted in any request for a conversion.
EXHIBIT B-2
A.R. ▇▇▇▇▇▇ LIMITED
[CANADIAN LENDER]
Re: Revolving Credit Agreement
Dated as of , 1996 (the "Agreement")
Gentlemen:
Pursuant to Section 2B.1 of the Agreement the undersigned hereby
confirms its request made on ___________________, ________ for a [Base
Rate] [Eurodollar] [Bankers' Acceptance] Loan in the amount of
$_______________ on ______________________, ________.
[The Interest Period applicable to said Canadian Loan will be [one]
[two] [three] months [30] [60] [90] days.]*
[Said Canadian Loan represents a conversion of the [Base Rate]
[Eurodollar] [Bankers' Acceptance] Loan in the same amount made on
____________________.]**
The conditions set forth in Section 3.3 of the Agreement have been
fully satisfied, including without limitation the representations and
warranties contained or referred to in Section IV of the Agreement are
true and accurate in all material respects on and as of the effective date
of the Canadian Loan as though made at and as of such date (except to the
extent that such representations and warranties expressly relate to an
earlier date); and no Default or Event of Default has occurred and is
continuing or will result from the Canadian Loan.
A.R. ▇▇▇▇▇▇ LIMITED
_______________________________
Title:
Date: ______________________
_______________
* To be inserted in any request for a Eurodollar Loan or Bankers'
Acceptance Loan.
** To be inserted in any request for a conversion.
