EXECUTION COPY
SECOND AMENDED AND RESTATED
FINANCING AGREEMENT AND GUARANTY
among
Specialty Paperboard, Inc.
(as Borrower)
Specialty Paperboard/Endura, Inc.,
CPG Investors Inc.,
CPG Holdings, Inc.,
CPG-Xxxxxx Xxxx Inc.,
Custom Papers Group Inc.,
Arcon Holdings Corp.
and
Arcon Coating Xxxxx Inc.
(as Guarantors)
The CIT Group/Business Credit, Inc.
Such other Lenders that may become
signatory hereto
(as Lenders)
and
The CIT Group/Business Credit, Inc.
(as Agent for the Lenders)
Dated as of December 31, 1996
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS, ACCOUNTING TERMS AND RULES OF
CONSTRUCTION 2
SECTION 1.01. Defined Terms..................................... 2
SECTION 1.02. Computation of Time
Periods..................................................... 25
SECTION 1.03. Accounting Principles and
Terms....................................................... 25
SECTION 1.04. Rules of
Construction................................................ 25
ARTICLE 2. CONDITIONS
PRECEDENT.............................................. 26
SECTION 2.01. Conditions Precedent to Initial Revolving Credit
Loan.............................................. 26
SECTION 2.02. Conditions Precedent to Each Revolving Credit
Loan.............................................. 30
SECTION 2.03. Deemed
Representation.............................................. 31
ARTICLE 3. AMOUNT AND TERMS OF THE REVOLVING CREDIT
LOANS.................................................. 31
SECTION 3.01. Revolving Credit
Loans....................................................... 31
SECTION 3.02. Revolving Credit
Note........................................................ 31
SECTION 3.03.
Overadvances................................................ 32
SECTION 3.04. Information Relating to
Accounts.................................................... 32
SECTION 3.05. Representations Relating to
Accounts.................................................... 32
SECTION 3.06. Collection of
Accounts.................................................... 33
SECTION 3.07. Notice Regarding
Accounts.................................................... 34
SECTION 3.08. Borrower's
Account..................................................... 35
SECTION 3.09. Application of
Payments.................................................... 35
SECTION 3.10.
Prepayments................................................. 36
SECTION 3.11. Funding of Revolving Credit
Loans....................................................... 37
SECTION 3.12. Notice and Manner of
Borrowing................................................... 37
SECTION 3.13. Obligations of Agent and
Lenders..................................................... 38
SECTION 3.14. Minimum
Amounts..................................................... 39
SECTION 3.15. Use of
Proceeds.................................................... 39
SECTION 3.16. Taxes............................................. 39
SECTION 3.17. Additional
Costs....................................................... 41
SECTION 3.18. Limitation on Types of Revolving Credit
Loans............................................. 42
SECTION 3.19.
Illegality.................................................. 42
SECTION 3.20. Treatment of Affected
Loans....................................................... 42
SECTION 3.21.
Adequacy.................................................... 43
ARTICLE 4.
GUARANTY......................................................... 43
SECTION 4.01. Guaranty.......................................... 43
SECTION 4.02. Guarantors' Guaranty Obligations
Unconditional..................................... 44
SECTION 4.03.
Waivers..................................................... 45
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SECTION 4.04.
Subrogation................................................. 45
ARTICLE 5.
COLLATERAL....................................................... 45
SECTION 5.01. (a) Grant of a Security Interest by
Borrower..................................... 45
(b) Grant of a Security Interest by
Guarantors................................... 46
SECTION 5.02. Covenants Regarding
Inventory................................................... 47
SECTION 5.03. Covenants Regarding
Equipment................................................... 47
SECTION 5.04. Collateral
Covenant.................................................... 49
SECTION 5.05. Covenants Regarding
Accounts.................................................... 50
SECTION 5.06. Covenants Regarding Lease
Agreement................................................... 50
SECTION 5.07. Continuing Security
Interest.................................................... 50
SECTION 5.08. Actions by
Agent....................................................... 51
SECTION 5.09. Additional Collateral and Further
Assurances........................................ 51
SECTION 5.10. Additional
Information................................................. 52
SECTION 5.11. Compliance with Fair Labor Standards
Act............................................... 52
ARTICLE 6. INTEREST, FEES AND
EXPENSES......................................................... 52
SECTION 6.01. Method of Electing Interest
Rates....................................................... 52
SECTION 6.02.
Interest.................................................... 54
SECTION 6.03.
Fees........................................................ 55
SECTION 6.04. Payments and
Computations................................................ 55
SECTION 6.05. Certain
Compensation................................................ 56
ARTICLE 7.
POWERS........................................................... 57
SECTION 7.01.
Powers...................................................... 57
ARTICLE 8. REPRESENTATIONS AND
WARRANTIES....................................................... 57
SECTION 8.01. Incorporation, Good Standing and Due
Qualification..................................... 57
SECTION 8.02. Corporate Power and Authority; No
Conflicts......................................... 58
SECTION 8.03. Legally Enforceable
Agreements.................................................. 58
SECTION 8.04.
Litigation.................................................. 58
SECTION 8.05. Financial
Statements.................................................. 58
SECTION 8.06. Ownership and
Liens....................................................... 61
SECTION 8.07.
Taxes....................................................... 61
SECTION 8.08.
ERISA....................................................... 62
SECTION 8.09.
Subsidiaries................................................ 62
SECTION 8.10. Operation of
Business.................................................... 62
SECTION 8.11. No Default on Outstanding Judgments or
Orders...................................................... 62
SECTION 8.12. No Defaults on Other
Agreements.................................................. 63
SECTION 8.13. Labor Disputes and Acts of
God......................................................... 63
SECTION 8.14. Governmental
Regulation.................................................. 63
SECTION 8.15.
Partnerships................................................ 63
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SECTION 8.16. Environmental
Protection.................................................. 63
SECTION 8.17.
Solvency.................................................... 64
SECTION 8.18. Arcon Purchase
Documents................................................... 64
SECTION 8.19. CPG Merger
Documents................................................... 65
SECTION 8.20. Intellectual
Property.................................................... 65
SECTION 8.21. License of Intellectual
Property.................................................... 65
ARTICLE 9. AFFIRMATIVE
COVENANTS........................................................ 65
SECTION 9.01. Reporting
Requirements................................................ 65
SECTION 9.02. Notices........................................... 67
SECTION 9.03. Payment of Taxes and
Claims...................................................... 70
SECTION 9.04. Maintenance of
Existence................................................... 70
SECTION 9.05. Conduct of
Business.................................................... 70
SECTION 9.06. Compliance with
Laws........................................................ 70
SECTION 9.07.
Insurance................................................... 70
SECTION 9.08. Books and Records;
Inspection.................................................. 74
SECTION 9.09. ERISA
Covenant.................................................... 75
SECTION 9.10. Intercompany Transfer of
Funds....................................................... 75
SECTION 9.11. Inventory and Accounts Receivable Analysis of Acquired
Entity...................................................... 76
ARTICLE 10. NEGATIVE COVENANTS...................................... 78
SECTION 10.01.
Debt........................................................ 78
SECTION 10.02.
Liens....................................................... 78
SECTION 10.03.
Guaranties.................................................. 78
SECTION 10.04. Sale of
Assets...................................................... 78
SECTION 10.05. Prohibition of Fundamental
Changes..................................................... 78
SECTION 10.06.
Investments................................................. 79
SECTION 10.07. Transaction with
Affiliates.................................................. 79
SECTION 10.08. Nature of
Business.................................................... 79
SECTION 10.09.
Dividends................................................... 80
SECTION 10.10.
Leases...................................................... 80
SECTION 10.11. Environmental
Compliance.................................................. 80
SECTION 10.12. Fiscal
Year........................................................ 80
SECTION 10.13. Subsidiary Stock
Issuance.................................................... 81
ARTICLE 11. Intentionally
Omitted.......................................................... 81
ARTICLE 12. EVENTS OF
DEFAULT.......................................................... 81
SECTION 12.01. Events of
Default..................................................... 81
SECTION 12.02. Acceleration of
Obligations................................................. 85
SECTION 12.03. Other
Remedies.................................................... 86
ARTICLE 13.
AGENCY........................................................... 87
SECTION 13.01. The
Agent....................................................... 87
SECTION 13.02. Delegation of
Duties...................................................... 87
SECTION 13.03. Exculpatory
Provisions.................................................. 88
SECTION 13.04. Reliance by
Agent....................................................... 88
SECTION 13.05. Notice of
Default..................................................... 89
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SECTION 13.06. Non-Reliance on Agent and other
Lenders..................................................... 89
SECTION 13.07.
Indemnification............................................. 89
SECTION 13.08. The Agent in its Individual
Capacity.................................................... 90
SECTION 13.09. Successor
Agent....................................................... 90
SECTION 13.10. Arrangements Requiring Consent of
Lenders..................................................... 90
SECTION 13.11. Recapture of
Payments.................................................... 92
ARTICLE 14. RIGHTS AND OBLIGATIONS OF THE LENDERS AND THE
AGENT.................................................. 92
SECTION 14.01. Adjustments Among
Lenders..................................................... 92
SECTION 14.02. Sharing of
Payments.................................................... 93
SECTION 14.03. Sale of
Participations.............................................. 93
SECTION 14.04. Nature of Revolving Credit
Commitments................................................. 94
SECTION 14.05. Sharing of Costs and
Expenses.................................................... 94
SECTION 14.06. Sharing of
Payments.................................................... 95
SECTION 14.07.
Assignments................................................. 95
SECTION 14.08. Acknowledgements by
Agent....................................................... 97
SECTION 14.09. Termination of Financing
Agreement................................................... 97
ARTICLE 15.
MISCELLANEOUS.................................................... 98
SECTION 15.01.
Waivers..................................................... 98
SECTION 15.02. Entire
Agreement................................................... 99
SECTION 15.03.
Usury....................................................... 99
SECTION 15.04. Payment of
Expenses.................................................... 99
SECTION 15.05.
Indemnity................................................... 100
SECTION 15.06.
Severability................................................ 100
SECTION 15.07. Waiver of Jury
Trial....................................................... 101
SECTION 15.08.
Notices..................................................... 101
SECTION 15.09. Governing
Law......................................................... 102
SECTION 15.10. Confidentiality................................... 102
Exhibits
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Revolving Credit Notice of Borrowing
Exhibit C - Form of Notice of Interest Rate Selection
Exhibit D - Form of Mortgage, Assignment of Leases and Rents
and Security Agreement (Brattleboro)
Exhibit E - Form of Solvency Certificate
Exhibit F - Form of Opinion of Counsel to Obligors
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Borrowing Base Certificate
Exhibit I - Form of Security Agreement
Schedules
Schedule 5.04 - List of Inventory and Equipment Locations
Schedule 5.04A - Real Estate
Schedule 8.04 - Litigation
Schedule 9.06 - Environmental Matters
iv
SECOND AMENDED AND RESTATED FINANCING AGREEMENT AND GUARANTY dated as
of December 31, 1996, among Specialty Paperboard, Inc. ("Borrower"), a Delaware
corporation, Specialty Paperboard/Endura, Inc. ("Endura"), a Delaware
corporation and a wholly owned subsidiary of Borrower, CPG Investors Inc., a
Delaware corporation and a wholly owned subsidiary of Borrower ("CPG
Investors"), CPG Holdings, Inc., a Delaware corporation and a wholly owned
subsidiary of CPG Investors ("CPG Holdings"), CPG-Xxxxxx Xxxx Inc., a Virginia
corporation and a wholly owned subsidiary of CPG Holdings ("CPG-Xxxxxx"), Custom
Papers Group Inc., a Virginia corporation and a wholly owned subsidiary of CPG
Holdings ("Custom"), Arcon Holdings Corp., a Delaware corporation, and a wholly
owned subsidiary of Borrower ("Arcon Holdings"), and Arcon Coating Xxxxx Inc., a
Delaware corporation and a wholly owned subsidiary of Arcon Holdings ("Arcon
Coating"), The CIT Group/Business Credit, Inc., a New York corporation ("CITBC")
with offices located at 1211 Avenue of the Americas, New York, New York, the
other lenders that may, subsequent to the date hereof, purchase from CITBC a
portion of its rights and obligations under this Second Amended and Restated
Financing Agreement and Guaranty pursuant to, and in accordance with, Section
14.07 hereof (CITBC and such other lenders each individually a "Lender" and
collectively the "Lenders"), and CITBC as agent for the Lenders (in such
capacity, together with its successors or assigns in such capacity, the
"Agent"). Endura, CPG Investors, CPG Holdings, CPG-Xxxxxx, Custom, Arcon
Holdings, Arcon Coating and each Acquired Entity are referred to herein as a
"Guarantor" and collectively as the "Guarantors". The Guarantors and the
Borrower are referred to herein collectively as the "Obligors".
PRELIMINARY STATEMENTS
1. Reference. Reference is made to (i) the Financing Agreement dated
April 29, 1994 among Borrower, each of the Lenders signatory thereto and the CIT
Group/Business Credit, Inc., as Agent for the Lenders and (ii) the Amended and
Restated Financing Agreement and Guaranty dated June 30, 1994 among Borrower,
Endura, CITBC, each of the other Lenders signatory thereto and CITBC, as Agent
for the Lenders (the "June 1994 Agreement").
2. Amendment and Restatement. To the extent this Second Amended and
Restated Financing Agreement and Guaranty amends the June 1994 Agreement, the
June 1994 Agreement is amended, and to the extent this Second Amended and
Restated Financing Agreement and Guaranty restates the June 1994 Agreement, the
June 1994 Agreement is restated.
The Borrower desires that the Lenders extend credit as provided herein
and the Lenders are prepared to extend such
credit. Accordingly, the Borrower, the Guarantors, the Lenders and the Agent
agree as follows:
ARTICLE 1. DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION
SECTION 1.01. Defined Terms. As used in this Second Amended and
Restated Financing Agreement and Guaranty the following terms have the following
meanings (terms defined in the singular to have the same meanings when used in
the plural and vice versa):
Account Debtor means each Person obligated to pay on an Account
Receivable.
Accounts shall mean all of an Obligor's now existing and future: (a)
Accounts Receivable (whether or not specifically listed on schedules furnished
to the Agent), and any and all instruments, documents, contract rights, chattel
paper, general intangibles, including, without limitation, all accounts created
by or arising from all of the Obligor's sales of goods or rendition of services
to its customers, (b) unpaid seller's rights (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom; (c) rights to any goods represented by any of the foregoing,
including rights to returned or repossessed goods; (d) reserves and credit
balances arising hereunder; (e) guarantees or collateral for any of the
foregoing; (f) insurance policies or rights relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.
Accounts Receivable means any right to payment for goods sold by or
services rendered by an Obligor, including all accounts arising from sales or
rendition of services made under any of the Obligor's trade names or styles, or
through any of the Obligor's divisions; regardless of how such right is
evidenced, whether secured or unsecured, or now existing or hereafter arising.
Acquired Entity shall mean (x) any Person acquired by the Borrower or
any Guarantor hereunder by way of (i) the purchase of stock or assets of such
Person and all or a portion of the consideration paid for such stock or assets
is paid directly or indirectly with the proceeds of the Revolving Credit Loans
or (ii) consolidation or merger of such Person with or into the Borrower or any
Guarantor or (y) any entity formed to acquire the assets or stock of another
Person and all or a portion of the consideration paid for such stock or assets
is paid directly or indirectly with the proceeds of the Revolving Credit Loans.
2
Acquired Indebtedness means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary or at the
time it merges or consolidates with the Borrower or any of the Borrower's
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary or such
acquisition, merger or consolidation.
Additional Costs shall have the meaning specified in Section 3.17.
Affected Loans shall have the meaning specified in Section 3.20.
Affiliate means with respect to any designated Person, any Person
which, directly or indirectly, controls or is controlled by or is under common
control with such designated Person. For purposes of this definition,
"control", "controlled by" and "under common control with", as used with respect
to any Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
Agent means The CIT Group/Business Credit, Inc., or any successor
thereof, acting as agent for Lenders pursuant to this Financing Agreement.
Anniversary Date shall mean the date occurring one (1) year from April
30, 1996 and the same date in every year thereafter.
Applicable Lending Office means, for each of the Lenders, the lending
office of such Lender (or of an Affiliate of such Lender) designated as such for
such Type of Loan on the signature page hereto or in the applicable Assignment
and Acceptance Agreement or such other office of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to Agent and the
Borrower as the office by which its Revolving Credit Loans of such Type are to
be made and maintained.
Applicable Margin means (a) with respect to the Chase Manhattan Bank
Rate one half percent (0.50%); and (b) with respect to the Libor Rate two
percent (2.00%).
Approvals and Permits means any permits, variance, permission,
authorization, consent, approval, license, franchise, ruling, permit, tariff,
rate, certification, exemption, or registration issued by any Governmental
3
Authority which is required to be obtained in accordance with applicable Law
in connection with the ownership, operation, construction, or maintenance of
its property.
Arcon Purchase Agreement means the Agreement dated as of August 28,
1996 among Borrower, Arcon Holdings and the other parties thereto pursuant to
which Borrower agrees to buy all of the outstanding capital stock of Arcon
Holdings.
Arcon Purchase Documents means the Arcon Purchase Agreement and all
other documents or agreements executed in connection with or pursuant to the
Arcon Purchase Agreement.
Arcon Stock Purchase means the purchase of all of the outstanding
capital stock of Arcon Holdings pursuant to the Arcon Purchase Agreement.
Assignment and Acceptance shall have the meaning ascribed to such term
in Section 14.07.
Assignment of Claims Act shall mean 00 Xxxxxx Xxxxxx Code Annotated
Section 3727 and all amendments and supplements thereto and all rules and
regulations promulgated thereof.
Availability shall mean the excess of
(a) the sum of
(i) eighty-five percent (85%) of the Eligible Accounts
Receivable of the Obligors (excluding Eligible Accounts
Receivable of CPG Investors until the Agent has performed its
analysis of the accounts receivable of CPG Investors), plus
(ii) fifty percent (50%) of the aggregate value of Eligible
Inventory of the Obligors (excluding Eligible Inventory of CPG
Investors until the Agent has performed its analysis of the
Inventory of CPG Inventory)
over
(b) the sum of
(i) the outstanding aggregate amount of all other
Obligations of the Borrower, and
(ii) the Availability Reserve, if any, with respect to the
Borrower.
Availability Reserve shall mean (a) $5,000,000 until such time as the
Borrower shall furnish to the Agent audited
4
financial statements of the Borrower for the Fiscal Year ending on December
31, 1997, such financials indicate that no Default or Event of Default shall
have occurred or be continuing under this Financing Agreement and (b) any
reserve which the Agent and/or the Lenders may require from time to time
pursuant to this Financing Agreement if applicable.
Board of Directors shall mean, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
Board of Governors means the Board of Governors of the Federal Reserve
Bank or any entity succeeding to any or all of its functions.
Board Resolution shall mean, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Agent.
Borrower Obligations shall mean all loans and advances made or to be
made by the Lenders or by the Agent on behalf of the Lenders to the Borrower
or to others for the Borrower's account; any and all indebtedness and
obligations which may at any time be owing by the Borrower to the Agent or
the Lenders howsoever arising, whether now in existence or incurred by the
Borrower from time to time hereafter; whether secured by pledge, Lien upon or
security interest in any of the Borrower's assets or property or the assets
or property of any other person, firm, entity or corporation; whether such
indebtedness is absolute or contingent, joint or several, matured or
unmatured, direct or indirect and whether the Borrower is liable to the
Lenders and/or the Agent for such indebtedness as principal, surety,
endorser, guarantor or otherwise. Borrower Obligations shall also include
indebtedness owing to the Lenders and/or the Agent by the Borrower under this
Financing Agreement or under any other agreement or arrangement now or
hereafter entered into between the Borrower and the Lenders; indebtedness or
obligations incurred by, or imposed on, the Lenders and/or the Agent, as a
result of environmental claims (other than as a result of actions of the
Lenders or the Agent) arising out of any Obligor's operation, premises or
waste disposal practices or sites; such Obligor's liability to the Lenders
and/or the Agent as maker or endorser on any promissory note or other
instrument for the payment of money; such Obligor's liability to the Lenders
and/or the Agent under any instrument of guaranty or indemnity, or arising
under any guaranty, endorsement or undertaking which the Lenders and/or the
Agent may make or issue to others for such Obligor's account, including any
accommodation extended with respect to
5
applications for letters of credit, the Lenders' and/or the Agent's
acceptance of drafts or the Lenders' and/or the Agent's endorsement of notes
or other instruments for such Obligor's account and benefit.
Borrowing Base means an amount equal to the sum of (a) eighty-five
percent (85%) of the Eligible Accounts Receivable, plus (b) fifty percent (50%)
of the aggregate value of Eligible Inventory.
Borrowing Base Certificate means a Certificate substantially in the
form of Exhibit H, certified by an officer of the Borrower, with respect to the
Borrowing Base.
Brattleboro Collateral shall mean all of Borrower's present and future
Equipment and Real Estate of Borrower whether now or hereafter owned by Borrower
and located on the Brattleboro, Vermont property owned by Borrower; and to the
extent not otherwise included, all proceeds and products of any and all of the
foregoing.
Business Day shall mean (a) for all purposes other than those covered
by clause (b) below, any day that CITBC and The Chase Manhattan Bank are open
for business excluding Saturday, Sunday and any day that either is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are closed and (b) with respect to all
notices, determinations, fundings and payments in connection with the Libor
Rate, any date that is a Business Day as described in clause (a) above that is
also a day for trading by and between banks in dollar deposits in the applicable
interbank Libor market.
Capital Lease means any lease of property (real or personal or mixed)
which, in accordance with GAAP, would be required to be capitalized on a balance
sheet of the lessee.
Capitalized Lease Obligations shall mean, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligation at any date shall be capitalized
amount of such obligations at such date, determined in accordance with GAAP.
Chase Manhattan Bank Rate shall mean the rate of interest from time to
time announced by The Chase Manhattan Bank at its principal office in the City
of New York. (The prime rate is not intended to be the lowest rate of interest
charged by The Chase Manhattan Bank to its borrowers).
Chase Manhattan Bank Rate Loans shall mean all or any portion of the
Revolving Credit Loans for which the
6
Borrower has elected to use the Chase Manhattan Bank Rate for interest rate
calculations.
CITEF means The CIT Group/Equipment Financing, Inc.
Closing Date means the date upon which the conditions set forth in
Section 2.01 shall have been fulfilled to the satisfaction of the Agent.
Code means The Internal Revenue Code of 1986, as thereafter amended.
Collateral shall mean with respect to an Obligor all of each Obligor's
present and future Accounts and Inventory of such Obligor whether now or
hereafter owned by such Obligor, and wherever located; and to the extent not
otherwise included, all proceeds and products of any and all of the foregoing,
including all rights under all permits granted in favor of the Borrower relating
to its facility in Brattleboro, Vermont. For purposes of this Agreement,
Collateral shall also include the Brattleboro Collateral.
Collateral Management Fee shall mean the sum of Thirty-Five Thousand
Dollars ($35,000) which shall be paid to the Agent for its own account in
accordance with Section 6.03 of this Financing Agreement to offset the expenses
and costs of the Agent in connection with record keeping, periodic examinations,
analyzing and evaluating the Collateral.
Consolidated EBITDA shall mean, for any period, the sum (without
duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated
Net Income has been reduced thereby, (A) all income taxes of the Borrower and
its Subsidiaries paid or accrued in accordance with GAAP for such period (other
than income taxes attributable to extraordinary, unusual or nonrecurring gains
or losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (B) Consolidated Interest Expense and (C) Consolidated
Non-cash Charges less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio shall mean the ratio of
Consolidated EBITDA during the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of the transaction giving rise to the
need to calculate the Consolidated Fixed Charge Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges for the Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes
of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges"
shall be calculated after giving effect on a pro forma (including any pro
forma
7
expense and cost reductions calculated on a basis consistent with Regulation
S-X under the Securities Act of 1933, as amended) basis for the period of
such calculation to (i) the incurrence or repayment of any Indebtedness of
the Borrower or any of its Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any incurrence
or repayment of other Indebtedness (and the application of the proceeds
thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period and (ii) any Asset Sales (as defined in the Indenture) or
Asset Acquisitions (as defined in the Indenture) (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Borrower or one of its Subsidiaries (including
any Person who becomes an Acquired Entity as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during
the Four Quarter Period) occurring during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Asset Sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Acquired Indebtedness)
occurred on the first day of the Four Quarter Period. If the Borrower or any
of its Subsidiaries directly or indirectly guarantee Indebtedness of a third
Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Borrower or any such Subsidiary had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio", (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest in such Indebtedness in
effect on the Transaction Date; (2) if interest on any Indebtedness actually
incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, an eurocurrency
interbank offered rate, or other rates, then the interest rate in effect on
the Transaction Date will be deemed to have been in effect during the Four
Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by
8
agreements relating to Interest Swap Obligations, shall be deemed to accrue
at the rate per annum resulting after giving effect to the operation of such
agreements.
Consolidated Fixed Charges shall mean, with respect to the Borrower
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense, plus (ii) the product of (x) the amount of all dividend payments on any
series of Preferred Stock (as defined in the Indenture) of the Borrower (other
than dividends paid in Qualified Capital Stock (as defined in the Indenture)
paid, accrued or scheduled to be paid or accrued during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local tax rate
of such Person, expressed as a decimal.
Consolidated Interest Expense shall mean, with respect to the Borrower
for any period, the sum of, without duplication: (i) the aggregate of the
interest expense of the Borrower and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP, including without limitation,
(a) any amortization of debt discount, (b) the net costs under Interest Swap
Obligations, (c) the capitalized interest and (d) the interest portion of any
deferred payment obligation; and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the
Borrower and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
Consolidated Net Income shall mean, with respect to the Borrower,
for any period, the aggregate net income (or loss) of the Borrower and its
Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom (a)
after-tax gains or losses from Asset Sales or abandonments or reserves
relating thereto, (b) after-tax items classified as extraordinary or
nonrecurring gains or losses, (c) the net income (or loss) of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Subsidiary or is merged or consolidated with the Borrower or any
Subsidiary, (d) the net income (but not loss) of any Subsidiary to the extent
that the declaration of dividends or similar distributions by that Subsidiary
of that income is restricted by a contract, operation of law or otherwise,
(e) the net income of any Person, other than a Subsidiary, except to the
extent of cash dividends or distributions paid to the Borrower or to a
Subsidiary by such Person, (f) income or loss attributable to discontinued
operations (including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued and (g)
in the case of a successor to the Borrower by consolidation or merger or as a
transferee of the Borrower's assets, any net
9
income of the successor corporation prior to such consolidation, merger or
transfer of assets.
Consolidated Non-cash Charges shall mean, with respect to the
Borrower, for any period, the aggregate depreciation, amortization and other
non-cash expenses of the Borrower and its Subsidiaries reducing Consolidated Net
Income of the Borrower for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
Continue, Continuation and Continued shall refer to the continuation
pursuant to Section 6.01 hereof of a Libor Rate Loan as a Libor Rate Loan from
one Libor Rate Period to the next Libor Rate Period.
Convert, Conversion and Converted shall refer to a conversion pursuant
to Section 6.01 hereof of Chase Manhattan Bank Rate Loans into Libor Rate Loans
or Libor Rate Loans into Chase Manhattan Bank Rate Loans, each of which may be
accompanied by the transfer by a Lender (at its sole discretion) of a Loan from
one Applicable Lending Office to another.
CPG Merger means the merger of a subsidiary of the Borrower with and
into CPG Investors.
CPG Merger Agreement means the Agreement dated as of August 28, 1996
among Borrower, CPG Investors and the other parties thereto.
CPG Merger Documents means the CPG Merger Agreement and all other
documents or agreements executed in connection with or pursuant to the CPG
Merger Agreement.
Customarily Permitted Liens shall mean:
(a) Liens of local, provincial, or state authorities for franchise or
other like taxes provided the aggregate amounts secured by such Liens shall not
exceed One Hundred Thousand Dollars ($100,000) in the aggregate outstanding at
any one time;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other like Liens imposed by Law, created in the
ordinary course of business and for amounts not yet due or which are the subject
of a Good Faith Contest;
(c) deposits made (and the Liens thereon) in the ordinary course of
business (including, without limitation,
10
security deposits for leases, surety bonds and appeal bonds) in connection
with workers' compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, contracts
(other than for the repayment or guarantee of Indebtedness), statutory
obligations and other similar obligations arising as a result of progress
payments under government contracts; and
(d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which are
listed in Schedule B of the title insurance policy delivered to the Agent
herewith; provided, however, that in no event shall any Environmental Lien be
deemed to be a Customarily Permitted Lien.
Default shall mean any event specified in Section 12.01 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, event or act, has been satisfied.
Default Rate of Interest shall mean a rate of interest per annum equal
to the sum of: (a) four percent (4%) plus (b) the Chase Manhattan Bank Rate,
which the Agent shall be entitled to charge the Borrower on all Obligations due
the Lenders and not paid by the Borrower.
Depository Accounts shall mean those accounts owned by, and in the
name of, the Agent and designated by the Agent for the deposit of proceeds of
Collateral.
Documentation Fee shall mean (a) the sum intended to compensate the
Agent (for its own account) for the use of the Agent's internal or outside
counsel and facilities in documenting, in whole or in part, the initial
transaction solely on behalf of the Lenders, exclusive of Out-Of-Pocket
Expenses, which sum shall be included as part of the Loan Facility Fee due and
payable in accordance with Section 6.03 of this Financing Agreement, and (b) the
Agent's standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing Agreement,
the Collateral and/or the Obligations.
Dollars and $ means lawful money of the United States of America.
Eligible Accounts Receivable shall mean the gross amount of each
Obligor's Accounts Receivable that conform to the warranties contained herein
and at all times continue to be acceptable to the Agent in the exercise of its
reasonable business judgment, less, without duplication, the sum of:
11
(a)any returns, discounts, claims, credits and allowances of any
nature (whether issued, owing, granted or outstanding); and
(b)reserves for:
(i)sales to the United States of America or to any agency,
department or division thereof except where assignment of all
resulting accounts receivable due or to become due under a particular
contract is made by any Obligor to the Agent and the Agent is
satisfied that all requirements for compliance with the Assignment of
Claims Act and/or other applicable statutes, rules, or regulations
have been fulfilled;
(ii)foreign sales other than sales (A) secured by stand-by
letters of credit (in form and substance satisfactory to the Agent)
issued or confirmed by, and payable at, banks having a place of
business in the United States of America and payable in United States
currency, (B) covered by policies of foreign credit insurance that are
in form and substance satisfactory to the Agent and are issued by one
or more insurance carriers that are fully acceptable to the Agent, and
are assigned to the Agent with the Agent named as loss payee
thereunder or (C) to customers residing in Canada provided such sales
otherwise comply with all of the other criteria for eligibility
hereunder, are payable in U.S. Dollars and all such sales do not
exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any one time;
(iii)accounts that remain unpaid more than ninety (90) days from
invoice date;
(iv)contras;
(v)sales to any Affiliate of an Obligor;
(vi)xxxx and hold (deferred shipment) or consignment sales;
(vii)sales to any customer which is (w) insolvent, (x) the debtor
in any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or state law,
(y) negotiating, or has called a meeting of its creditors for purposes
of negotiating, a compromise of its debts or (z) in the Agent's
reasonable business judgment, financially
12
unacceptable to the Agent or has a credit rating unacceptable to the
Agent;
(viii)all sales to any customer if fifty percent (50%) or more of
either (x) all outstanding invoices or (y) the aggregate dollar amount
of all outstanding invoices, are unpaid more than ninety (90) days
from invoice date;
(ix)any other reasons deemed necessary by the Agent in its
reasonable business judgment and which are customary either in the
commercial finance industry or in the lending practices of the Agent
or the Lenders; and
(x)an amount representing, historically, returns, discounts,
claims, credits and allowances.
Eligible Inventory shall mean the gross amount of each Obligor's
Inventory that conforms to the warranties contained herein and which at all
times continues to be acceptable to the Agent in the exercise of its reasonable
business judgment less any work-in-process, supplies (other than raw material),
goods not present in the United States of America, goods returned or rejected by
the customers of such Obligor and other than goods that are undamaged and
resalable in the normal course of business, goods to be returned to the
suppliers of such Obligor, goods in transit to third parties (other than the
agents or warehouses of such Obligor) and less any reserves required by the
Agent in its reasonable discretion for special order goods, market value
declines and xxxx and hold (deferred shipment) or consignment sales.
Employee Benefit Plan means any plan, agreement, arrangement or
commitment which is an employee benefit plan, as defined in Section 3(3) of
ERISA, maintained by the Borrower, or any ERISA Affiliate or with respect to
which the Borrower, or any ERISA Affiliate at any relevant time has any
liability or obligation to contribute.
Environmental Discharge means any spill, emission, leaking, pumping,
injection, deposit, dispersal, leaching, migration, disposal, discharge or
release or threatened release of Hazardous Materials into the indoor or outdoor
environment or into or out of any property, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water or
groundwater.
Environmental Law means any applicable Law relating to human health
or safety or the environment and any terms and conditions of any Approvals or
Permits issued thereunder, including, without limitation, Laws relating to
noise or to Environmental Discharges or to the generation, manufacture,
13
processing, distribution, use, treatment, storage, disposal, transport,
handling or remediation of Hazardous Materials or to the transfer of
industrial or manufacturing facilities or property.
Environmental Lien means any Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by, such Governmental Authority in response to, an
Environmental Discharge.
Environmental Notice means any written complaint, order, claim,
citation, letter, inquiry, notice or other written communication from any Person
(a) relating to the Borrower's compliance with or liability or potential
liability under any Environmental Law, (b) relating to the occurrence or
presence of or exposure to or possible or threatened or alleged occurrence or
presence of or exposure to Environmental Discharges or Hazardous Materials at,
to, or from any of Obligor's past, present or future locations or facilities or
Real Estate or at, to or from any other location or facility including, without
limitation: (i) the existence of any contamination or possible or threatened
contamination at any such location or facility or the Real Estate; and (ii)
Remedial Action in connection with any Environmental Discharge or Hazardous
Materials at any such location or facility or Real Estate or any part thereof;
or (c) relating to any violation or alleged violation of any Environmental Law
by any Obligor, the Real Estate, or any prior owner of operator of the Real
Estate.
Equipment shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, located at the Brattleboro, Vermont property owned by
Borrower, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto and all proceeds of whatever
sort.
ERISA means the Employee Retirement Income Security Act of 1974, as
thereafter amended.
ERISA Affiliate means any entity required to be aggregated with a
Borrower under Section 414(b), (c), (m) or (o) of the Code.
Event(s) of Default shall have the meaning provided for in Section
12.01 of this Financing Agreement.
Executive Officers shall mean the Chairman, President, Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, Executive Vice
President(s), Senior Vice President(s), and Secretary of the Borrower.
14
Financing Agreement means this Second Amended and Restated Financing
Agreement and Guaranty.
Fiscal Year shall mean each period from January 1 to December 31.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply.
Good Faith Contest means the contest of an item if: (a) the item is
diligently contested in good faith by appropriate proceedings timely instituted;
(b) adequate reserves are established with respect to the contested item; (c)
during the period of such contest, the enforcement of the contested item is
effectively stayed; and (d) the failure to pay or comply with the contested item
during the period of such contest could not result in a Material Adverse Change.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Guarantors means all of Endura, CPG Investors, CPG Holdings,
CPG-Xxxxxx, Custom, Arcon Holdings, Arcon Coating and each Acquired Entity.
Guaranty Obligations shall mean, all obligations of any Guarantor as
guarantor of the obligations of the Borrower under this Financing Agreement.
Guarantor Obligations shall also include indebtedness owing to the Lenders
and/or the Agent by any Guarantor under this Financing Agreement or under any
other agreement or arrangement now or hereafter entered into between the
Guarantor and the Lenders.
Hazardous Materials means any pollutants, contaminants, toxic or
hazardous substances or wastes, chemicals, radioactive material, medical wastes
or special waste, including, without limitation, asbestos fibers and friable
asbestos, polychlorinated biphenyls, and petroleum or hydrocarbon-based
products, derivatives wastes, or breakdown, constituent or decomposition
products thereof.
Indebtedness shall mean at any date:
(a) indebtedness or liability for borrowed money, or for the deferred
purchase price of property or services (including trade obligations);
(b) obligations as lessee under Capital Leases;
15
(c) reimbursement obligations under letters of credit issued for the
account of any Person;
(d) all reimbursement obligations arising under bankers' or trade
acceptances;
(e) all guarantees, endorsements (other than for collection or deposit
in the ordinary course of business), and other contingent obligations to
purchase any of the items included in this definition, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss;
(f) all obligations secured by any Lien on property owned by such
Person, whether or not the obligations have been assumed; and
(g) all obligations under any agreement providing for a swap, ceiling
rates, ceiling and floor rates, contingent participation or other hedging
mechanisms with respect to interest payable on any of the items described in
this definition.
Indenture means the Indenture dated as of October 15, 1996 among the
Borrower, the Guarantors (as defined therein) and the Trustee (as defined
therein) pursuant to which the Senior Notes are issued.
Insolvency means, at any particular time, a Multiemployer Plan is
insolvent within the meaning of Section 4245 of ERISA.
Interest Swap Obligations means the obligations of any Person pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
Inventory of an Obligor shall mean all of such Obligor's present and
hereafter acquired merchandise, inventory and goods held for sale or lease or to
be furnished under contracts of service, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same; in all
stages of production- from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
16
Law means any treaty, foreign, federal, state or local statute, law,
rule, regulation, ordinance, order, code, policy, or rule of common law, now or
hereafter in effect, and in each case as amended, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
Lease Agreement shall mean that certain Lease Agreement by and between
Borrower, as lessee and the CIT Group/Equipment Financing, Inc., as lessor,
dated as of April 29, 1994, as amended and supplemented by that certain First
Amendment to Lease Agreement dated as of September 29, 1995.
Lender(s) shall mean CITBC, each Assignee which becomes a Lender
pursuant to Section 14.07 hereof, and their respective successors.
Lender Loan Commitment shall mean, with respect to each Lender's
making of the Revolving Credit Loans, the obligation of such Lender to make
Revolving Credit Loans under this Financing Agreement up to the aggregate
principal amount outstanding at any time set forth below:
Lender Pro Rata Share of Pro Rata Share of
Revolving Credit Amount of Revolving Overadvance Amount of Discretionary
Facility Credit Commitment Availability Overadvance Availability
----------------- ------------------- ----------------- ------------------------
CITBC 100% $20,000,000 100% $3,000,000
Lender Party shall mean the Agent and each of the Lenders.
Libor Period shall mean a thirty (30) day, sixty (60) day, or ninety
(90) day interest period with respect to Libor Rate Loans, as selected by the
Borrower.
Libor Rate shall mean, at any time of determination, the then highest
prevailing London Interbank Offered Rate paid in London on thirty (30) day,
sixty (60) day, or ninety (90) day dollar deposits from other banks as published
two (2) days prior to the commencement of the applicable interest period, under
"Money Rate," in the New York City edition of The Wall Street Journal or if
there is no such publication or statement therein as to a Libor Rate, then in
any publication used in the New York City financial community which was
published two (2) days prior to the commencement of the applicable interest
period.
Libor Rate Loans shall mean all or an portion of the Revolving Credit
Loans for which the Borrower has elected to use the Libor Rate for the interest
rate calculations.
17
Libor Rate Prepayment Premium shall mean, for any payment of principal
of any Libor Rate Loan prior to the end of an applicable interest period, an
amount computed pursuant to the following formula:
(R - T) x P x D
---------------
360
R = interest rate applicable to the Libor Rate Loan
T = effective interest rate per annum at which any readily marketable
bonds or other obligations of the United States, selected at the
Agent's sole discretion, maturing on or near the last day of the then
applicable interest period for such Libor Rate Loan and in
approximately the same principal amount as such Libor Rate Loan, can
be purchased by the Agent on the day of such prepayment of principal
P = the amount of principal prepaid
D = the number of days remaining in the Libor Period as of the date of
such prepayment
The Borrower shall pay such amount within five (5) business days of
presentation by CITBC to the Borrower of a statement setting forth the
amount and CITBC's calculation thereof pursuant hereto, which statement
shall be conclusive on the Borrower absent manifest error.
Lien means any mortgage, pledge, hypothecation, security interest,
collateral assignment, Lien (statutory or other), or other security interest or
encumbrance of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction (except any such filing that is expired or that relates to
an operating lease)).
Loan Documents shall mean each of this Financing Agreement, the
Revolving Credit Notes, and the Security Documents.
Loan Facility Fee shall mean the fee payable to the Agent for the
ratable benefit of the Lenders in accordance with, and pursuant to, the
provisions of Section 6.03 of this Financing Agreement.
Material Adverse Change means (a) a material adverse change in the
status of the business, results of operations, condition (financial or
otherwise), prospects, profitability,
18
assets, operations, or property of an Obligor, or (b) any event or occurrence
of whatever nature which could have a material adverse effect on an Obligor's
ability to perform its obligations under the Loan Documents.
Moody's means Xxxxx'x Investors Service, Inc. and any successor
thereto which provides credit ratings.
Mortgage (Brattleboro, Vermont) means an Amended and Restated
Mortgage, Assignment of Leases and Rents and Security Agreement dated as of
April 29, 1994 delivered by Borrower to CITBC, as amended by the Mortgage
Modification Agreement dated as of March 22, 1995, as further amended by the
Mortgage Modification Agreement dated as of December 31, 1996.
Mortgage Modification Agreement means the Mortgage Modification
Agreement dated as of March 22, 1995 by and between Borrower and CITBC.
Non-Brattleboro Equipment shall mean all present and hereafter
acquired machinery, equipment, furnishings and fixtures owned by any Obligor,
and all additions, substitutions and replacements thereof, wherever located
(other than at the Brattleboro, Vermont property owned by Borrower), together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto and all proceeds of whatever sort.
Non-Brattleboro Real Estate shall mean the fee and/or leasehold
interests in the real property of the Borrower or any Obligor (other than those
interests in the Brattleboro, Vermont property).
Non-Excluded Taxes shall have the meaning specified in Section 3.16.
Notice of Borrowing shall mean a Revolving Credit Notice of Borrowing.
Obligations shall mean collectively the Borrower Obligations and the
Guaranty Obligations.
Obligors means all of Borrower, Endura, CPG Investors, CPG Holdings,
CPG-Xxxxxx, Custom, Arcon Holdings, Arcon Coating and each Acquired Entity.
Officer's Certificate shall mean a certificate signed in the name of
the Borrower by its President, Vice President, Controller or Treasurer.
Operating Leases shall mean all leases of property (whether real,
personal or mixed) other than Capital Leases.
19
Other Taxes shall have the meaning specified in Section 3.16.
Out-of-Pocket Expenses shall mean all of the Lenders' and the Agent's
present and future expenses incurred relative to this Financing Agreement,
whether incurred heretofore or hereafter, which expenses shall include, without
being limited to, the cost of record searches, all costs and expenses incurred
by the Agent in opening bank accounts, depositing checks, receiving and
transferring funds, and any charges imposed on the Agent due to "insufficient
funds" of deposited checks and the Agent's standard fee relating thereto, local
counsel fees, title insurance premiums, real estate survey costs, fees and taxes
relative to the filing of financing statements, costs of preparing and recording
mortgages/deeds of trust against the Real Estate and all expenses, costs and
fees set forth in Section 3.18 of this Financing Agreement.
Overadvance shall have the meaning specified in Section 3.03.
Overadvance Availability has the meaning specified in Section 3.03.
PBGC means Pension Benefit Guaranty Corporation.
Pension Plan means any Employee Benefit Plan which is an employee
pension benefit plan as defined in Section 3(2) of ERISA.
Permitted Encumbrances shall mean:
(a) Liens expressly permitted, or consented to, by the Agent;
(b) Purchase Money Liens;
(c) Customarily Permitted Liens;
(d) Liens granted the Agent by the Borrower or a Guarantor;
(e) Liens of judgment creditors provided such Liens do not exceed, in
the aggregate, at any time, Two Hundred Fifty Thousand Dollars ($250,000) (other
than Liens bonded or insured to the reasonable satisfaction of the Agent);
(f) Liens for taxes not yet due and payable or which are the subject
of a Good Faith Contest and which Liens are not x) other than with respect to
Real Estate, senior to the Liens of the Agent or y) for taxes due the United
States of
20
America; provided, however, that in no event shall any Environmental Lien be
deemed to be a Permitted Encumbrance;
(g) Liens granted by Borrower to CITEF securing its obligations under
the Lease Agreement and Liens granted by each Guarantor securing such
Guarantor's guaranty of such obligations; and
(h) Liens granted by the Borrower or any Guarantor on any of its
assets other than (i) the Brattleboro Collateral, (ii) each Obligor's Accounts
and (iii) each Obligor's Inventory.
Permitted Indebtedness shall mean:
(a) Indebtedness incurred in the ordinary course of business for raw
materials, supplies, property, equipment, services, taxes or labor or otherwise;
(b) Indebtedness secured by Purchase Money Liens;
(c) Indebtedness of the Borrower which is subordinated to the prior
payment and satisfaction of the Borrower's Obligations to the Lenders by means
of a subordination agreement or similar instrument, in each case in form and
substance satisfactory to the Lenders;
(d) deferred taxes and other expenses incurred in the ordinary course
of business;
(e) Indebtedness existing on the date of execution of this Financing
Agreement and listed in the most recent financial statement delivered to the
Lenders or otherwise disclosed to the Lenders in writing on or prior to the date
of execution of this Financing Agreement; and
(f) the Senior Notes.
Permitted Investments means:
(a) direct obligations of the United States of America or any agency
thereof backed by the full faith and credit of the United States of America with
maturities of one (1) year or less from the date of acquisition;
(b) commercial paper with maturities of two hundred seventy (270) days
or less of (a) a Lender or any parent of a Lender, or (b) a domestic issuer
rated at least "P-1" by Moody's or "A-1" by S&P; and
(c) certificates of deposit with maturities of one (1) year or less
from the date of acquisition issued by (i) any Lender, or (ii) any commercial
bank operating within the
00
Xxxxxx Xxxxxx xx Xxxxxxx whose outstanding long-term debt is rated at least
"A" by Moody's or "A" by S&P.
Person means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
Prepayment Fee shall mean the fee payable to the Agent for the ratable
benefit of the Lenders in accordance with, and pursuant to, the provisions of
Section 6.03 of this Financing Agreement.
Pro Rata Share means, for purposes of this Financing Agreement and
with respect to each Lender, in the case of the Revolving Credit Loans and the
Unused Line Fees and the Overadvances, a fraction, the numerator of which is
such Lender's Revolving Credit Commitment and the denominator of which is the
total of all the Lenders' Revolving Credit Commitments.
Purchase Money Liens shall mean Liens on any item of equipment
acquired by an Obligor after the Closing Date, provided that (a) each such Lien
shall attach only to the property to be acquired, (b) a description of the
property so acquired is furnished to the Agent, and (c) the debt incurred in
connection with such acquisitions shall not exceed, in the aggregate for all
Obligations, Five Hundred Thousand Dollars ($500,000) in any Fiscal Year.
Quarterly Payment Date means each March 31, June 30, September 30 and
December 31.
Real Estate shall mean the fee and/or leasehold interests in the real
property of the Borrower located at Brattleboro, Vermont which has been
encumbered, mortgaged, pledged or assigned to the Agent or to the Agent's
designee for the ratable benefit of the Lenders, pursuant to the Mortgage
(Brattleboro, Vermont).
Regulatory Change means, with respect to any Lender, any change after
December 31, 1996 in United States federal, state, municipal or foreign Laws
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
such Lender of or under any United States, federal, state, municipal or foreign
Laws or regulations (whether or not having the force of Law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
Remedial Action means action required to (a) clean up, remove, treat
or in any other way address Hazardous
22
Materials in the indoor or outdoor environment; (b) prevent an Environmental
Discharge or minimize any further Environmental Discharge; or (c) investigate
and determine if a remedial response is needed, design such a response or
conduct post-remedial investigation, monitoring operation, maintenance or
care.
Reorganization means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.
Reportable Event means an event described in Section 4043(b) of ERISA
or in the regulations thereunder (other than those events as to which the thirty
(30) day notice period is waived under Subsections .13, .14, .15, .18, .19 or
.20 of PBGC Regulation Section 2615).
Required Lenders shall mean, on the date calculation of Required
Lenders is made, the Lenders having Revolving Credit Commitments to lend at
least sixty six and two thirds percent (66 2/3%) of the Revolving Credit Loans
hereunder.
Revolving Credit Commitment has the meaning specified in Section 3.01.
Revolving Credit Commitment Termination Date shall mean April 30,
2001; provided, however, the Borrower and the Lenders agree that such date shall
be automatically extended for an additional year on such date or on each
subsequent anniversary date thereof unless and until at least sixty (60) days
prior to any such date the Borrower or the Lenders shall have given the other
notice in writing that such date shall not be so extended.
Revolving Credit Facility means Twenty Million Dollars ($20,000,000).
Revolving Credit Loans shall have the meaning specified in Section
3.01.
Revolving Credit Note shall have the meaning specified in Section
3.02.
Revolving Credit Notice of Borrowing shall have the meaning specified
in Section 3.12.
S&P means Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx,
Inc. or any successor thereto which provides credit ratings.
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Security Agreement means the Security Agreement in substantially the
form of Exhibit I hereto, to be delivered by the Borrower under the terms of
this Agreement.
Security Documents means the Security Agreement, the Mortgage
(Brattleboro, Vermont) and any other security agreement granting a Lien on any
assets of an Obligor to secure such Obligor's Obligations.
Security Interest shall have the meaning specified in Section 5.03.
Senior Notes means the $100,000,000 9.375% Senior Notes of Borrower
due October 15, 2006 issued pursuant to the terms and provisions of the
Indenture.
Settlement Date shall mean the date each week on which the Agent and
the Lenders shall settle amongst themselves so that the Agent shall not have, as
Agent, any money at risk and on such Settlement Date each of the Lenders shall
have its Pro Rata Share of all outstanding Revolving Credit Loans, based upon
its Revolving Credit Commitments. Notwithstanding the previous sentence, upon
the occurrence of an Event of Default or a continuing decline or increase of the
Revolving Credit Loans or other Obligations, the Agent may, at its discretion,
elect to settle its and the Lenders' accounts more often than weekly.
Solvency Certificate means a certificate in substantially the form of
Exhibit E, to be delivered by each Obligor pursuant to the terms of this
Financing Agreement.
Solvent means, when used with respect to any Person, that (a) the fair
value of the property of such Person, on a going concern basis, is greater than
the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair salable value of the assets of
such Person, on a going concern basis, is not less than the amount that will be
required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged. Contingent liabilities will be
computed at the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
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Specialty Hong Kong shall mean Specialty Paperboard (Hong Kong)
Limited, a Hong Kong corporation.
Specialty Japan shall mean Specialty Paperboard Kabushiki Kaisha, a
Japanese corporation.
Subsidiary shall mean, as to any Person, a corporation of which shares
of stock having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by such Person.
Transferee shall have the meaning specified in Section 14.03.
Type of any Loan shall mean a Chase Manhattan Bank Rate Loan or a
Libor Rate Loan or both or either of the foregoing, all as the context may
require.
Unused Line Fee shall (a) mean the aggregate fee due to the Agent for
the ratable benefit of the Lenders at the end of each quarter for each Revolving
Line of Credit and (b) be determined by multiplying the difference between such
Revolving Line of Credit and the average daily Revolving Credit Loans of the
Borrower for said quarter by three-eighths of one percent (.375%) per annum for
the number of days in said quarter.
SECTION 1.02. Computation of Time Periods. In this Financing
Agreement unless otherwise specified, in the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
SECTION 1.03. Accounting Principles and Terms. Except as otherwise
provided in this Financing Agreement, (a) all computations and determinations as
to financial matters, and all financial statements to be delivered under this
Financing Agreement, shall be made or prepared in accordance with GAAP and (b)
all accounting terms used in this Financing Agreement shall have the meaning
ascribed to such terms by such principles.
SECTION 1.04. Rules of Construction. When used in this Financing
Agreement: (a) "or" is not exclusive; (b) a reference to a Law includes any
amendment or modification to such Law; (c) a reference to a Person includes
its permitted successors and permitted assigns; and (d) unless otherwise
provided for in this Financing Agreement, a reference to an
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agreement, instrument or document shall include such agreement, instrument or
document as the same may be amended, modified or supplemented from time to
time in accordance with its terms and as permitted by the Loan Documents.
ARTICLE 2. CONDITIONS PRECEDENT
SECTION 2.01. Conditions Precedent to Initial Revolving Credit Loan.
The obligation of the Lenders to make an initial Revolving Credit Loan is
subject to the condition precedent that (1) the Agent shall have received each
of the following documents, in form and substance satisfactory to the Agent and
its counsel, and (2) each of the following other requirements shall have been
fulfilled:
(a) Evidence of Due Organization and all Corporate Actions by the
Obligors. A certificate of the Secretary or Assistant Secretary of each
Obligor, dated the Closing Date, attesting to the certificate of incorporation
and bylaws of such Obligor and all amendments thereto and to all corporate
actions taken by such Obligor, including resolutions of its board of directors,
taken by such Obligor, including resolutions of its board of directors,
authorizing the execution, delivery and performance of the Loan Documents and
each other document to be delivered pursuant to the Loan Documents.
(b) Incumbency and Signature Certificate of each Obligor. A
certificate of the Secretary or Assistant Secretary of each Obligor, dated as of
the Closing Date, certifying the names and true signatures of the officers of
such Obligor authorized to sign the Loan Documents, and the other documents to
be delivered pursuant to the Loan Documents.
(c) Good Standing Certificates of each Obligor. A certificate, dated
reasonably near the Closing Date, from the Secretary of State (or other
appropriate official) of the jurisdiction of incorporation of such Obligor
certifying as to the due incorporation and good standing of such Obligor and
certificates, dated reasonably near the Closing Date, from the Secretary of
State (or other appropriate official) of each other jurisdiction where such
Obligor is required to be qualified to conduct business, certifying that such
Obligor is duly qualified to do such business and is in good standing in such
state.
(d) Revolving Credit Note. The Revolving Credit Note duly executed by
the Borrower.
(e) Depository Accounts. Each Obligor shall have established a
system of lock box accounts (satisfactory to the
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Agent) for the collection of such Obligor's Accounts and shall have taken all
steps necessary to insure that all Accounts Receivable such Obligor shall
have established are delivered to such Depository Account of such Obligor.
(f) Structure of Arcon Stock Purchase and CPG Merger. The Required
Lenders shall be satisfied with the corporate and legal structure of the Arcon
Stock Purchase and CPG Merger and all the terms of the Arcon Purchase Documents
and the CPG Merger Documents.
(g) Arcon Purchase Documents. Evidence that (a) each transaction
contemplated by the Arcon Purchase Agreement has occurred and (b) all conditions
to the Arcon Stock Purchase have been met or waived with the concurrence of all
of the Lenders and certified copies of the Arcon Purchase Documents, with the
opinions of counsel included therein expressly stating that the Lenders are
entitled to rely thereon as fully as if such opinions were addressed to the
Lenders.
(h) CPG Merger Documents. Evidence that (a) each transaction
contemplated by the CPG Merger Agreement has occurred and (b) all conditions to
the CPG Merger Agreement have been met or waived with the concurrence of all of
the Lenders and certified copies of the CPG Merger Documents, with the opinion
of counsel included therein expressly stating that the Lenders are entitled to
rely thereon as fully as if such opinion were addressed to the Lenders.
(i) General Due Diligence. Due diligence satisfactory to the Required
Lenders with respect to each Obligor, including but not limited to the
management of each Obligor, satisfactory visits to selected plant sites, and
satisfactory interviews with key customers of each Obligor.
(j) Inventory and Accounts Receivable Analysis. A satisfactory
analysis of the inventory and accounts receivables and personal property of the
Borrower, CPG Investors, Arcon Holdings and each of its respective Subsidiaries.
(k) Lien Searches. The Agent shall have received tax, judgment,
Uniform Commercial Code searches satisfactory to the Agent for all locations
presently occupied or used by each Obligor.
(l) UCC Filings. Any documents (including without limitation,
financing statements) required to be filed in order to create, in favor of
the Agent for the ratable benefit of the Lenders, a first and exclusive
perfected security interest (except for Permitted Encumbrances) in the
Collateral with respect to which a security interest may be perfected by a
filing under the Uniform Commercial Code shall have been
27
properly filed in each office in each jurisdiction required in order to
create in favor of the Agent for the ratable benefit of the Lenders a
perfected Lien on the Collateral. The Agent shall have received
acknowledgement copies of all such filings (or, in lieu thereof, the Agent
shall have received other evidence satisfactory to the Agent that all such
filings have been made); and the Agent shall have received evidence that all
necessary filing fees and all taxes or other expenses related to such filings
have been paid in full.
(m) Casualty Insurance. Borrower shall have delivered to the Agent
evidence satisfactory to the Lenders that casualty insurance policies listing
the Agent as loss payee or mortgagee, as the case may be, for the Brattleboro,
Vermont property and for the Inventory of each Obligor, are in full force and
effect, all as set forth in Section 9.07 of this Financing Agreement.
(n) Examination and Verification. The Agent shall have completed to
the satisfaction of the Lenders an examination and verification of the Accounts,
Inventory, books and records of each Obligor.
(o) Approvals and Permits. Evidence satisfactory to the Agent that
all Approvals and Permits required for the operation of the business of each
Obligor are in effect.
(p) Xxxx-Xxxxx-Xxxxxx. Evidence that each of the Arcon Stock Purchase
and CPG Merger was effected in accordance with the Xxxx-Xxxxx-Xxxxxx Act.
(q) Solvency Certificates. Solvency Certificates duly executed by
each Obligor.
(r) Landlord's Waiver(s). The Agent shall have received from each
landlord of any premises occupied by any Obligor a landlord's waiver waiving any
Lien such landlord has on any of the Inventory of any Obligor pursuant to an
agreement in form and substance satisfactory to the Lenders.
(s) Cash Budget Projection. The Agent shall have received a twelve
(12) month cash budget projection prepared by the Borrower in form and substance
acceptable to the Lenders.
(t) Warehouse Documents. The Agent shall have received from each
public warehouse in which Inventory of any Obligor is stored, an acknowledgement
in form and substance acceptable to the Lenders concerning the Lenders' security
interest in such Inventory.
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(u) Third Party Processor Letters. The Agent shall have received,
from each third party processor of Inventory of any Obligor, an acknowledgement
in form and substance acceptable to the Lenders concerning the Lenders' security
interest in such Inventory.
(v) Fees and Expenses. Payment in full to the Agent and the Lenders
of all fees required to be paid to the Agent pursuant to the terms and
conditions of this Financing Agreement; and payment in full of all other fees
required to be paid in accordance with the terms of the Loan Documents.
(w) Opinions of Counsel. Favorable opinion of counsel to the
Obligors acceptable to the Required Lenders in form and substance satisfactory
to the Required Lenders.
(x) Due Diligence. Satisfactory completion of all reasonable due
diligence items the Agent deems necessary, including but not limited to
interviews with key customers and any other Persons material to the operation of
each Obligor's business and review of actual and potential liabilities of each
Obligor under Environmental Laws or in connection with Environmental Discharges
relating to all past and present real estate, properties and operations of each
Obligor and their respective predecessors.
(y) Officer's Certificate. The following statements shall be true and
Agent shall have received certificates signed by duly authorized officers of the
Borrower stating that:
(i) The representations and warranties contained in this Agreement
and in each of the other Loan Documents are correct on and as of the date
of this Financing Agreement, as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is continuing.
(z) Brattleboro, Vermont Mortgage Modification. The Borrower shall
have executed and delivered to the Agent for the benefit of the Agent and the
Lenders, the Mortgage Modification Agreement (Brattleboro, Vermont) dated
December 31, 1996 by and between the Borrower and CITBC, and such Mortgage
Modification Agreement (Brattleboro, Vermont) shall have been delivered to a
title company for recording.
(aa) Disbursement Authorizations. The Borrower shall have delivered
to the Agent all information necessary for the Agent to issue wire transfer
instructions on behalf of the Borrower for the initial Revolving Credit Loan
and subsequent Revolving Credit Loans to be made to it under this
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Agreement, including, but not limited to, disbursement authorizations in form
acceptable to the Agent.
(bb) Structure of Senior Notes Offering. The Required Lenders shall
be satisfied with the terms and conditions of the offering by the Borrower of
its Senior Notes issued pursuant to the Indenture.
(cc) Security Agreement. The Security Agreement duly executed by the
Borrower together with (a) duly executed financing statements (UCC-1) to be
filed under the Uniform Commercial Code of all jurisdictions necessary or, in
the opinion of the Agent, desirable to perfect the security interest created by
the Security Agreement; (b) duly executed copies of the financing statements
(UCC-3) to be filed under the Uniform Commercial Code of all jurisdictions
necessary, or in the opinion of the Agent, desirable to terminate any Liens in
favor of any party other than the Agent; and (c) Uniform Commercial Code
searches identifying all of the financing statements on file with respect to
such party in all jurisdictions referred to under (a), including the financing
statements filed by the Agent against such party, indicating that no party other
than the Agent claims an interest in any of the Collateral.
(dd) Environmental Due Diligence. The Agent shall have received
evidence satisfactory to the Agent and the Lenders, in their complete
discretion, that the presence of any Hazardous Materials at, or the occurrence
of any Environmental Discharge at, to or from, the Xxxxxx Xxxx or Hughesville
properties on or prior to the Closing Date could not result in a Material
Adverse Change under any circumstances, including, without limitation,
circumstances in which any Obligor, any predecessor to any Obligor, or any
present or former Affiliate of any Obligor is called upon to satisfy the
obligations (contractual or otherwise) of any other Person in connection with
such Hazardous Materials or Environmental Discharge.
(ee) Additional Documentation. Such other approvals, opinions or
documents as the Agent or any Lender shall reasonably request.
SECTION 2.02. Conditions Precedent to Each Revolving Credit Loan.
The obligations of the Lenders to make each Revolving Credit Loan (including the
initial Revolving Credit Loans under this Agreement), shall be subject to the
further conditions precedent that on the date of providing such Revolving Credit
Loan:
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(a) The following statements shall be true:
(i) all of the representations and warranties contained in this
Financing Agreement and in each of the other Loan Documents
are correct on and as of the date of providing such
Revolving Credit Loan as though made on and as of such date;
and
(ii) no Default or Event of Default has occurred and is
continuing, or could result from providing such Revolving
Credit Loan;
(b) The Agent shall have received such other approvals, opinions or
documents as the Agent or any Lender may reasonably request.
SECTION 2.03. Deemed Representation. Each delivery of a Notice of
Borrowing requesting a Revolving Credit Loan shall constitute a representation
and warranty that the statements contained in Section 2.02 are true and correct
both on the date of such delivery of the Notice of Borrowing and as of the date
of the providing of such Revolving Credit Loan.
ARTICLE 3. AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS.
SECTION 3.01. Revolving Credit Loans. Subject to the terms and
conditions of this Financing Agreement, each Lender severally agrees to make
loans ("Revolving Credit Loans") to the Borrower from time to time during the
period from the Closing Date through the Revolving Credit Commitment Termination
Date, provided that (a) the amount of each Revolving Credit Loan does not exceed
the then effective Availability, and (b) the aggregate principal amount of all
Revolving Credit Loans outstanding at any time does not exceed the lesser of:
(i) the Revolving Credit Facility or (ii) the then effective Borrowing Base
("Revolving Credit Commitment"). Within the limits of the Revolving Credit
Commitment, the Borrower may borrow, make a payment pursuant to Section 3.10,
and reborrow under this Section 3.01. The Revolving Credit Loans may be
outstanding as Chase Manhattan Bank Rate Loans or Libor Loans. Each Type of
Revolving Credit Loan of each Lender shall be made and maintained at such
Lender's Applicable Lending Office for such Type of Loan.
SECTION 3.02. Revolving Credit Note. All Revolving Credit Loans
made by each Lender under this Financing Agreement shall be evidenced by, and
repaid with interest in accordance with, a promissory note of the Borrower in
substantially the form of Exhibit A hereto, in the principal amount equal to
such Lender's Pro Rata Share of the
31
Revolving Credit Commitment, payable to such Lender for the account of its
Applicable Lending Office and maturing as to principal on the Revolving
Credit Commitment Termination Date (the "Revolving Credit Note"). Each
Lender is hereby authorized by the Borrower to endorse on the schedule
attached to the Revolving Credit Note held by it the date of making each
Revolving Credit Loan, the amount of each Revolving Credit Loan, the type of
the Revolving Credit Loan and each Conversion, Continuation and payment of
principal amount received by such Lender for the account of its Applicable
Lending Office of its Revolving Credit Loans, which endorsement shall, in the
absence of manifest error, be conclusive as to the outstanding balance of the
Revolving Credit Loans made by such Lender; provided, however, that the
failure to make such notation with respect to any Revolving Credit Loan or
Conversion, Continuation or payment shall not limit or otherwise affect the
Obligations of the Borrower under this Financing Agreement or the Revolving
Credit Note held by such Lender. Each Lender agrees that prior to any
assignment of its Revolving Credit Note it will endorse the schedule attached
to its Revolving Credit Note. All outstanding principal on the Revolving
Credit Loans shall be due and payable on the Revolving Credit Commitment
Termination Date.
SECTION 3.03. Overadvances. The Agent may, on behalf of the
Lenders, make a Revolving Credit Loan in excess of the Availability or the
Revolving Credit Facility ("Overadvances") in either case, up to an aggregate
amount outstanding at any time of Three Million Dollars ($3,000,000)
("Overadvance Availability"); provided that the Agent and the Lenders shall not
be obligated to make any Overadvances hereunder and any Overadvance made by the
Agent in excess of Availability or the Revolving Credit Facility shall be in the
sole and absolute discretion of the Agent subject to payment in the amount of
such Overadvances or to any additional terms the Agent deems necessary. In the
event that the Agent makes Overadvances on behalf of the Lenders, each Lender
severally agrees to make a Revolving Credit Loan equal to its Pro Rata Share of
all Overadvances.
SECTION 3.04. Information Relating to Accounts. In furtherance of
the continuing assignment and security interest in each Obligor's Accounts,
each Obligor will, upon the creation of Accounts, execute and deliver to the
Agent in such form and manner as the Agent may reasonably require, solely for
the Agent's convenience in maintaining records of collateral, such
confirmatory schedules of Accounts as the Agent may reasonably request, and
such other appropriate reports designating, identifying and describing the
Accounts as the Agent may reasonably require. In addition, upon the Agent's
request, such Obligor shall provide the Agent and each of the Lenders with
copies of agreements with, or purchase
32
orders from, the Obligor's customers, and copies of invoices to customers,
proof of shipment or delivery and such other documentation and information
relating to said Accounts and other collateral as the Agent may reasonably
require. Failure to provide the Agents or any of the Lenders with any of the
foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein. Each Obligor hereby authorizes the Agent
to regard its printed name or rubber stamp signature on assignment schedules
or invoices as the equivalent of a manual signature by one of such Borrower's
authorized officers or agents.
SECTION 3.05. Representations Relating to Accounts. Each Obligor
hereby represents and warrants that (a) each Account of such Obligor is based on
an actual and bona fide sale and delivery of goods or rendition of services to
customers, made by such Obligor in the ordinary course of its business; (b) the
goods and inventory being sold and the Accounts created are the exclusive
property of such Obligor and are not and shall not be subject to any lien,
consignment arrangement, encumbrance, security interest or financing statement
whatsoever, other than the Permitted Encumbrances; (c) the invoices evidencing
such Accounts are in the name of such Obligor; and (d) the customers of such
Obligor have accepted the goods or services, owe and are obligated to pay the
full amounts stated in the invoices according to their terms, without dispute,
offset, defense, counterclaim or contra, except for disputes and other matters
arising in the ordinary course of business of which such Obligor has advised the
Agent pursuant to Section 3.07. Each Obligor confirms to the Lenders that any
and all taxes or fees relating to its business, its sales, the Accounts of such
Obligor or goods relating thereto, are its sole responsibility and that same
will be paid by such Obligor or when due and that none of said taxes or fees
represent a lien on or claim against the Accounts. Each Obligor also warrants
and represents that it is a duly and validly existing corporation and is
qualified in all states and provinces where the failure to so qualify would have
an adverse effect on the business of such Obligor or the ability of such Obligor
to enforce collection of Accounts due from customers residing in such locations.
Each Obligor agrees to maintain such books and records regarding Accounts as the
Agent may reasonably require and agrees that the books and records of such
Obligor will reflect the Lenders' interest in the Accounts of such Obligor. All
of the books and records of such Obligor will be available to the Agent and the
Lenders at normal business hours, including any records handled or maintained
for such Obligor by any other company or entity.
SECTION 3.06. Collection of Accounts. Until the Agent has advised
an Obligor to the contrary after the occurrence of an Event of Default, such
Obligor may and will enforce, collect and receive all amounts owing on the
Accounts
33
of such Obligor for the Lenders' benefit and on the Lenders' behalf, but at
such Obligor's expense; such privilege shall terminate automatically upon the
institution by or against such Obligor of any proceeding under any bankruptcy
or insolvency law or, at the election of the Agent, upon the occurrence of
any other Event of Default and until such Event of Default is waived. Any
checks, cash, notes or other instruments or property received by such Obligor
with respect to any Accounts of such Obligor shall be held by such Obligor in
trust for the Lenders, separate from such Obligor's own property and funds,
and immediately turned over to the Agent for the ratable benefit of the
Lenders with proper assignments or endorsements by deposit to the Depository
Accounts. All amounts received by the Agent in payment of Accounts of an
Obligor will be credited to such Obligor's accounts upon the Agent's receipt
of "collected funds" at the Agent's bank account in New York, New York on the
Business Day of receipt if received no later than 1:00 p.m. (New York time)
or on the next succeeding Business Day if received after 1:00 p.m. (New York
time). No checks, drafts or other instrument received by the Agent shall
constitute final payment to the Agent or the Lenders unless and until such
instruments have actually been collected.
Pursuant to separate arrangements between the Agent and each
institution at which a Depository Account is maintained (herein the "Depository
Banks"), each such Depository Bank has agreed, or will agree, if instructed by
the Agent as permitted hereunder to remit funds collected and to be collected in
the Depository Account to an account specified by the Agent. It is hereby
agreed between the Agent and each Obligor that until the first day the Lenders
make Revolving Credit Loans to such Obligor and (i) the Availability is
$5,000,000 or greater and (ii) there is then no Default or Event of Default, the
Agent shall permit such Obligor to instruct the Depository Banks to transfer any
funds in the Depository Accounts to their respective operating accounts or such
other accounts located in the United States (other than payroll accounts) as
such Obligor may designate. Upon the occurrence of an Event of Default, the
Agent shall have the right to immediately, without notice to an Obligor,
instruct such Depository Banks to remit funds collected and to be collected in
the Depository Accounts to an account specified by the Agent and with respect to
the disposition of any and all funds collected or to be collected in such
Depository Accounts.
SECTION 3.07. Notice Regarding Accounts. Each Obligor agrees to
notify each of the Lenders promptly of any matters materially affecting the
value, enforceability or collectibility of any Account of such Obligor and of
all material customer disputes, offsets, defenses, counterclaims, returns,
rejections and all reclaimed or repossessed
34
merchandise or goods. Each Obligor agrees that it shall issue credit
memoranda promptly (with duplicates to the Agent upon request after the
occurrence of an Event of Default) upon accepting returns or granting
allowances, and may continue to do so until the Agent has notified such
Obligor that an Event of Default has occurred and that all future credits or
allowances are to be made only after the Agent's prior written approval.
Upon the occurrence of an Event of Default and until such time as such Event
of Default is waived and on notice from the Agent, each Obligor agrees that
all returned, reclaimed or repossessed merchandise or goods shall be set
aside by such Obligor, marked with the Agent's name and held by such Obligor
for the Agent's account as owner and assignee for the ratable benefit of the
Lenders.
SECTION 3.08. Borrower's Account. The Agent shall maintain a
separate account on its books in the Borrower's name in which the Borrower will
be charged with Revolving Credit Loans made by the Agent on behalf of the
Lenders to it or for the Borrower's account, and with any other Obligations of
the Borrower, including any and all costs, expenses and reasonable attorney's
fees which the Lenders and/or the Agent may incur in connection with the
exercise by or for the Agent or the Lenders of any of the rights or powers
herein conferred upon the Agent or in the prosecution or defense of any action
or proceeding to enforce or protect any rights of the Agent or the Lenders in
connection with this Financing Agreement or the Collateral assigned hereunder,
or any Obligations owing to the Lenders and/or the Agent by the Borrower. The
Borrower will be credited with all amounts received by the Agent from such
Person or from others for such Person's account, including, as above set forth,
all amounts received by the Agent in payment of assigned Accounts and such
amounts will be applied to payment of the Obligations. In no event shall prior
recourse to any Accounts or other security granted to or by the Borrower be a
prerequisite to the Agent's right to demand payment of any Obligation. Further,
it is understood that the Lenders and the Agent shall have no obligation
whatsoever to perform in any respect any of the Borrower's contracts or
obligations relating to its Accounts.
After the end of each month, the Agent shall promptly send the
Borrower a statement showing the accounting for the charges, Revolving Credit
Loans and other transactions occurring between the Agent and such Person during
that month. The monthly statements shall be deemed correct and binding upon the
Borrower and shall constitute an account stated among such Person, the Lenders
and the Agent unless the Agent receives a written statement of the exceptions
within thirty (30) days of the date of the monthly statement.
SECTION 3.09. Application of Payments. Notwithstanding anything to
the contrary contained in this
35
Article 3 or elsewhere in this Financing Agreement, the Agent shall apply all
amounts received by it in payment of Accounts or Obligations of the Borrower
to Chase Manhattan Bank Rate Revolving Credit Loans of the Borrower prior to
any application to other Types of Revolving Credit Loans of the Borrower;
provided, however, (a) upon the occurrence of an Event of Default or (b) in
the event the aggregate amount of outstanding Revolving Credit Loans of the
Borrower which are Libor Rate Loans exceeds the Borrowing Base of the
Borrower, the Agent may apply all such amounts received by it to the payment
of Obligations in such manner and in such order as the Agent may elect in its
reasonable business discretion. In the event that any such amounts are
applied to Revolving Credit Loans of the Borrower which are Libor Rate Loans,
such application shall be treated as a prepayment of such loans of the
Borrower and the Agent shall be entitled to the Libor Rate Prepayment Premium
with respect thereto.
SECTION 3.10. Prepayments. Subject to the limitation noted below,
the Borrower may prepay the Revolving Credit Loans upon at least one (1)
Business Day's notice to Agent in the case of Chase Manhattan Bank Rate Loans,
and at least three (3) Business Day's notice to Agent in the case of Libor Rate
Loans, in whole or in part with accrued interest to the date of such prepayment
on the amount prepaid, provided that (a) each partial prepayment shall be in the
case of a Libor Rate Loan, in a principal amount of not less than One Million
Dollars ($1,000,000) and integral multiples of One Hundred Thousand Dollars
($100,000); and (b) Libor Rate Loans prepaid on any Business Day other than the
last day of the Libor Rate Period applicable for such Loan shall require the
Borrower to pay the Libor Rate Prepayment Premiums. Notwithstanding anything to
the contrary in this Financing Agreement, the Borrower may not cancel its
Revolving Credit Commitment prior to the payment in full of all outstanding
Obligations owed to CITEF under the Lease Agreement or any loan agreements.
In the event that the Borrower shall cause its Revolving Credit
Facility to be cancelled and the Borrower shall obtain an alternative commitment
from another lender for financing, Borrower shall prepay the Revolving Credit
Loans in whole with accrued interest to the date of such cancellation and in
addition, the Borrower shall pay to the Agent, for the account of each Lender, a
fee ("Prepayment Fee"), in the following amounts:
Period Amount
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Twelve (12) month period from 1.5% of the average
December 31, 1996 to December principal amount of all
31, 1997 Revolving Credit Loans
outstanding at any time for
the six month period prior
to such cancellation
Twelve (12) month period from 1.0% of the average
December 31, 1997 to December principal amount of all
31, 1998 Revolving Credit Loans
outstanding at any time for
the six month period prior
to such cancellation
Twelve (12) month period from 0.5% of the average
December 31, 1998 to December principal amount of all
31, 1999 Revolving Credit Loans
outstanding at any time for
the six month period prior
to such cancellation
To the extent the outstanding principal amount of the Revolving Credit
Loans exceed the Borrowing Base, the Borrower shall prepay such Revolving Credit
Loans in an amount equal to the excess of the outstanding principal amount of
Revolving Credit Loans over the then effective Borrowing Base.
SECTION 3.11. Funding of Revolving Credit Loans. The Agent, for the
account of the Lenders, shall disburse all Revolving Credit Loans and shall
handle all collections of Collateral and repayment of Obligations. It is
understood that for purposes of Revolving Credit Loans and for purposes of this
Section 3.11, the Agent is using the funds of CITBC.
On each Settlement Date, the Agent and the Lenders shall each remit to
the other, in immediately available funds, all amounts necessary so as to ensure
that, as of such Settlement Date, each Lenders shall have its Pro Rata Share of
all outstanding Revolving Credit Loans in accordance with its Revolving Credit
Commitments.
The Agent shall forward to each Lender, at the end of each month, a
copy of the account statement rendered by the Agent to the Borrower.
SECTION 3.12. Notice and Manner of Borrowing. With regard to each
Revolving Credit Loan, the Borrower shall deliver to the Agent and, if
required by the Agent, with a copy to each Lender, a written or telegraphic
or facsimile notice substantially in the form of Exhibit B hereto (effective
upon receipt) ("Revolving Credit Notice of Borrowing") not later than 12:00
noon (New York time) on the
37
day of making each Chase Manhattan Bank Rate Revolving Credit Loan and at
least three (3) Business Days prior to the date of any Libor Rate Revolving
Credit Loan. Each Revolving Credit Notice of Borrowing must specify: (a) the
date of such Revolving Credit Loan; (b) the amount of such Revolving Credit
Loan; (c) the initial Type or Types which will comprise the requested
Revolving Credit Loan and (d) in the case of a Libor Rate Revolving Credit
Loan, the initial Libor Rate Period applicable thereto. The Agent will
promptly notify each Lender of receipt by the Agent of a Revolving Credit
Notice of Borrowing and of the contents thereof.
SECTION 3.13. Obligations of Agent and Lenders. Each Lender is
solely responsible for its Pro Rata Share of each Revolving Credit Commitment
and neither Agent nor any Lender shall be responsible for, nor assume any
obligations for, the failure of any Lender to make available its Pro Rata Share
of any such Revolving Credit Loans. Should any Lender refuse to make available
its Revolving Credit Loans, then each of the other Lenders may, but without
obligation to do so, increase, unilaterally, its portion of the Revolving Credit
Loans in which event the Borrower shall be so obligated to such other Lender.
Nothing contained herein shall be deemed to obligate the Agent to make
available to the Borrower the full amount of a requested Revolving Credit Loan
when the Agent has not received any Lender's Pro Rata Share of such Revolving
Credit Loan or if the Agent otherwise has any notice that any of the Lenders
will not advance its Pro Rata Share thereof. The Agent, for the account of the
Lenders, shall disburse all Revolving Credit Loans and shall handle all
collections of Collateral and repayment of Obligations. It is understood that
for purposes of Revolving Credit Loans and for purposes of this Article 3 and
prior to settlement among the Lenders on any Settlement Date the Agent is using
the funds of CITBC.
Unless the Agent shall have been notified in writing by any Lender
prior to any advance to the Borrower that such Lender will not make the
amount which would constitute its share of the borrowing on such date
available to the Agent, the Agent may assume that such Lender shall make such
amount available to the Agent on a Settlement Date, and the Agent may, in
reliance upon such assumption, make available to the Borrower for the benefit
of the Borrower a corresponding amount. Absent such notice each Lender's
commitment shall be absolute and unconditional and such Lender shall
reimburse the Agent its Pro Rata Share of such borrowing upon demand. A
certificate of the Agent submitted to any Lender with respect to any amount
owing under this subsection shall be conclusive, absent manifest error. If
such Lender's Pro Rata Share of such borrowing is not in fact made available
to the Agent by such Lender on the Settlement Date, the Agent shall be
38
entitled to charge the Borrower's account with any such amount with interest
thereon at the rate per annum applicable to Revolving Credit Loans hereunder,
on demand, from the Borrower without prejudice to any rights which the Agent
may have against such Lender hereunder. Nothing contained in this subsection
shall relieve any Lender which has failed to make available its Pro Rata
Share of any borrowing hereunder from its obligation to do so in accordance
with the terms hereof. Nothing contained herein shall be deemed to obligate
the Agent to make available to the Borrower the full amount of a requested
advance when the Agent has not received any Lender's Pro Rata Share of such
Revolving Credit Loan or if the Agent has any notice that any of the Lenders
will not advance its Pro Rata Share thereof.
SECTION 3.14. Minimum Amounts. The amount of each Revolving Credit
Loan borrowed on any given day and the aggregate amount of each Revolving Credit
Loan with the same interest rate after giving effect to the conversions and
continuations provided for in Section 5.01 shall, in the case of Libor Rate
Loans, be in an amount at least equal to One Million Dollars ($1,000,000) or a
greater amount which is an integral multiple of One Hundred Thousand Dollars
($100,000) (Libor Rate Loans having different Libor Rate Periods outstanding at
the same time shall be deemed separate Loans for purposes of the foregoing, one
for each Libor Rate Period). There shall be no minimum amount of principal
applicable to a conversion or continuation of a Chase Manhattan Bank Rate Loan.
SECTION 3.15. Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used by the Borrower for its working capital and general
corporate purposes and may be used by the Borrower to make loans to any Obligor
for working capital purposes; provided, however, that an amount not to exceed
$15,000,000 of the proceeds of the Revolving Credit Loans may be used by the
Borrower to pay all or a portion of the consideration for the acquisition of
stock or assets of another Person. The Borrower will not, directly or
indirectly, use any Revolving Credit Loan proceeds for the purpose of purchasing
or carrying any margin stock within the meaning of Regulations G, T, U or X of
the Board of Governors or to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
SECTION 3.16. Taxes. Any and all payments by the Borrower made
hereunder shall be made free and clear of and without deduction for any and all
taxes, levies, imposts, deductions, charges or withholdings imposed by any
Governmental Authority, and all liabilities with respect thereto, excluding
taxes imposed on or measured by the net income of any of the Lenders on the
receipt or accrual of stated principal and interest payments by the jurisdiction
39
under the laws of which such Lender is organized or any political subdivision
thereof or in which such Lender maintains an office or conducts business (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Non-Excluded Taxes"). If
the Borrower shall be required by Law to withhold or deduct any Non-Excluded
Taxes from or in respect of any sum payable hereunder, (a) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.16) Lender receives an amount equal to the sum it would have
received had no such deductions been made, (b) the Borrower shall make such
deductions, and (c) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable Law.
In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise under the laws of the United States of America or the State of
New York or any other taxing authority from any payment made hereunder or from
the execution or delivery or otherwise with respect to this Agreement or any
other Loan Document (hereinafter referred to an "Other Taxes").
The Borrower shall indemnify each Lender for the full amount of
Non-Excluded Taxes and Other Taxes (including, without limitation, any
Non-Excluded Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 3.16) paid by such Lender or any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Non-Excluded Taxes or Other Taxes were correctly or legally
asserted. Payments by the Borrower pursuant to this indemnification shall be
made within thirty (30) days from the date a Lender makes written demand
therefor.
Within thirty (30) days after the date of any payment of Non-Excluded
Taxes or Other Taxes by the Borrower, the Borrower shall furnish to the
applicable Lender the original or a certified copy of a receipt evidencing
payment thereof. The Borrower shall compensate the applicable Lender for all
losses and expenses sustained by such Lender as a result of any failure by the
Borrower to so furnish such copy of such receipt.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.16 shall survive the payment in full of the Revolving Credit
Loans.
40
Each Lender that is organized under the laws of any jurisdiction other
than the United States of America or any State thereof (including the District
of Columbia) agrees, if eligible, to furnish to the Borrower and the Agent,
prior to the first Quarterly Payment Date, two copies of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any
successor forms thereto (wherein such Lender claims entitlement to complete
exemption from U.S. federal withholding tax on all payments made by the Borrower
hereunder) and upon request of the Borrower to provide to such Person and the
Agent a new Form 4224 or Form 1001 or any successor form thereto (claiming a
complete exemption from U.S. federal withholding tax on all payments made by
such Person hereunder) if any previously delivered form is found to be
incomplete or incorrect in any material respect or upon the obsolescence of any
previously delivered form.
SECTION 3.17. Additional Costs. The Borrower shall pay directly to
the applicable Lender from time to time on demand such amounts as such Lender
may determine to be necessary to compensate it for any increased costs which
such Lender determines are attributable to its making or maintaining any Libor
Rate Loan, or its obligation to convert any Chase Manhattan Bank Rate Loan to a
Libor Rate Loan hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such Libor Rate Loans or such obligation
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change which:
(a) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or the Revolving Credit Loans or the Revolving
Credit Note in respect of any of such Libor Rate Loans (other than changes in
the rate of net income tax imposed on such Lender); or
(b) imposes or modifies any reserve, special deposit, deposit
insurance or assessment, minimum capital, capital ratio or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender (including any Libor Rate Loans or any
deposits referred to in the definition of "Libor Rate" in Section 1.01 hereof),
or any Revolving Credit Commitment of such Lender; or
(c) imposes any other condition affecting this Financing Agreement or
the Revolving Credit Loans or the Revolving Credit Note (or any of such
extensions of credit or liabilities).
Without limiting the effect of the provisions of the first paragraph
of this Section 3.17, in the event that, by reason of any Regulatory Change,
a Lender either (1) incurs
41
Additional Costs based on or measured by the excess above a specified level
of the amount of a category of deposits of other liabilities of such Lender
which includes deposits by reference to which the Libor Rate is determined as
provided in this Financing Agreement or a category of extensions of credit or
other assets of such Lender which includes Revolving Credit Loans based on
the Libor Rate or (2) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Borrower and the Agent, the obligation of such Lender
to make or continue, or to convert Chase Manhattan Bank Rate Loans into Libor
Rate Loans shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 3.18 hereof shall be
applicable).
A certificate of any Lender claiming compensation under this Section,
setting forth the additional amount or amounts to be paid to it hereunder, shall
be conclusive in the absence of manifest error.
SECTION 3.18. Limitation on Types of Revolving Credit Loans. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
a Libor Rate for any Libor Rate Period:
(a) The Agent or any of the Lenders determines (which determination
shall be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Libor Rate" in Section 1.01 hereof are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Libor Rate Loans as provided in
this Financing Agreement; or
(b) Any Lender determines (which determination shall be conclusive)
that the relevant rates of interest referred to in the definition of "Libor
Rate" in Section 1.01 hereof upon the basis of which the rate of interest for
Libor Rate Loans for such Libor Rate Period are to be determined do not
adequately cover the cost to such Lender of making or maintaining such Libor
Rate Loans for such Libor Rate Period;
then Agent shall give the Borrower prompt notice thereof, and so long as such
condition remains in effect, such Lenders shall be under no obligation to make
such Libor Rate Loans, convert Chase Manhattan Bank Rate Loans into such Libor
Rate Loans or continue such Libor Rate Loans and if the Borrower has outstanding
Libor Rate Loans shall, on the last day(s) of the then current Libor Rate
Period(s) for such outstanding Libor Rate Loans, either prepay such Libor Rate
Loans or convert such Libor Rate Loans into a Chase Manhattan Bank Rate Loan in
accordance with Section 6.01.
SECTION 3.19. Illegality. Notwithstanding any other provision of
this Agreement, in the event that it
42
becomes unlawful for any Lender to honor its obligation to make or maintain
Libor Rate Loans hereunder or convert Chase Manhattan Bank Rate Loans into
Libor Rate Loans, then such Lender shall promptly notify the Borrower thereof
and such Lender's obligation to make or continue, or to convert a Chase
Manhattan Bank Rate Loan into the affected Libor Rate Loan shall be suspended
until such time as such Lender may again make and maintain such Libor Rate
Loans (in which case the provisions of Section 3.20 hereof shall be
applicable).
SECTION 3.20. Treatment of Affected Loans. If the obligations of a
Lender to make or continue a Libor Rate Loan, or to convert Chase Manhattan Bank
Rate Loans into Libor Rate Loans are suspended pursuant to Section 3.17 or 3.19
hereof (Libor Rate Loans so affected being herein called "Affected Loans"), such
Lender's Affected Loans shall be automatically converted into Chase Manhattan
Bank Rate Loans on the last day(s) of the then current Libor Rate Period(s) for
the Affected Loans (or, in the case of a conversion required by Section 3.17 or
3.19, on such earlier date as such Lender may specify to the Borrower).
To the extent that such Lender's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Affected Loans shall be applied instead to its Chase
Manhattan Bank Rate Loans. All Revolving Credit Loans which would otherwise be
made or continued by Lenders as Libor Rate Loans shall be made or continued
instead as Chase Manhattan Bank Rate Loans and all Chase Manhattan Bank Rate
Loans of Lenders which would otherwise be converted into Libor Rate Loans shall
remain as Chase Manhattan Bank Rate Loans.
SECTION 3.21. Adequacy. If any of the Lenders shall have
determined that, after the date hereof, the adoption of any applicable Law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation
or administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of Law) of any such Governmental
Authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Lender (or its Parent) as a
consequence of such Lender's obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, change, request
or directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time
to time, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. A certificate of
43
a Lender claiming compensation under this Section 3.21, shall be conclusive
in the absence of manifest error.
ARTICLE 4. GUARANTY
SECTION 4.01. Guaranty. Each Guarantor, jointly and severally,
hereby irrevocably, absolutely and unconditionally guarantees to each Lender
Party and their successors, endorsees, transferees and assigns the prompt and
complete payment by the Borrower as and when due and payable (whether at stated
maturity or by required prepayment, acceleration, demand or otherwise), of all
Obligations now existing or hereafter incurred by the Borrower, including but
not limited to those under the Revolving Credit Loans (all such Obligations
being herein called the "Borrower Obligations"); and agrees to pay on demand any
and all expenses (including counsel fees and expenses) which may be paid or
incurred by any Lender Party in collecting any or all of the Borrower
Obligations and/or enforcing any rights under this Guaranty or under the
Borrower Obligations.
SECTION 4.02. Guarantors' Guaranty Obligations Unconditional. Each
Guarantor hereby jointly and severally guarantees that its Borrower Obligations
will be paid strictly in accordance with the terms of the Loan Documents and
other agreements to which the Borrower is a party, regardless of any Law now or
hereafter in effect in any jurisdiction affecting any such terms or the rights
of any Lender Party with respect thereto. The obligations and liabilities of
each Guarantor under this Guaranty shall be absolute and unconditional
irrespective of: (1) any lack of validity or enforceability of any of the
Borrower Obligations, any Loan Document, or any agreement or instrument relating
thereto; (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Borrower Obligations, or any other
amendment or waiver of or consent to any departure from any Loan Document or any
other documents or instruments executed in connection with or related to the
Borrower Obligations; (3) any exchange or release of, or non-perfection of any
Lien on or in, any Collateral, or any release or amendment or waiver of or
consent to any departure from any other guaranty, for all or any of the Borrower
Obligations; or (4) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Borrower or any Guarantor in
respect of the Borrower Obligations or the Guarantors in respect of this
Guaranty.
This Guaranty is a continuing guaranty and shall remain in full
force and effect until: (1) the payment in full and indefeasible
satisfaction of all the Borrower Obligations (after the Revolving Credit
Termination Date), and (2) the payment of the other expenses to be paid by
the
44
Borrower pursuant hereto. This Guaranty shall continue to be effective or
shall be reinstated, as the case may be, if at any time any payment, or any
part thereof, of any of the Borrower Obligations is rescinded or must
otherwise be returned by any Lender Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor
or otherwise, all as though such payment had not been made.
The obligations and liabilities of the Borrower and each Guarantor
under this Guaranty shall not be conditioned or contingent upon the pursuit by
any Lender or any other Person at any time of any right or remedy against the
Borrower or any Guarantor or any other Person which may be or become liable in
respect of all or any part of the Borrower Obligations or against any Collateral
or security or guarantee therefor or right of setoff with respect thereto.
The Borrower and each Guarantor hereby consents that, without the
necessity of any reservation of rights against the Borrower or any Guarantor and
without notice to or further assent by the Borrower or any Guarantor any demand
for payment of any of the Borrower Obligations made by any Lender Party may be
rescinded by such Lender Party and any of the Borrower Obligations continued
after such rescission.
SECTION 4.03. Waivers. To the extent permitted by applicable law,
the Borrower and each Guarantor hereby waives: (1) promptness and diligence;
(2) notice of or proof of reliance by any Lender Party upon this Guaranty or
acceptance of this Guaranty; (3) notice of the incurrence of any Borrower
Obligation by the Borrower or Guaranty Obligation by any Guarantor or the
renewal, extension or accrual of any Borrower Obligation or Guaranty Obligation;
(4) notice of any actions taken by any Lender Party, the Borrower, any Guarantor
or any other party under any Loan Document, or any other agreement or instrument
relating to the Borrower Obligations; (5) all other notices, demands and
protests, and all other formalities of every kind in connection with the
enforcement of the Borrower Obligations or of the obligations of the Borrower or
any Guarantor hereunder, the omission of or delay in which, but for the
provisions of this Section 4.3, might constitute grounds for relieving the
Borrower or any Guarantor of its obligations hereunder; and (6) any requirement
that any Lender Party protect, secure, perfect or insure any Lien on any
property subject thereto or exhaust any right or take any action against the
Borrower or any Guarantor or any other Person or any Collateral.
SECTION 4.04. Subrogation. Each Borrower and each Guarantor agrees
that it hereby waives and releases any rights which it may acquire by way of
subrogation under this Guaranty, whether acquired by any payment made
hereunder, by
45
any setoff or application of funds of such Borrower or Guarantor by any
Lender Party or otherwise.
ARTICLE 5. COLLATERAL
SECTION 5.01. (a) Grant of a Security Interest by Borrower. As
security for the prompt payment in full of all Revolving Credit Loans and to
secure the payment in full of the other Borrower Obligations, the Borrower
hereby pledges and grants to the Agent for the ratable benefit of the Lenders a
continuing general Lien upon and security interest in all of its:
(1) present and hereafter acquired Inventory;
(2) present and future Accounts; and
(3) the Brattleboro Collateral.
The security interests granted hereunder shall extend and attach to:
(i) All Collateral which is presently in existence and which is owned
by the Borrower or in which the Borrower has any interest, whether held by the
Borrower or others for its account, and, if any Brattleboro Collateral is
Equipment, whether the Borrower's interest in such Equipment is as owner or
lessee or conditional vendee;
(ii) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or the Borrower from the
Borrower's customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by the Borrower or to the sale, promotion or
shipment thereof; and
(iii) All proceeds of any and all of the foregoing.
(b) Grant of a Security Interest by Guarantors. As security for the
prompt payment and performance in full of all of the Guaranty Obligations, each
Guarantor hereby pledges and grants to the Agent for the ratable benefit of the
Lenders a continuing general Lien upon and security interest in all of its:
(1) present and hereafter acquired Inventory; and
(2) present and future Accounts.
The security interests granted hereunder shall extend and attach to:
46
(i) All Collateral which is presently in existence and which is owned
by the applicable Guarantor or in which such Guarantor has any interest, whether
held by such Guarantor or others for its account;
(ii) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or the applicable
Guarantor from such Guarantor's customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute to
the finished goods or products manufactured or processed by any Guarantor or to
the sale, promotion or shipment thereof; and
(iii) All proceeds of any and all of the foregoing.
SECTION 5.02. Covenants Regarding Inventory. Each Obligor agrees
to safeguard, protect and hold all Inventory for the Lenders' account and
make no disposition thereof except in the regular course of the business of
such Obligor as herein provided. Until the Agent has given such Obligor
notice to the contrary, as provided for below, any Inventory may be sold and
shipped by such Obligor to its customers in the ordinary course of such
Obligor's business, on open account and on terms currently being extended by
such Obligor to its customers, provided that all proceeds of all sales
(including cash, accounts receivable, checks, notes, instruments for the
payment of money and similar proceeds) are forthwith transferred, endorsed,
and turned over and delivered to the Agent for the ratable benefit of the
Lenders in accordance with Section 3.06 of this Financing Agreement. The
Agent shall have the right to withdraw this permission at any time upon the
occurrence of an Event of Default and until such time as such Event of
Default is waived, in which event no further disposition shall be made of the
Inventory by such Obligor without the Agent's prior written approval. Cash
sales or sales of Inventory in which a Lien upon, or security interest in,
Inventory is retained by such Obligor shall be made by such Obligor only with
the approval of the Agent, and the proceeds of such sales or sales of
Inventory for cash shall not be commingled with such Obligor's other
property, but shall be segregated, held by such Obligor in trust for the
Lenders as the Lenders' exclusive property, and shall be delivered
immediately by such Obligor to the Agent in the identical form received by
such Obligor by deposit to the Depository Accounts. Upon the sale, exchange,
or other disposition of Inventory, as herein provided, the security interest
in such Obligor's Inventory provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to,
all proceeds, including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping documents, chattel
paper and all other cash and non-cash
47
proceeds of such sale, exchange or disposition. As to any such sale,
exchange or other disposition, the Agent shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation.
SECTION 5.03. Covenants Regarding Equipment. The Equipment is and
will only be used by the Borrower in its business and will not be held for sale
or lease, or removed from its premises, or otherwise disposed of by the Borrower
without the prior written approval of the Agent. The Borrower will not sell,
transfer, lease or otherwise dispose of any of the Equipment constituting a part
of the Brattleboro Collateral, or attempt, offer or contract to do so, except
for sales of assets permitted by this Financing Agreement. Concurrently with
any such permitted disposition, the property acquired by a transferee in such
disposition shall automatically be released from the security interest created
by this Financing Agreement (the "Security Interest"). It is acknowledged and
agreed that notwithstanding any release of property from the Security Interest
in accordance with the foregoing provisions of this Section, the Security
Interest shall in any event continue in the proceeds of the Brattleboro
Collateral. The Agent shall promptly execute and deliver (and, when
appropriate, shall cause any separate agent, co-agent or trustee to execute and
deliver) any releases, instruments or documents reasonably requested by the
Borrower to accomplish or confirm the release of the Equipment constituting a
part of the Brattleboro Collateral provided by this Section. Any such release
of the Equipment constituting a part of the Brattleboro Collateral provided by
the Agent shall specifically describe that portion of the Brattleboro Collateral
to be released, shall be expressed to be unconditional and shall be without
recourse or warranty (other than a warranty that the Agent has not assigned its
rights and interests to any other Person). The Borrower shall pay all of the
Agent's out-of-pocket expenses in connection with any release of the Brattleboro
Collateral.
The Borrower agrees at its own cost and expense to keep the Equipment
in as good and substantial repair and condition as the same is now or at the
time the Lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. The Borrower also agrees to safeguard, protect and
hold all Equipment for the Lenders' account and make no disposition thereof
unless the Borrower first obtains the prior written approval of the Agent. Any
sale, exchange or other disposition of any Equipment shall only be made by the
Borrower with the prior written approval of the Agent, and the proceeds of any
such sales shall not be commingled with the Borrower's other property, but shall
be segregated, held by the Borrower in trust for the Lenders as the Lenders'
exclusive property, and
48
shall be delivered immediately by the Borrower to the Agent in the identical
form received by the Borrower by deposit to the Depository Accounts. Upon
the sale, exchange, or other disposition of the Equipment, as herein
provided, the security interest provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to,
all proceeds, including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping documents, chattel
paper and all other cash and non-cash proceeds of such sales, exchange or
disposition. As to any such sale, exchange or other disposition, the Agent
shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation. Notwithstanding anything
hereinabove contained to the contrary, the Borrower may sell, exchange or
otherwise dispose of obsolete Equipment or Equipment no longer needed in the
Borrower's operations, provided, however, that (a) the then book value of the
Equipment so disposed of does not exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate in any Fiscal Year and (b) the proceeds of such
sales or dispositions are delivered to the Agent for the ratable benefit of
the Lenders in accordance with the foregoing provisions of this paragraph,
except that the Borrower may retain and use such proceeds to purchase
forthwith replacement Equipment which the Borrower determines in its
reasonable business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold, provided, however, that the aforesaid right
shall automatically cease upon the occurrence of an Event of Default which is
not waived.
SECTION 5.04. Collateral Covenant. Each Obligor hereby covenants
that, except for the Permitted Encumbrances, such Obligor is or will be at the
time additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, consign, transfer and create a
security interest therein, free and clear of any and all claims or Liens in
favor of others; that such Obligor will at its expense forever warrant and, at
the Lenders' and/or the Agent's request, defend the same from any and all claims
and demands of any other person other than the Permitted Encumbrances. Such
Obligor will not grant, create or permit to exist, any Lien upon or security
interest in the Collateral, or any proceeds thereof, in favor of any other
Person other than the holders of the Permitted Encumbrances.
No Obligor will (a) change the location of its chief executive
office/chief place of business from that specified in Schedule 5.04 or remove
its books and records from the location specified in Schedule 5.04, (b)
permit any of the Inventory or Equipment owned by it to be kept at a location
other than those listed on Schedule 5.04 hereto or (c) change its name
(including the adoption of any new trade name),
49
identity or corporate structure unless it shall have provided at least thirty
(30) days prior written notice to the Agent of any such change. Each Obligor
will from time to time notify the Agent of each location at which any amount
of the Collateral or such books and records are to be kept including for
temporary processing, storage or similar purposes. No Obligor shall remove
any amount of Collateral or such books or record to a location not set forth
on Schedule 5.04 or otherwise keep any amount of Collateral (other than Real
Estate, to the extent described in Schedule 5.04A hereto) at a location not
set forth on Schedule 5.04 unless, not less than thirty (30) days prior to
the day such removal or other change occurs such Obligor shall give written
notice to the Agent of such removal or other change and the new location of
such Collateral or such books and records. No action requiring notice to the
Agent under this paragraph shall be effected until such filings and other
measures required under applicable Law to continue uninterrupted the first
perfected security interest and Lien of the Agent in the Collateral affected
thereby shall have been taken, and until the Agent shall have received such
opinions of counsel with respect thereto as it shall have reasonably
requested. Each Obligor also agrees to advise the Agent promptly, in
sufficient detail, of any material adverse change relating to the type,
quantity or quality of the Collateral or to the security interests granted to
the Lenders or the Agent therein. Each Obligor as to itself, hereby
authorizes the Agent to regard its printed name or rubber stamp signature on
assignment schedules or invoices as the equivalent of a manual signature by
one of its authorized officers or agents.
SECTION 5.05. Covenants Regarding Accounts. No Obligor will (a)
amend, modify, terminate or waive any provision of any contract, license or
agreement giving rise to an Account of such Obligor in any manner which could
reasonably be expected to materially adversely affect the value of such
contract, license or Account as Collateral, (b) fail to exercise promptly and
diligently each and every material right which it may have under each material
contract, license or agreement giving rise to an Account of such Obligor (other
than any right of termination), except in a manner consistent with the ordinary
and customary conduct of its business or (c) fail to deliver to the Agent upon
its reasonable request a copy of each material demand, notice or document
received by it relating in any way to any material contract, license or
agreement giving rise to an Account of such Obligor.
Other than in the ordinary course of business as generally conducted
by such Obligor over a period of time, no Obligor will grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or
50
partially, any Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
SECTION 5.06. Covenants Regarding Lease Agreement. The Borrower
will not amend or modify any of the terms or provisions of the Lease Agreement,
as in effect on the date hereof.
SECTION 5.07. Continuing Security Interest. The rights and security
interests granted to the Agent for the ratable benefit of the Lenders hereunder
are to continue in full force and effect, notwithstanding the termination of
this Financing Agreement or the fact that the account maintained in the
Borrower's name on the books of the Agent may from time to time be temporarily
in a credit position, until the final payment in full to the Agent and the
Lenders of all Obligations and the termination of this Financing Agreement. Any
delay, or omission by the Agent to exercise any right hereunder, shall not be
deemed a waiver thereof, or be deemed a waiver of any other right, unless such
waiver be in writing and signed by the Agent. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion.
SECTION 5.08. Actions by Agent. To the extent that the Obligations
are now or hereafter secured by any assets or property other than the Collateral
or by the guarantee, endorsement, assets or property of any other Person, then
the Agent shall have the right in its sole discretion to determine which rights,
security, Liens, security interests or remedies the Agent shall at any time
pursue, foreclose upon, relinquish, subordinate, modify or take any other action
with respect to, without in any way modifying or affecting any of them, or any
of the Agent's or the Lenders' rights hereunder.
SECTION 5.09. Additional Collateral and Further Assurances. Upon
the request of the Agent, each Obligor will, at the sole expense of such
Obligor, promptly and duly execute and deliver such further instruments and
documents and take such further action as the Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this Financing
Agreement, the Security Documents and of the rights and powers herein and
therein granted for the benefit of the Agent and the Lenders.
Each Obligor will comply with the requirements of all state and
federal Laws in order to grant to the Agent for the benefit of the Lenders
valid and perfected first security interests and Liens in the Collateral,
subject only to the Permitted Encumbrances. The Agent is hereby authorized
by each Obligor to file any financing statements covering the Collateral
whether or not the Obligor's signature appears thereon. Each Obligor agrees
to do whatever the Agent may
51
request, from time to time, by way of: filing notices of Liens, financing
statements, amendments, renewals and continuations thereof; cooperating with
the Agent; keeping stock records; and performing such further acts as the
Lenders may reasonably require in order to perfect the Liens contemplated by
this Financing Agreement in favor of the Lenders for the benefit of the
Lenders.
Any reserves or balances to the credit of the Borrower and any other
property or assets of an Obligor in the possession of the Agent or any of the
Lenders may be held by such holder as security for any Obligations and applied
in whole or partial satisfaction of such Obligations when due. The Liens and
security interests granted herein and any other Lien or security interest the
Agent or any Lender may have in any other assets of an Obligor shall secure
payment and performance of all now existing and future Obligations. The Agent
may in its discretion charge any or all of the Obligations to the account of an
Obligor when due.
This Financing Agreement and the obligation of the Borrower to perform
all of its covenants and obligations hereunder are further secured by a Mortgage
(Brattleboro, Vermont) on the Real Estate. The Borrower shall give to the Agent
for the ratable benefit of the Lenders from time to time such mortgage on the
Real Estate as the Agent shall require to obtain a valid first Lien thereon
subject only to those exceptions of title as set forth in future title insurance
policies that are satisfactory to the Lenders.
SECTION 5.10. Additional Information. Each Obligor will execute and
deliver to the Agent, from time to time, such written statements and schedules
as the Agent may reasonably require, designating, identifying or describing the
Collateral pledged to the Lenders or the Agent hereunder, including, without
limitation, such schedules of Accounts as the Agent may reasonably request to
support or confirm any information previously given, and such other appropriate
reports designating, identifying and describing the Accounts as the Agent may
reasonably require, and changes after the date hereof in the descriptions of the
specific properties constituting its owned and leased properties. An Obligor's
failure, however, to promptly give the Agent such statements or schedules shall
not affect, diminish, modify or otherwise limit the Lenders' or the Agent's
security interests in the Collateral.
SECTION 5.11. Compliance with Fair Labor Standards Act. Each Obligor
shall comply in all material respects with all provisions of the Fair Labor
Standards Act as set forth in Sections 201 through 219 of Title 29 of the United
States Code.
52
ARTICLE 6. INTEREST, FEES AND EXPENSES.
SECTION 6.01. Method of Electing Interest Rates. The Revolving
Credit Loans made to the Borrower shall bear interest at either the Chase
Manhattan Bank Rate or the Libor Rate. Thereafter, the Borrower may from time
to time elect to change or continue the Type borne by each Revolving Credit
Loan, as follows:
(a) if such Revolving Credit Loans are Chase Manhattan Bank Rate
Loans, the Borrower may elect to convert such Revolving Credit Loans to Libor
Rate Loans as of any Business Day;
(b) if such Revolving Credit Loans are Libor Rate Loans, the Borrower
may elect to convert such Revolving Credit Loans to Chase Manhattan Bank Rate
Loans or, or elect to continue such Libor Rate Loans as Libor Rate Loans for an
additional Libor Rate Period, in each case effective on the last day of the then
current Libor Rate Period applicable to such Revolving Credit Loans.
Each such election shall be made by delivering a notice substantially in the
form of Exhibit C hereto (a "Notice of Interest Rate Selection") to Agent by (1)
12:00 Noon (New York City time) at least one (1) Business Day before the
conversion of a Libor Rate Loan into a Chase Manhattan Bank Rate Loan, or (2)
12:00 Noon (New York City time) at least three (3) Business Days before the
conversion of a Chase Manhattan Bank Rate Loan into a Libor Rate Loan or the
continuation of a Libor Rate Loan as a Libor Rate Loan. A Notice of Loan
Interest Rate Selection may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Revolving Credit Loan; provided that
the portion to which such notice applies, and the remaining portion to which it
does not apply, each are sufficient to meet the minimum amount specified in
Section 3.14.
Each Notice of Interest Rate Selection relating to a Chase Manhattan
Bank Rate Loan or Libor Rate Loan shall specify:
(i) the Revolving Credit Loan (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of the first paragraph of this Section 6.01;
(iii) if the Revolving Credit Loans are to be converted, and if
such new Revolving Credit Loans are
53
Libor Rate Loans, the duration of the initial Libor Rate Period
applicable thereto; and
(iv) if such Revolving Credit Loans are to be continued as Libor
Rate Loans for an additional Libor Rate Period, the duration of such
additional Libor Rate Period.
Each Libor Rate Period specified in a Notice of Interest Rate
Selection shall comply with the provisions of the definition of Libor Rate
Period. No conversion into a Libor Rate Loan and no continuation of a Libor
Rate Loan shall be permitted when a Default or Event of Default has occurred and
is continuing. If the Borrower fails to deliver a timely Notice of Interest
Rate Selection to the Agent for any Libor Rate Loans to the Borrower such
Revolving Credit Loans shall be converted into Chase Manhattan Bank Rate Loans
on the last day of the then current Libor Rate Period applicable thereto.
Anything herein to the contrary notwithstanding, at no time shall
there be outstanding more than three (3) different Libor Rate Periods relating
to Libor Rate Loans in the aggregate.
SECTION 6.02. Interest. The Borrower shall pay interest on the
outstanding unpaid principal amount of its Revolving Credit Loans for each day
from and including the date such Revolving Credit Loan is made until but
excluding the date such Revolving Credit Loan is paid in full, at one of the
following rates per annum:
(1) Chase Manhattan Bank Rate Loan. For a Chase Manhattan Bank Rate
Loan, a rate per annum equal at all times to the sum of the Chase Manhattan Bank
Rate in effect for such day plus the Applicable Margin; and
(2) Libor Rate Loan. For a Libor Rate Loan, a rate per annum equal
at all times during each Libor Rate Period of such Revolving Credit Loan to the
sum of the Libor Rate for such Libor Rate Period plus the Applicable Margin.
All accrued and unpaid interest on the Revolving Credit Loans will be
payable in arrears on each Quarterly Date, regardless of interest rate, and
shall be calculated based on a 360 day year. The Agent shall be entitled to
charge the Borrower's account with the applicable interest rate(s) until all
Obligations have been paid in full.
The interest rate on Chase Manhattan Bank Rate Loans shall change
when the Chase Manhattan Bank Rate changes. Interest on the Chase Manhattan
Bank Rate Loans and the Libor Rate Loans shall not exceed the maximum amount
permitted under applicable Law. Upon the occurrence of an Event of Default
54
interest will accrue at the Default Rate of Interest as provided in Section
12.02.
Agent shall determine each interest rate applicable to the Revolving
Credit Loans hereunder. Agent shall give prompt notice to the Borrower and each
Lender of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
SECTION 6.03. Fees. During the period from the Closing Date to the
Revolving Credit Commitment Termination Date, the Borrower agrees to pay to the
Agent for the account of each Lender the Unused Line Fee relating to the
Revolving Credit Commitment to the Borrower. All Unused Line Fees are payable
in arrears on each Quarterly Payment Date. Upon receipt of any such Unused Line
Fee, the Agent will promptly thereafter cause to be distributed to each Lender
its Pro Rata Share of such Fee.
The Borrower shall reimburse or pay the Agent, as the case may be, for
(i) all Out-of-Pocket Expenses of the Agent and/or the Lenders, and (ii) any
applicable Documentation Fee.
On April 30, 1997 and each anniversary thereof, the Borrower shall pay
to the Agent a Collateral Management Fee (for its own account) in the amount of
Thirty-Five Thousand Dollars ($35,000). All the fees under this paragraph are
"Collateral Management Fees" and shall be fully earned when paid and shall not
be refundable or rebateable by reason of prepayment, acceleration upon an Event
of Default, or any other circumstance and shall survive any termination of this
Financing Agreement.
The Borrower shall pay the Agent's standard charges for, and the fees
and expenses of, the Agent's personnel used by the Agent for reviewing the books
and records of the Borrower and for verifying, testing, protecting,
safeguarding, preserving or disposing of all or any part of the Collateral,
provided, however, that the foregoing shall not be payable until the occurrence
of an Event of Default if the Borrower are paying a Collateral Management Fee.
The Borrower hereby authorizes the Agent to charge the Borrower's
accounts with the Agent with the amount of all payments due hereunder as such
payments become due. The Borrower confirms that any charges which the Agent may
so make to its account as herein provided will be made as an accommodation to
the Borrower and solely at the Agent's discretion.
SECTION 6.04. Payments and Computations. The Borrower shall make
each principal and interest payment and
55
pay all fees not later than 12:00 Noon (New York time) on the day when due in
Dollars in immediately available funds in New York City to Agent at its
principal office.
All computations of interest on Libor Rate Loans, Chase Manhattan Bank
Rate Loans and fees, shall be made by Agent on the basis of a year of three
hundred sixty (360) days and paid, in each case, for the actual number of days
elapsed (including the first day but excluding the last day). Each
determination by Agent of an interest rate or fees hereunder shall be conclusive
and binding for all purposes absent manifest error.
Calculation of all amounts payable to the Agent for the ratable
benefit of the Lenders under this Financing Agreement with regard to Libor Rate
Loans shall be made as though the Lenders had actually funded the Libor Rate
Loans through the purchase of deposits in the relevant market and currency, as
the case may be, bearing interest at the rate applicable to such Libor Rate
Loans and having a maturity comparable to the relevant Libor Period, provided,
however, that the Lenders may fund each of the Libor Rate Loans in any manner as
the Agent sees fit and the foregoing assumption shall be used only for
calculation of amounts payable under the Financing Agreement.
Whenever any payment of principal or interest (except on Libor Rate
Loans) or of fees shall be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day. Whenever any payment
of principal or interest on a Libor Rate Loan shall be due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Business Day. If the date for
any payment of principal is extended by operation of Law or otherwise, interest
thereon shall be payable for such extended time.
SECTION 6.05. Certain Compensation. The Borrower hereby jointly
and severally agrees to indemnify the Agent and each Lender and hold the
Agent and each Lender harmless from any loss, cost or expense they may
sustain or incur as a consequence of the failure by the Borrower to complete
any borrowing hereunder of a Libor Rate after notice thereof has been given
by such Borrower to the Agent, including, without limitation, any loss, cost
or expense incurred by reason of the liquidation or re-employment of deposits
or other funds acquired by the Agent to fund such borrowing when the
applicable amount of the Revolving Credit Loan, as a result of such failure,
is not made subject to such interest rates on such date. The Agent shall
certify the amount of its and/or the Lenders' loss, cost or expense to the
Borrower, and such
56
certification shall be final and conclusive absent manifest error.
Without limiting the foregoing, such compensation shall include the
Libor Rate Prepayment Premium.
ARTICLE 7. POWERS.
SECTION 7.01. Powers. The Borrower hereby constitutes the Agent or
any person or agent the Agent may designate as its attorney-in-fact, at the
Borrower's cost and expense, to exercise all of the following powers, which
being coupled with an interest, shall be irrevocable until all of the Borrower's
Obligations to the Agent and the Lenders have been paid in full after the
termination of this Financing Agreement:
(1) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent, the Lenders, or such Borrower, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(2) To receive, open and dispose of all mail addressed to the Borrower
and to notify postal authorities to change the address for delivery thereof to
such address as the Agent may designate;
(3) To request from customers indebted on Accounts at any time, in the
name of the Agent or the Borrower or that of the Agent's designee, information
concerning the amounts owing on the Accounts;
(4) To transmit to customers indebted on Accounts notice of the
Agent's and the Lenders' interest therein and to notify customers indebted on
Accounts of the Borrower to make payment directly to the Agent for the
Borrower's account; and
(5) To take or bring, in the name of the Agent, the Lenders or the
Borrower, all steps, actions, suits or proceedings deemed by the Agent necessary
or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the
powers set forth in (b), (d) and (e) above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of Default
is waived in writing.
57
ARTICLE 8. REPRESENTATIONS AND WARRANTIES
Each of the Obligors, individually and jointly, represents and
warrants that:
SECTION 8.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION.
Such Obligor is duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own its assets and to transact the business in which
it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required except to the extent
that its failure to be so qualified could not result in a Material Adverse
Change.
SECTION 8.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The
execution, delivery and performance by such Obligor of the Loan Documents
have been duly authorized by all necessary corporate action and do not and
will not: (a) require any consent or approval of its stockholders; (b)
contravene its certificate of incorporation or by-laws; (c) violate any
provision of, or require any filing (other than the filing of the financing
statements contemplated by the Security Documents), registration, consent or
approval under any Law (including, without limitation, Regulation U), order,
writ, judgment, injunction, decree, determination or award presently in
effect having applicability to such corporation; (d) result in a breach of or
constitute a default under or require any consent under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which such
Obligor is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien (other than
as created under the Security Documents), upon or with respect to any of the
properties now owned or hereafter acquired by such Person.
SECTION 8.03. LEGALLY ENFORCEABLE AGREEMENTS. Each Loan Document
is a legal, valid and binding obligation of such Obligor, enforceable against
such Obligor in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
SECTION 8.04. LITIGATION. Except as disclosed in Schedule 8.04
hereto, there are no actions, suits or proceedings pending or, to the
knowledge of any of the Obligors, as the case may be, threatened, against or
affecting such Obligor before any court, governmental agency or arbitrator,
which could, in any one case or in the aggregate, result in a Material
Adverse Change.
58
SECTION 8.05. FINANCIAL STATEMENTS. (a) The consolidated balance
sheet of the Borrower and its Subsidiaries as of December 31, 1994 and
December 31, 1995, the related statements of income, statements of
stockholders' equity (deficit) and statements of cash flows of the Borrower
for the Fiscal Years then ended, and the accompanying footnotes, together
with the opinion thereon, dated February 29, 1996, of Coopers & Xxxxxxx LLP,
independent certified public accountants, copies of which have been furnished
to the Lenders, are complete and correct and fairly present the financial
condition of the Borrower and its Subsidiaries as at such dates and the
results of the operations of the Borrower and its Subsidiaries for the
periods covered by such statements, all in accordance with GAAP consistently
applied. There are no liabilities of the Borrower and its Subsidiaries,
fixed or contingent, which are material but are not reflected in the
financial statements or in the notes thereto, other than liabilities arising
in the ordinary course of business since December 31, 1995. No information,
exhibit, or report furnished by the Borrower and its Subsidiaries to the
Agent or any Lender in connection with the negotiation of this Financing
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein
not materially misleading.
(b) The consolidated unaudited balance sheet of the Borrower and its
Subsidiaries as of September 30, 1996, the related statements of income,
statements of stockholders' equity (deficit) and statements of cash flows of
such entities for the six-month periods then ended, and the accompanying
footnotes, copies of which have been furnished to the Lenders, are complete
and correct and fairly present the financial condition of the Borrower and
its Subsidiaries, as at such dates and the results of the operations of the
Borrower and its Subsidiaries for the periods covered by such statements, all
in accordance with GAAP consistently applied. There are no liabilities of
the Borrower and its Subsidiaries, fixed or contingent, which are material
but not reflected in the financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business since September
30, 1996. No information, exhibit, or report furnished by the Borrower and
its Subsidiaries to the Agent or any Lender in connection with the
negotiation of this Financing Agreement contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(c) The consolidated balance sheet of CPG Investors and its
Subsidiaries as of December 31, 1994 and December 31, 1995, the related
statements of income, statements of stockholders' equity (deficit) and
statements of cash flows of
59
CPG Investors and its Subsidiaries for the fiscal years then ended, and the
accompanying footnotes, together with the opinion thereon, dated February 29,
1996 of Coopers & Xxxxxxx LLP, independent certified public accountants,
copies of which have been furnished to the Lenders, are complete and correct
and fairly present the financial condition of CPG Investors and its
Subsidiaries as at such dates and the results of the operations of CPG
Investors and its Subsidiaries for the periods covered by such statements,
all in accordance with GAAP consistently applied. There are no liabilities
of CPG Investors and its Subsidiaries, fixed or contingent, which are
material but are not reflected in the financial statement or in the notes
thereto, other than liabilities arising in the ordinary course of business
since December 31, 1995. No information, exhibit, or report furnished by CPG
Investors and its Subsidiaries to the Agent or any Lender in connection with
the negotiation of this Financing Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
(d) The consolidated unaudited balance sheet of CPG Investors and
its Subsidiaries as of June 30, 1996, the related statements of income,
statements of stockholders' equity (deficit) and statements of cash flows of
such entities for the six-month period then ended, and the accompanying
footnotes, copies of which have been furnished to the Lenders, are complete
and correct and fairly present the financial condition of CPG Investors and
its Subsidiaries, as at such date and the results of the operations of CPG
Investors and its Subsidiaries for the periods covered by such statements,
all in accordance with GAAP consistently applied. There are no liabilities
of CPG Investors and its Subsidiaries, fixed or contingent, which are
material but not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business
since June 30, 1996. No information, exhibit, or report furnished by CPG
Investors and its Subsidiaries to the Agent or any Lender in connection with
the negotiation of this Financing Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
(e) The consolidated balance sheets of Arcon Holdings and its
Subsidiary as of October 31, 1994 and October 31, 1995, the related
statements of income, statements of stockholders' equity (deficit) and
statements of cash flows of Arcon Holdings and its Subsidiary for the fiscal
years then ended, and the accompanying footnotes, together with the opinion
thereon, dated November 28, 1995 of Price Waterhouse LLP, independent
certified public accountants, copies of which have been furnished to the
Lenders, are complete and correct and fairly present the financial condition
of Arcon Holdings
60
and its Subsidiary as at such dates and the results of the operations of
Arcon Holdings and its Subsidiary for the periods covered by such statements,
all in accordance with GAAP consistently applied. There are no liabilities
of Arcon Holdings and its Subsidiary, fixed or contingent, which are material
but are not reflected in the financial statement or in the notes thereto,
other than liabilities arising in the ordinary course of business since
October 31, 1995. No information, exhibit, or report furnished by Arcon
Holdings and its Subsidiary to the Agent or any Lender in connection with the
negotiation of this Financing Agreement contained any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(f) The consolidated unaudited balance sheet of Arcon Holdings and
its Subsidiary as of June 30, 1996, the related statements of income,
statements of stockholders' equity (deficit) and statements of cash flows of
such entities for the eight-month period then ended, and the accompanying
footnotes, copies of which have been furnished to the Lenders, are complete
and correct and fairly present the financial condition of Arcon Holdings and
its Subsidiary, as at such date and the results of the operations of Arcon
Holdings and its Subsidiary for the periods covered by such statements, all
in accordance with GAAP consistently applied. There are no liabilities of
Arcon Holdings and its Subsidiary, fixed or contingent, which are material
but not reflected in the financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business since June 30,
1996. No information, exhibit, or report furnished by Arcon Holdings and its
Subsidiary to the Agent or any Lender in connection with the negotiation of
this Financing Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(g) NO MATERIAL ADVERSE CHANGE. Since December 31, 1995 there has
been no Material Adverse Change with respect to any Obligor.
SECTION 8.06. OWNERSHIP AND LIENS. No Obligor has any fee
interests in any real property or leasehold interests in real property having
an unexpired term (including any option or renewal periods) in excess of 20
years other than the interest encumbered by the Mortgage (Brattleboro,
Vermont). Each Obligor has title to, or valid leasehold interests in, all of
its properties and assets, real and personal, including the properties and
assets, and leasehold interests reflected in the financial statements
referred to in Section 5.05 (other than any properties or assets disposed of
in the ordinary course of business), and none of the properties and assets
owned by such Obligor and none of its
61
leasehold interests is subject to any Lien, except Permitted Encumbrances.
SECTION 8.07. TAXES. Each Obligor has filed all tax returns
(federal, state and local) required to be filed and has paid all taxes,
assessments and governmental charges and levies thereon to be due, including
interest and penalties, except to the extent they are the subject of a Good
Faith Contest.
SECTION 8.08. ERISA. Each Obligor is substantially in compliance
with all applicable provisions of ERISA and the Code. No Reportable Event
has occurred with respect to any Pension Plan; no notice of intent to
terminate a Pension Plan has been filed nor has any Pension Plan been
terminated; no Obligor nor any other Person, including any fiduciary, has
engaged in any prohibited transaction (as defined in Section 4975 of the Code
or Section 406 of ERISA) which could subject any Obligor, or any entity which
any Obligor has an obligation to indemnify, to any tax or penalty imposed
under Section 4975 of the Code or Section 502 of ERISA; there is no lien
outstanding pursuant to Section 4068 of ERISA or Section 412 of the Code or
security interest, within the meaning of Section 401(a)(29) of the Code,
given in connection with a Pension Plan; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer, a
Pension Plan, nor has the PBGC instituted any such proceedings; no Obligor,
nor any ERISA Affiliate has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; the minimum funding
requirements under ERISA and the Code have been satisfied with respect to all
Pension Plans and the aggregate unfunded liabilities under all Pension Plans
does not exceed Two Hundred Thousand Dollars ($200,000); no Multiemployer
Plan is in Reorganization or is Insolvent; and neither Borrower, any
Guarantor, nor any ERISA Affiliate has received notice that indicates the
existence of potential or contingent withdrawal liability under a
Multiemployer Plan in excess of One Million Eight Hundred Thousand Dollars
($1,800,000). No Obligor has any liability for retiree medical or life
insurance benefits other than liability with respect to active employees
covered by the Owensboro, Kentucky location and the total FASB liability for
such group is not material to any Obligor.
SECTION 8.09. SUBSIDIARIES. The Borrower has no Subsidiaries other
than Specialty Hong Kong, Specialty Japan, Endura, CPG Investors, CPG
Holdings, CPG-Xxxxxx, Custom, Arcon Holdings and Arcon Coating.
SECTION 8.10. OPERATION OF BUSINESS. Each Obligor possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade
names, or rights thereto, to
62
conduct its business substantially as now conducted and as presently proposed
to be conducted except where failure to so possess could not result in a
Material Adverse Change and no Obligor is in violation of any valid rights of
others with respect to any of the foregoing.
SECTION 8.11. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Each
Obligor has satisfied all judgments and no Obligor is in default with respect
to any judgment, writ, injunction, decree, rule or regulation of any court,
arbitrator or federal, state, municipal or other Governmental Authority,
commission, board, bureau, agency or instrumentality, domestic or foreign.
SECTION 8.12. NO DEFAULTS ON OTHER AGREEMENTS. No Obligor is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any certificate of incorporation or
corporate restriction which could result in a Material Adverse Change. No
Obligor is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in
any agreement or instrument.
SECTION 8.13. LABOR DISPUTES AND ACTS OF GOD. Neither the
business nor the properties of any Obligor are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance).
SECTION 8.14. GOVERNMENTAL REGULATION. No Obligor is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act, the Federal
Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
SECTION 8.15. PARTNERSHIPS. No Obligor is a partner in any
partnership.
SECTION 8.16. ENVIRONMENTAL PROTECTION. Each Obligor has obtained
all Approvals and Permits required under all Environmental Laws and such
Approvals and Permits are in good standing. Each Obligor is in compliance
with all Environmental Laws and the terms and conditions of such Approvals
and Permits, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those Laws.
No Environmental Lien has attached to the Brattleboro Collateral.
63
None of the Real Estate or any other property owned or leased by any
Obligor is listed or proposed for listing on the National Priorities List
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or listed on the Comprehensive Environmental
Response, Compensation and Liability Information System List or any similar
state list of sites, and the Borrower is not aware of any conditions at the
Real Estate which, if known to a Governmental Authority, would qualify such
Real Estate for inclusion on any such list.
Except as disclosed in Schedule 8.16,
(a) No Obligor is subject to any plan, order, writ, decree,
judgment, settlement or injunction issued, entered into, promulgated or
approved under or in connection with any Environmental Laws or any
Environmental Discharges;
(b) No Obligor has received any Environmental Notice;
(c) There have been no Environmental Discharges at, to, or from the
Real Estate or either Borrower's other property or facilities or operations,
except such Environmental Discharges as have occurred pursuant to and in full
compliance with all Environmental Laws and Approvals and Permits issued
thereunder;
(d) There are not and, to the knowledge of each Obligor, have never
been any Hazardous Materials present at the Real Property or other
properties, facilities or operations of the Borrower, except such Hazardous
Materials as are and were managed pursuant to and in full compliance with all
Environmental Laws and Approvals and Permits issued thereunder;
(e) No Obligor has any actual or contingent liability in connection
with any Environmental Discharges at any location, including, without
limitation, the Real Property, any site to which an Obligor has transported
or arranged for the transport of Hazardous Substances, or any site at which
an Obligor has disposed of Hazardous Substances; and
(f) No Obligor has any actual or contingent liability in connection
with any property, businesses, or operations previously owned or operated by
the Borrower for (i) any violation of any Environmental Laws, (ii) any
Remedial Action, or (iii) any Environmental Discharges at any location,
including, without limitation, the Real Property, any property, facilities or
operations previously owned or operated by an Obligor, any site to which an
Obligor has transported or arranged for the transport of Hazardous
64
Substances, or any site at which an Obligor has disposed of Hazardous
Substances.
SECTION 8.17. SOLVENCY. Each Obligor is Solvent.
SECTION 8.18. ARCON PURCHASE DOCUMENTS. As of the Closing Date,
the Arcon Purchase Documents have been duly authorized, executed and
delivered by each of the parties thereto and such Documents are a legal,
valid and binding obligation of each of the parties thereto, enforceable in
accordance with the terms of each such Document. The sale of stock
contemplated by the Arcon Purchase Documents has become effective and such
sale of stock has been duly consummated pursuant to the terms of the Arcon
Purchase Documents. After giving effect to the sale of stock in accordance
with the Arcon Purchase Documents, the representations and warranties
contained in this Agreement and each of the other Loan Documents are correct
in all respects and no Default or Event of Default has occurred or would
result from such sale of stock. As of the Closing Date, all the
representations and warranties in the Arcon Purchase Documents are true and
correct.
SECTION 8.19. CPG MERGER DOCUMENTS. As of the Closing Date, the
CPG Merger Documents have been duly authorized, executed and delivered by
each of the parties thereto and such Documents are a legal, valid and binding
obligation of each of the parties thereto, enforceable in accordance with the
terms of each such Document. The merger of a subsidiary of the Borrower into
CPG Investors and the issuance of stock in connection therewith has become
effective and such transaction has been duly consummated pursuant to the
terms of the CPG Merger Documents. After giving effect to such transaction
in accordance with the CPG Merger Documents, the representations and
warranties contained in this Agreement and each of the other Loan Documents
are correct in all respects and no Default or Event of Default has occurred
or would result from such transaction. As of the Closing Date, all the
representations and warranties in the CPG Merger Document are true and
correct.
SECTION 8.20. INTELLECTUAL PROPERTY. Except as set forth on
Schedule 8.20 hereto, neither Borrower nor any Guarantor has any trademarks,
patents or copyrights or any applications pending for any trademarks, patents
or copyrights.
SECTION 8.21. LICENSE OF INTELLECTUAL PROPERTY. Except as set
forth on Schedule 8.21 hereto, neither Borrower nor any Guarantor holds or
has it entered into any agreement for the use of any license for any
trademark, patent, copyright or other intellectual property rights.
65
ARTICLE 9. AFFIRMATIVE COVENANTS.
So long as any Revolving Credit Loans are outstanding or the Lenders
have any Revolving Credit Commitments hereunder or any other amount is owing
to any Lender hereunder or under any Loan Documents:
SECTION 9.01. REPORTING REQUIREMENTS. The Borrower will furnish to
each Lender:
(a) ANNUAL REPORTING REQUIREMENTS: as soon as practicable, and in
any event within one hundred twenty (120) days after the end of each Fiscal
Year of the Borrower, an audited consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such Year, and audited consolidated
statements of earnings, stockholders' equity (deficit), and cash flow of the
Borrower and its Subsidiaries for such Year, setting forth in each case, in
comparative form the figures for the previous Fiscal Year, certified without
qualification arising out of the scope of the audit by a nationally
recognized firm of independent public accountants or other independent public
accountants satisfactory to the Required Lenders, and an unaudited
consolidating balance sheet of the Borrower and its Subsidiaries as at the
end of such Year and unaudited consolidating statements of earnings,
stockholders' equity (deficit) and cash flow of the Borrower and its
Subsidiaries for such Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year. The Borrower shall deliver to the
Agent and each Required Lender no later than thirty (30) days prior to the
start of each new Fiscal Year, annual consolidated and consolidating cash
flow projections of the Borrower and its Subsidiaries, including a projected
consolidated and consolidating balance sheet and statements of earnings,
stockholders' equity (deficit), and cash flow for such Fiscal Year in form
satisfactory to the Required Lenders;
(b) QUARTERLY REPORTING REQUIREMENTS: as soon as practicable, and
in any event within sixty (60) days, after the end of the first, second and
third fiscal quarters of each Fiscal Year of the Borrower (commencing on the
fiscal quarter ending on September 30, 1996), the unaudited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at the
end of such fiscal quarter and the related unaudited consolidated and
consolidating statements of income, stockholders' equity (deficit), and cash
flows, setting forth in each case, in comparative form the figures of the
comparable period for the previous Fiscal Year, certified as to accuracy by
the Borrower (subject to normal year-end audit adjustments);
(c) OFFICER'S CERTIFICATE: each financial statement which the
Borrower is required to submit hereunder must
66
be accompanied by an officer's certificate signed by the chief financial
officer of the Borrower certifying that: (i) the financial statement(s)
fairly and accurately represent(s) the consolidated and consolidating
financial condition of the Borrower and its Subsidiaries at the end of the
particular accounting period, as well as the consolidated and consolidating
operating results of the Borrower and its Subsidiaries during such accounting
period, subject to year-end audit adjustments; and (ii) during the particular
accounting period, (A) there has been no default or condition which, with the
passage of time or notice, or both, would constitute a Default or Event of
Default under this Agreement and such officer has obtained no knowledge of
any Default; provided, however, that if any Executive Officer has knowledge
that any Default or Event of Default has occurred during such period, the
existence of and a detailed description of same shall be set forth in the
Officer's Certificate; and (B) the Borrower has not received any notice of
cancellation with respect to its property insurance policies that have not
been replaced;
(d) MANAGEMENT LETTER: promptly after receipt thereof, a copy of
each report delivered to the Borrower by the independent public accountants
which certify the Borrower's financial statements in connection with any
annual or interim audit of its books, including any management reports or
letters, if any, addressed to the Borrower or any of their respective
officers by such accountants;
(e) OTHER INFORMATION: from time to time, with reasonable
promptness, such other information with respect to each Obligor as Agent or
Lender may from time to time reasonably request;
(f) ACCOUNTS RECEIVABLE AGING SUMMARIES: within thirty (30) days
after the end of each month, Accounts Receivable aging summaries with respect
to each Obligor and within thirty (30) days after the end of each quarter of
each Fiscal Year of such Obligor, detailed Accounts Receivable aging
schedules with respect to each Obligor, prepared in accordance with GAAP,
and, if so requested by the Agent, within sixty (60) days after the close of
each Fiscal Year, an audit of Accounts Receivable of each Obligor for such
Fiscal Year prepared by a nationally-recognized accounting firm acceptable to
the Agent;
(g) REPORTS: promptly after the sending or filing thereof, copies
of all proxy statements, financial statements and reports which the Borrower
sends to all its stockholders, and copies of all regular, periodic and
special reports, and all registration statements which the Borrower files
with the Securities and Exchange Commission or any agency which may be
67
substituted therefor, or with any national securities exchange; and
(h) BORROWING BASE CERTIFICATE: within twenty-five (25) days after
the last day of each month or such lesser period of time as the Agent may
require in its sole discretion, a Borrowing Base Certificate.
SECTION 9.02. NOTICES. The Borrower will, promptly upon obtaining
knowledge of any of the following occurrences and promptly upon the giving or
receipt of any of the following notices, deliver to Agent:
(a) written notice of the occurrence of any Default or Event of
Default, specifically stating that a Default or Event of Default, as the case
may be, has occurred and describing such Default or Event of Default;
(b) written notice of the occurrence of any casualty, damage or loss
to or in respect of the Collateral, in an amount greater than Five Hundred
Thousand Dollars ($500,000), whether or not giving rise to a claim under any
insurance policy, together with copies of any document relating thereto
(including copies of any such claim) in possession or control of the Borrower
or any agent of the Borrower;
(c) written notice of any Material Adverse Change;
(d) written notice of any litigation or proceeding affecting any
Obligor which if adversely determined could result in a Material Adverse
Change;
(e) written notice of the assertion of any Lien (other than
Permitted Encumbrances) against the Collateral or the occurrence of any event
that could have a material adverse effect on the value of the Collateral or
the Liens created pursuant to this Agreement or any Security Document;
(f) written notice of any cancellation of any insurance policy
required to be maintained by any Obligor pursuant to Section 9.07 hereof;
(g) written notice of (i) all expenditures (actual or anticipated)
in excess of Five Hundred Thousand Dollars ($500,000) for (A) Remedial
Action, (B) compliance with Environmental Laws or (C) environmental testing
and the impact of said expenses on any Obligor's working capital; and (ii)
any Environmental Notices advising an Obligor of any liability (real or
potential), which liability could result in a Material Adverse Change;
68
(h) on the first Anniversary of the date hereof and on each
Anniversary thereafter, a report describing issues (not previously disclosed
to the Lenders under other provisions of this Section 9.02) which have arisen
during the prior year pertaining to Environmental Laws, Environmental
Discharges, Hazardous Materials, and Remedial Action and the action which is
proposed to be taken or being taken with respect thereto;
(i) if and when an Obligor or any ERISA Affiliate (i) gives or is
required to give notice to the PBGC of any Reportable Event with respect to
any Pension Plan, a copy of any notice of such Reportable Event given or
required to be given to the Pension Benefit Guaranty Corporation; (ii)
receives notice of a complete or partial withdrawal liability under Title IV
of ERISA or that any Multiemployer Plan is in Reorganization, is Insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
Pension Benefit Guaranty Corporation under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Pension Plan or
Multiemployer Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such
application; (v) gives notice of intent to terminate any Pension Plan under
Section 4041(c) of ERISA a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal from any Pension Plan pursuant
to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any
required payment or contribution to any Pension Plan or Multiemployer Plan or
makes any amendment to any Pension Plan which has resulted or is reasonably
likely to result in the imposition of a Lien, an accumulated funding
deficiency (as defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived, or the posting of a bond or other security, a
certificate of the appropriate financial officer setting forth details as to
such occurrence and action, if any which either Borrower or other ERISA
Affiliate is required or proposes to take;
(j) if and when (i) a transaction prohibited under Section 4975 of
the Code or Section 406 of ERISA occurs resulting in liability to any Obligor
or any entity which the Borrower has an obligation to indemnify, (ii) a
Pension Plan intended to qualify under Section 401(a) or 401(k) of the Code
fails to so qualify or (c) liability is imposed to enforce Section 515 of
ERISA with respect to any Multiemployer Plan, a certificate of the
appropriate financial officer setting forth details as to such occurrence and
action, if any, which the Borrower or other ERISA Affiliate is required or
proposes to take;
(k) written notice of any change in the location of any Collateral,
other than to locations that, as of the date
69
hereof, are known to the Agent and for which the Agent has filed financing
statements and otherwise perfected its Liens thereon;
(l) written notice, in sufficient detail, of any material adverse
change relating to the type, quantity or quality of the Collateral or on the
security interests granted to the Agent for the ratable benefit of the
Lenders.
Each notice pursuant to this Section 9.02 shall be accompanied by a
statement of the Borrower furnishing such notice setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes
to take with respect thereto.
SECTION 9.03. PAYMENT OF TAXES AND CLAIMS. Each Obligor will pay,
when due, all taxes, assessments, claims and other charges (herein "taxes")
lawfully levied or assessed upon such Obligor or the Collateral and if such
taxes remain unpaid after such date fixed for the payment thereof unless such
taxes are the subject of a Good Faith Contest or if any Lien shall be claimed
thereunder (a) for taxes due the United States of America or (b) which in the
Lenders' reasonable opinion might create a valid obligation having priority
over the rights granted to the Lenders herein, the Agent may, on such
Obligor's behalf, pay such taxes, and the amount thereof shall at the Agent's
option be charged to such Borrower's Revolving Credit Loans and shall be an
Obligation secured hereby. If the amount of taxes of the Borrower paid by
the Agent pursuant to this Section 9.03 is in excess of Availability, then
the Borrower shall be deemed to be in default of this Section 9.03.
SECTION 9.04. MAINTENANCE OF EXISTENCE. Each Obligor will preserve
and maintain its corporate existence and good standing in the jurisdiction of
its incorporation, and qualify and remain qualified as a foreign corporation
in each jurisdiction in which such qualification is required, except to the
extent that its failure to do so qualify could not result in a material
adverse change.
SECTION 9.05. CONDUCT OF BUSINESS. Each Obligor will continue to
engage in an efficient and economical manner in a business similar to the
type of business as conducted by it as of the date hereof.
SECTION 9.06. COMPLIANCE WITH LAWS. Each Obligor will comply with
all Laws, except to the extent that failure to do so could not result in a
Material Adverse Change; provided that such Obligor may contest any acts,
rules, regulations, orders and directions of such bodies or officials in any
reasonable manner which will not, in the Lenders'
70
reasonable opinion, materially and adversely effect the Lenders' rights or
priority in the Collateral.
SECTION 9.07. INSURANCE. (a) The Borrower will maintain, with
financially sound and reputable companies, acceptable to the Agent, insurance
policies (a) insuring the Borrower, the Agent and the Lenders against
Comprehensive General Liability and auto liability, liability for personal
injury and property damage relating to the Brattleboro Collateral and
Inventory and (b) insuring the Brattleboro Collateral and Inventory of the
Borrower against all risk of loss by fire, explosion, theft and auto
comprehensive/collision, and such other casualties as may be reasonably
satisfactory to the Agent, such policies to be in such amounts and on such
terms as the Agent shall reasonably require. All policies covering the
Brattleboro Collateral and Inventory are, subject to the rights of any
holders of Permitted Encumbrances holding claims senior to the Lenders, to be
made payable to the Agent for the benefit of the Lenders, in case of loss,
under a standard non-contributory "mortgage", "lender" or "secured party"
clause and are to contain such other provisions as the Lenders may require to
fully protect the Lenders' interest in the Real Estate and shall protect the
Lenders' interest in the Brattleboro Collateral and Inventory and any
payments to be made under such policies. All original certificates of
Insurance, policies or true copies thereof are to be delivered to the Agent,
premium prepaid, with the loss payable endorsement in the Agent's favor for
the benefit of the Lenders, and shall provide for not less than thirty (30)
days prior written notice to the Agent of the exercise of any right of
cancellation.
In addition to the foregoing, the Borrower will maintain Business
Interruption and Comprehensive Boiler and Machinery Insurance in form and
amounts and with insurers acceptable to the Agent. In addition, Xxxxxxx'x
Compensation Insurance in amounts required by applicable law and in form
acceptable to the Agent shall be maintained in connection with the
Brattleboro Collateral and Inventory.
(b) Each Guarantor will maintain, with financially sound and
reputable companies, acceptable to the Agent, insurance policies (a) insuring
such Guarantor, the Agent and the Lenders against Comprehensive General
Liability and auto liability, liability for personal injury and property
damage relating to the Inventory of the Guarantors and (b) insuring the
Inventory of the Guarantors against all risk of loss by fire, explosion,
theft and auto comprehensive/collision, and such other casualties as may be
reasonably satisfactory to the Agent, such policies to be in such amounts and
on such terms as the Agent shall reasonably require. All policies covering
the Inventory of the Guarantors are, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to
71
the Lenders, to be made payable to the Agent for the benefit of the Lenders,
in case of loss, under a standard non-contributory "lender" or "secured
party" clause and are to contain such other provisions as the Lenders may
require to fully protect the Lenders' interest in the Inventory of the
Guarantors and any payments to be made under such policies. All original
certificates of Insurance, policies or true copies thereof are to be
delivered to the Agent, premium prepaid, with the loss payable endorsement in
the Agent's favor for the benefit of the Lenders, and shall provide for not
less than thirty (30) days prior written notice to the Agent of the exercise
of any right of cancellation.
In addition to the foregoing, each Guarantor will maintain Business
Interruption and Comprehensive Boiler and Machinery Insurance in form and
amounts and with insurers acceptable to the Agent. In addition, Xxxxxxx'x
Compensation Insurance in amounts required by applicable law and in form
acceptable to the Agent shall be maintained in connection with the Inventory
of the Guarantor.
(c) At the request of the Borrower or if such Obligor fails to
maintain such insurance, the Agent may arrange for such insurance, but at the
Borrower's expense and without any responsibility on the Lenders' part for:
obtaining the insurance, the solvency of the insurance companies, the
adequacy of the coverage, or the collection of claims. Upon the occurrence
and during the continuance of an Event of Default, the Agent shall, subject
to the rights of any holders of Permitted Encumbrances holding claims senior
to the Lenders, have the sole right, in the name of the Agent for the benefit
of the Lenders or the Borrower, to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such
insurance policies.
In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the outstanding
Revolving Credit Loans and then either pay the balance to the Agent to be
held as cash collateral pending repair, restoration or replacement of the
insured property pursuant to the provisions below.
In the event any part of the Brattleboro Collateral is damaged by
fire or other casualty and the insurance proceeds for such damage or other
casualty (the "Proceeds") is less than or equal to One Hundred Thousand
Dollars ($100,000), the Agent shall promptly apply such Proceeds to reduce
the outstanding balances of such Revolving Credit Loans.
72
As long as no Event of Default shall have occurred and be
continuing, the Brattleboro Collateral Borrower has sufficient business
interruption insurance to replace the lost profits of any of its facilities,
and the Proceeds are in excess of One Hundred Thousand Dollars ($100,000),
the Borrower may elect (by delivering written notice to the Agent) to repair
or restore the Brattleboro Collateral to substantially the equivalent
condition prior to such fire or other casualty as set forth herein, or to
replace the same with substantially the equivalent or functionally equivalent
Real Estate or Equipment. If the Borrower does not, or cannot, elect to use
the Proceeds as set forth above, the Agent may, subject to the rights of any
holders of Permitted Encumbrances holding claims senior to the Lenders and
the Agent, apply the Proceeds to the payment of the Obligations in such
manner and in such order as the Agent may reasonably elect.
If the Borrower elects to use the Proceeds for the repair,
replacement or restoration of any Real Estate or Equipment, and there is then
no Event of Default, (a) proceeds on Equipment and Real Estate in excess of
One Hundred Thousand Dollars ($100,000) will be applied to the reduction of
the Borrowers' Revolving Credit Loans, and (b) the Agent may set up a reserve
against Availability for an amount equal to the amount of proceeds so
allocated to the Borrower's Revolving Credit Loan. The reserves will
collectively be reduced dollar-for-dollar upon receipt of non-cancelable
executed purchase orders, delivery receipts or contracts for the replacement,
repair or restoration of Equipment or the Real Estate and disbursements in
connection therewith, such reduction to be allocated between the Borrower's
reserve in such proportions as the Agent shall determine. Prior to the
commencement of any restoration, repair or replacement of Real Estate, the
Borrower shall provide the Agent with a restoration plan and a total budget
certified by the chief executive officer and chief financial officer of the
Borrower, and, if the total budget exceeds One Million Dollars ($1,000,000),
also certified by an independent third party experienced in construction
costing. If there are insufficient proceeds to cover the cost of restoration
as so determined, the Borrower shall be responsible for the amount of any
such insufficiency prior to the commencement of restoration and shall
demonstrate evidence of such before the reserve will be reduced. Completion
of restoration shall be evidenced by a final, unqualified certification of
the design architect employed, if any, but only if the cost of restoration
exceeded One Million Dollars ($1,000,000); an unconditional certificate of
occupancy, if applicable; such other certification as may be required by law;
or if none of the above is applicable, a written good faith determination of
completion by the chief executive officer and chief financial officer of the
Borrower as the case may be (herein collectively
73
the "Completion"). Upon Completion, any remaining reserves as established
hereunder will be automatically released.
All policies of insurance required under the provisions of this
Section shall contain (a) an endorsement by the insurer that any loss shall
be payable in accordance with the terms of such policy notwithstanding any
act or negligence of the Borrower that might otherwise give rise to a defense
by the insurer to its payment of such loss, and (b) a waiver by the insured
of all rights of subrogation to any rights of the additional insureds against
the Borrower, and (c) a disclaimer of all rights of setoff, counterclaim or
deduction against the insureds other than the Borrower. The Borrower shall
not take out separate insurance concurrent in form or contributing in the
event of loss with that required by this Agreement unless the same shall
contain a standard non-contributory lender's loss payable endorsement in
scope and form approved by the Required Lenders prior to the Closing Date
with loss payable to the Agent for the benefit of the Lenders as its
interests may appear. All retentions and deductibles under policies where
the Agent is loss payee shall be the sole responsibility of the Borrower
maintaining such policies subject to the Lenders' approval.
Without limiting any of the foregoing, each of the insurance
policies required by this Section 9.07 which is required to name the Agent in
its capacity as agent for each of the Lenders, as an additional insured
thereunder shall provide:
(a) that no cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least thirty (30) days after
receipt by the Agent of written notice thereof;
(b) that the interests of Agent and each of the Lenders will be
insured regardless of any breach by any Obligor or any other Person of any
warranties, declarations or conditions contained therein;
(c) that neither Agent nor any of the Lenders shall have any
obligation or liability for premiums, commissions, assessments or calls in
connection with such insurance.
On or before the Closing Date and prior to each policy expiration
thereafter, each Obligor shall deliver to the Agent an original certificate
or binder signed by the insurer or its duly authorized representative showing
the insurance then maintained by the Borrower pursuant to this Section 9.07,
and stating that such insurance complies with the terms of this Section 9.07,
together with evidence that payment of the premiums on such insurance is
current. The Obligors shall effect such changes in the form (but not the
74
amount or types) of the policies required pursuant to this Section 9.07, as
may be required by the Agent, provided such changes (a) are commercially
available at reasonable rates, which determination shall be made by Agent and
(b) the effect of such changes by the Borrower would not result in a
violation of the provisions of the Mortgage (Brattleboro, Vermont).
SECTION 9.08. BOOKS AND RECORDS; INSPECTION. Each Obligor will
maintain books and records pertaining to the Collateral owned by it in such
detail, form and scope as is consistent in all material respects with current
practices and agrees that the books and records of such Obligor will reflect
the Lenders' interest in such Collateral. Each Obligor agrees that all of
its books and records, including records handled or maintained for such
Obligor by any other company or entity, will be available to the Agent, the
Lenders and that the Agent, the Lenders or their respective agents,
accountants and attorneys may enter upon such Obligor's premises or any other
properties on or in which any of such Obligor's Collateral may be located at
any time during normal business hours upon reasonable notice (provided, that
no such notice is required after the occurrence and during the continuance of
an Event of Default), and from time to time, for the purpose of inspecting
the Collateral, and any and all records pertaining thereto, including,
without limitation, copies of agreements with, or purchase orders from, such
Obligor's customers, and copies of invoices to customers, proof of shipment
or delivery and such other documentation and information relating to said
Accounts and other Collateral as the Agent may reasonably require. Each
Obligor hereby further agrees that the Lenders may, from and after the date
hereof, request any information from, and have access to such Obligor's
officers and its independent public accountant, and such Obligor will cause
such officers and direct such accountants to make available to the Lenders
such information.
SECTION 9.09. ERISA COVENANT. Each Obligor will, and will cause
each of its ERISA Affiliates to, maintain all Employee Benefit Plans in
compliance in all material respects with all applicable law, including any
reporting requirements, and make all contributions due under the terms of
each Employee Benefit Plan or as required by law. As soon as possible
following the date hereof (but in no event more than thirty (30) days
thereafter) each Obligor contributing to a Multiemployer Plan shall request
from each such Multiemployer Plan an estimate, in writing, of withdrawal
liability (contingent or otherwise) under such Multiemployer Plan and shall
provide a copy of such written withdrawal liability estimate to the Agent.
In addition, within the same time period each Obligor shall request from the
applicable Multiemployer Plans an estimate, in writing, of the amount of any
withdrawal liability to be assessed in connection with the stock purchase
transactions contemplated by the Arcon Purchase
75
Documents and the merger contemplated by the CPG Merger Documents and shall
provide a copy of such written estimate to the Agent.
SECTION 9.10. INTERCOMPANY TRANSFER OF FUNDS. The Borrower will
take such actions as may be necessary in order to cause (1) each Guarantor to
pay dividends on its capital stock, from funds legally available therefor, or
to purchase shares of capital stock of any Guarantor, or for any Subsidiary
of a Guarantor to loan or advance funds to the Guarantor, in each case to the
extent necessary to enable the Guarantor to pay its Guaranty Obligations
hereunder, and (2) the Borrower to contribute to the capital of any
Guarantor, or to purchase additional shares of capital stock of any
Guarantor, or for any Subsidiary of a Borrower to loan or advance funds to
the Borrower, in each case to the extent necessary to enable the Borrower to
pay its Obligations hereunder.
SECTION 9.11. INVENTORY AND ACCOUNTS RECEIVABLE ANALYSIS OF
ACQUIRED ENTITY. In the event of an acquisition of an Acquired Entity by an
Obligor, such Obligor shall or shall cause the Acquired Entity to afford the
Agent the right to inspect and perform an analysis within thirty days of the
acquisition, satisfactory to the Agent, of the inventory, accounts
receivables and personal property of such Acquired Entity.
SECTION 9.12. ACQUIRED ENTITIES. Each of the following conditions
shall be satisfied by the Borrower with respect to each Acquired Entity
acquired on or after the date hereof:
(a) the Acquired Entity shall have executed all documentation and
take all steps required pursuant to which such Acquired Entity shall become
a Guarantor under this Agreement and shall agree to be bound by the terms
of this Agreement applicable to a Guarantor;
(b) the Acquired Entity shall have executed all documentation and
take all steps required to give the Agent a first priority perfected Lien
in all of such Acquired Entity's Inventory and Accounts, which Lien shall
not be subject to any other financing arrangement;
(c) the Agent shall have received a certificate of the Secretary or
Assistant Secretary of such Acquired Entity attesting to the Certificate of
Incorporation and Bylaws of such Acquired Entity and all amendments thereto
and to all corporate action taken by such Acquired Entity, including
resolutions of its Board of Directors authorizing the execution, delivery
and performance of
76
this Agreement and any other documents executed in connection therewith;
and
(d) the Agent shall have received a favorable opinion of counsel to
such Acquired Entity covering all of the matters covered by (a), (b) and
(c) above, and as to such other matters as the Agent may reasonably
request.
SECTION 9.13. COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) Each Obligor
(i) will comply with all Environmental Laws as presently existing or
as adopted or amended in the future, all Approvals and Permits issued
pursuant to such Environmental Laws, and all writs, decrees, judgments,
settlements and orders issued in connection with such Environmental Laws;
(ii) obtain and renew all Approvals and Permits required pursuant to
Environmental Laws;
(iii) conduct any Remedial Action in compliance with Environmental
Laws; provided, however, that an Obligor shall not be required to undertake
any Remedial Action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings, will not result in any
non-compliance with Environmental Laws, and appropriate reserves are being
maintained with respect to such circumstances; and
(iv) notify the Agent of any of the following that is likely to have a
Material Adverse Change:
(A) any Environmental Notice, including one to take or pay for
any Remedial Action with respect to any Hazardous Material at, to, or
from any of Obligor's past, present or future locations or facilities
or Real Estate or at, to or from any other location or facility; and
(B) any knowledge by any Obligor of an occurrence or condition
at, to or from any of Obligor's past, present or future locations or
facilities or Real Estate, or at, to or from any other location or
facility, that might reasonably result in a violation of Environmental
Law.
(b) Without limitation of the foregoing, within one year of the date
hereof, each Obligor shall have substantially addressed all matters
identified as non-compliance with Environmental Laws and shall have
undertaken all Remedial Actions identified in the August 1996 Environmental
Due
77
Diligence Report for Custom Papers Group Mill Facilities prepared by ENSR
Consulting and Engineering for the Borrower.
(c) The Borrower will complete or undertake all transactions
pursuant to Section 6.6 of the CPG Merger Agreement and will agree in writing
on an amount to be deposited into the Rochester Environmental Escrow Account
(as defined in the CPG Merger Agreement) to provide the indemnification set
forth in Section 10.2(b)(i)(B) of the CPG Merger Agreement.
SECTION 9.14. INVENTORY AND ACCOUNTS RECEIVABLE ANALYSIS OF CPG
INVESTORS. Within ninety (90) days of the date hereof, CPG Investors and its
Subsidiaries shall afford the Agent the right to inspect and perform an
analysis, satisfactory to the Agent, of the inventory, accounts receivable
and personal property of CPG Investors and its Subsidiaries.
ARTICLE 10. NEGATIVE COVENANTS
So long as any Revolving Credit Loans are outstanding, or any Lender
has any Revolving Credit Commitment hereunder or any other amount is owing to
the Lenders hereunder or under any other Loan Documents, no Obligor shall:
SECTION 10.01. DEBT. Create, incur or suffer to exist any
Indebtedness other than (i) Permitted Indebtedness or (ii) other
Indebtedness, so long as after giving effect to the incurrence thereof, the
Consolidated Fixed Charge Coverage Ratio is greater than 2.00 to 1.00.
SECTION 10.02. LIENS. Create or suffer to exist or permit any Lien
upon or with respect to any of its properties except for Permitted
Encumbrances.
SECTION 10.03. GUARANTIES. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable
(including, but not limited to an agreement to purchase any obligation,
stock, assets, goods or services or to supply or advance any funds, assets,
goods or services, or an agreement to maintain or cause any such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of such Person against loss) for the obligations, stock or
dividends of any Person, except guarantees by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and the guaranties of Borrower Obligations pursuant to
Article 4 of this Financing Agreement.
SECTION 10.04. SALE OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of (a) its now or hereafter acquired Collateral, except as
otherwise
78
specifically permitted by this Financing Agreement or any other document
relating to the transactions contemplated hereunder or (b) all or
substantially all of its assets, which do not constitute Collateral.
SECTION 10.05. PROHIBITION OF FUNDAMENTAL CHANGES. Enter into any
transaction of merger or consolidation, or change its form of organization or
business, or liquidate or dissolve (or suffer any liquidation or
dissolution), or sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person except for the
Arcon Stock Purchase and the CPG Merger.
SECTION 10.06. INVESTMENTS. Make any loan or advance to any Person
or purchase or otherwise acquire any capital stock, assets, obligations or
other securities of, make any capital contribution to, or otherwise invest
in, or acquire any interest, in any Person, except: (i) Permitted
Investments, (ii) loans, advances, capital contributions and share purchases
permitted by Section 9.07 or Section 9.10 of this Financing Agreement, and
(iii) loans, advances and capital contributions made by any Obligor in
another Obligor, including any loan, advance or capital contribution made by
an Obligor in a newly formed Subsidiary which shall become an Obligor
hereunder. Notwithstanding the foregoing, the Borrower shall be permitted to
make loans, advances or capital contributions to each of Specialty Hong Kong
and Specialty Japan to fund their respective operations, provided (A) the
operations of each such entity are conducted on a basis substantially similar
in size, scope and nature to those conducted by such entity in the
twelve-month period ended on the date hereof, and (B) the aggregate amount of
such loans, advances and capital contributions from the Borrower to all such
entities, net of repayments and dividends from such entities to the Borrower
shall not exceed the following amounts for the indicated periods:
(1) For calendar year 1996, $5,000,000; and
(2) For each calendar year thereafter, the applicable amount for the
preceding calendar year plus $250,000.
SECTION 10.07. TRANSACTION WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease, loan
or exchange of property with any Affiliate of such Obligor unless such
transaction shall be on terms no less favorable to such Obligor than would be
obtainable at the time in a comparable arm's length transaction with an
unrelated third party; provided, that this Section 10.07 shall not apply to
(a) customary fees paid by
79
the Borrower to members of its Board of Directors, (b) any transaction
between the Borrower and any employee of such Person that is approved by such
Person's Board of Directors (provided that such approval shall not be
required with respect to normal compensation arrangements involving any such
employee) and (c) loans, advances, capital contributions and share purchases
permitted by Section 9.07 or Section 9.10 of this Financing Agreement.
SECTION 10.08. NATURE OF BUSINESS. Change its corporate name,
principal place of business or structure, or enter into or engage in any
operation or activity other than activities of the types conducted by each
Obligor on the date hereof or as of the date of the acquisition of an
Acquired Entity and operations and activities substantially similar thereto
and logical extensions thereof.
SECTION 10.09. DIVIDENDS. Declare or pay any dividends; or
purchase, redeem, retire, or otherwise acquire for value any of the capital
stock or securities convertible into capital stock of such Obligor now or
hereafter outstanding; or make any distribution of assets to its stockholders
as such, whether in cash, assets, or in obligations of the Borrower, or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of any shares
of its capital stock, except (i) dividend payments by any Guarantor to the
Borrower or (ii) during any Fiscal Year ending on or after December 31, 1995
the Borrower may declare and pay dividends on its capital stock or purchase
or redeem its capital stock in an aggregate amount not to exceed thirty-three
and one third percent (33 1/3%) of the total of Consolidated Net Income minus
consolidated Amortization of Deferred Book Gain of the Borrower and its
Subsidiaries for the prior Fiscal Year of the Borrower, provided that at the
time of such declaration and distribution and after giving effect to such
dividend (a) there is aggregate Availability of at least Two Million Five
Hundred Thousand Dollars ($2,500,000), and (b) no Default or Event of Default
is outstanding or will occur as a result thereof.
SECTION 10.10. LEASES. Except for the Lease Agreement, enter into
any Operating Lease if after giving effect thereto the aggregate obligations
with respect to all of the Operating Leases of the Obligors during any Fiscal
Year would exceed Five Hundred Thousand Dollars ($500,000).
SECTION 10.11. ENVIRONMENTAL COMPLIANCE. Except in compliance with
applicable Environmental Laws, (a) use any of the Real Estate or other
property of any Obligor or any portion thereof for the handling, processing,
storage or disposal of Hazardous Materials, (b) cause or permit to be located
on any of the property of any Obligor any underground
80
tank or other underground storage receptacle for Hazardous Materials, (c)
generate any Hazardous Materials on any of the Real Estate or other property
of any Obligor, (d) conduct any activity on the Real Estate or other property
of any Obligor or use any property in any manner so as to cause an
Environmental Discharge or (e) otherwise conduct any activity on the Real
Estate or any other property or use any property in any manner that would
lead to any claim under or violate any Environmental Law.
SECTION 10.12. FISCAL YEAR. Change its Fiscal Year from a period
of January 1 to December 31.
SECTION 10.13. SUBSIDIARY STOCK ISSUANCE. Permit any Subsidiary of
any Obligor to issue or sell to any Person, other than such Obligor, any of
such Subsidiary's shares, interests, participation or other equivalents
(however designated including stock appreciation rights), warrants or options
to acquire capital stock.
ARTICLE 11. INTENTIONALLY OMITTED.
ARTICLE 12. EVENTS OF DEFAULT
SECTION 12.01. EVENTS OF DEFAULT. Notwithstanding anything
hereinabove to the contrary, the Agent may, and if directed to do so by the
Required Lenders shall, terminate this Financing Agreement immediately upon
the occurrence of any of the following (herein "Events of Default"):
(a) failure of an Obligor to pay any of its Obligations within
five (5) business days of the due date thereof, provided that nothing
contained herein shall prohibit the Agent from charging such amounts
to an Obligor's account on the due date thereof (if the Agent so
charges such Obligor's account, no Event of Default relating to
non-payment of Obligations will be deemed to have occurred) and,
provided further, that if the Agent chooses not to charge such amounts
to an Obligor's account on the due date thereof, the Agent shall so
notify the Obligor and the Obligor shall have five (5) days from the
date it receives such notice to pay such Obligations;
(b) any representation or warranty of an Obligor contained
herein or in any other Loan Document, or any representation, warranty,
statement in any certificate, financial statement or other document
furnished to Agent or any of the Lenders by or on behalf of an Obligor
under any
81
Loan Document shall, as of the time made, confirmed or
furnished, prove to have been (i) in the case of such representations
and warranties which are not subject to a Material Adverse Change
exception, incorrect in any material respect or (ii) in all cases
where such representations and warranty is subject to such an
exception, incorrect;
(c) breach by an Obligor of any warranty, representation or
covenant contained herein (other than those referred to in
subparagraph (d) below) or in any other Loan Document or written
agreement entered into in connection with this Financing Agreement
between an Obligor and the Lenders and/or the Agent or delivered by an
Obligor to any of the Lenders and/or the Agent in connection herewith
or the transactions contemplated hereby, if such breach shall not have
been remedied to the Required Lenders' satisfaction within the earlier
to occur of the applicable grace period in such written agreement or
thirty (30) days from the date of such breach;
(d) breach by an Obligor of any representation, warranty or
covenant contained in Sections 3.05, 3.06, 5.02, 5.03, 5,04, 5.10,
8.06, 8.17, 8.19, 8.20, 9.01(g), 9.03, 9.07 or Article 10 (other than
Section 10.11);
(e) if an Obligor shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) admit in writing its inability, or be generally unable,
to pay its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence any case,
proceeding or other action seeking to have an order for relief entered
on its behalf as debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition
or readjustment of debts, (v) file an answer or other pleading in any
such case, proceeding or other action admitting the material
allegations of any petition, complaint or similar pleading filed or
(vi) take any corporate or other action for the purpose of effecting
any of the foregoing;
82
(f) if a proceeding or case shall be commenced without the
application or consent of an Obligor in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization,
dissolution, winding-up, or the composition or readjustment of debts
of such Person, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, or a warrant of attachment,
execution or similar process shall be issued against property of such
Person and such proceeding, case, warrant or process shall continue
undismissed, or any order, judgment or decree approving or ordering
any of the foregoing shall be entered, or any order for relief against
such Person shall be entered in an involuntary case under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or readjustment of debts;
(g) cessation of the business of an Obligor or the calling of a
meeting of the creditors of such Person for purposes of compromising
the debts and obligations of such Person.
(h) an Obligor shall (a) fail to pay any Indebtedness in excess
of Two Hundred Fifty Thousand Dollars ($250,000) (other than with
respect to this Financing Agreement) of such Obligor, or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (b) fail to
perform or observe any term, covenant, or condition on its part to be
performed or observed under any agreement or instrument relating to
any such Indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or
to permit the acceleration after the giving of notice or passage of
time, or both, of the maturity of such Indebtedness, whether or not
such failure to perform or observe shall be waived by the holder of
such Indebtedness, or any such Indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
(i) if a judgment or judgments for the payment of money in
excess of Two Hundred Fifty Thousand Dollars ($250,000) shall be
rendered against an Obligor and the same shall remain in
83
effect and unstayed or bonded pending appeal for a period of thirty (30)
or more consecutive days;
(j) if any Loan Document shall cease, for any reason, to be in
full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any party
thereto, or any party thereof shall deny it has any further liability
or obligation under or shall fail to perform its obligations under
such Loan Document;
(k) if any of the following events occur or exist with respect
to an Obligor or any ERISA Affiliate: (i) an Obligor or any other
Person engages in a transaction in connection with which a Borrower,
or any entity which a Borrower has an obligation to indemnify, could
be subject to liability for either a civil penalty assessed pursuant
to Section 502 of ERISA or a tax imposed under Section 4975 of the
Code; (ii) an accumulated funding deficiency (as defined in Section
302 of ERISA or Section 412 of the Code), whether or not waived,
exists with respect to any Pension Plan; (iii) any Reportable Event,
as defined in ERISA, with respect to any Pension Plan; (iv) the giving
under Section 4041 of ERISA of a notice of intent to terminate any
Pension Plan or the termination of any Pension Plan; (v) any event or
circumstance that might constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Pension
Plan, or the institution by the PBGC of any such proceedings; (vi) the
imposition of liability to enforce Section 515 of ERISA; (vii) the
failure of a Pension Plan intended to qualify under Section 401(a) or
401(k) of the Code to so qualify; (viii) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer
Plan or the Reorganization, Insolvency, or termination of any
Multiemployer Plan; or (ix) the imposition of liability in respect of
any Pension Plan or Multiemployer Plan subject to Title IV of ERISA
(other than a liability to the PBGC for insurance premiums under Title
IV of ERISA, payment of which is not yet due); (x) pursuant to
Section 4068 of ERISA or Section 401(a)(29) or Section 412 of the
Code, a lien arises or security interest is granted with respect to
any Pension Plan; PROVIDED, HOWEVER, that no Event of Default shall be
deemed to exist with respect to any event or condition described in
clause (i) through (ix) above unless
84
such event or condition, individually or together with all other such
events or conditions, if any, could subject an Obligor to any tax,
penalty, or other liability to an Employee Benefit Plan, the Pension
Benefit Guaranty Corporation, or otherwise (or any combination thereof)
which could result in a Material Adverse Change;
(l) if there shall occur a default which is not cured or waived
within the applicable grace period, if any, under the Mortgage
(Brattleboro, Vermont);
(m) if any time the Agent for the benefit of the Lenders no longer
has a Lien on any of the Collateral; or
(n) The Borrower shall fail to pay any amount owing under the Lease
Agreement when due, and such failure shall continue unremedied for a period
of ten (10) days from the date such amount was due.
SECTION 12.02. ACCELERATION OF OBLIGATIONS. Upon the occurrence of
a Default and/or an Event of Default, the Agent may (at its option) and shall
at the written direction of the Required Lenders declare that all Revolving
Credit Loans provided for in this Financing Agreement shall be thereafter in
the Agent's sole discretion and the obligation of the Lenders to make
Revolving Credit Loans shall cease unless such Default is cured to the
Required Lenders' satisfaction or such Event of Default is waived. If an
Event of Default shall occur and be continuing, the Agent may, and if
directed to do so by the Required Lenders shall, upon notice by the Agent to
the Borrowers, (a) declare the Revolving Credit Commitments terminated,
whereupon such Revolving Credit Commitments shall forthwith terminate
immediately and any accrued fees shall forthwith become due and payable and
all Obligations, and, as liquidated damages for loss of a bargain and not as
a penalty, a lost transaction fee shall be due and payable in addition to the
accelerated amounts set forth herein and all other amounts payable under this
Financing Agreement and any other Loan Documents to be, whereupon the same
shall become, forthwith due and payable without presentment, demand or
protest of any kind, all of which are hereby waived by the Borrower, anything
contained in this Agreement to the contrary notwithstanding, equal to the
full outstanding principal amounts of the Revolving Credit Loans being
accelerated multiplied by three percent (3%); PROVIDED, HOWEVER, that the
lost transaction fee shall be paid by the Borrower on Chase Manhattan Bank
Rate Loans and Libor Rate Loans only if such loans are accelerated on or
prior to the first Anniversary Date; (b) charge the Borrower the Default Rate
of Interest on all then outstanding or thereafter incurred Obligations ,
PROVIDED (i) the Agent has given the
85
Borrower written notice of the Event of Default, PROVIDED, HOWEVER, that no
notice is required if the Event of Default is the Event listed in paragraph
(e), (f) or (g) of Section 12.01 hereof and (ii) the Borrower has failed to
cure the Event of Default within ten (10) days after (x) the Agent deposited
such notice in the United States mail or (y) the occurrence of the Event of
Default listed in paragraph (e), (f) or (g) or Section 12.01 hereof; and (c)
immediately terminate this Financing Agreement upon notice to the Borrower;
PROVIDED, HOWEVER, that no notice of termination is required if the Event of
Default is the Event listed in paragraph (e), (f) or (g) of Section 12.01
hereof. The exercise by the Lenders of any option or remedy hereunder is not
exclusive of any other option or remedy which may be exercised at any time by
the Lenders, acting through the Agent.
SECTION 12.03. OTHER REMEDIES. Immediately upon the occurrence of
any Event of Default and so long as such Event of Default is continuing, the
Agent may to the extent permitted by Law: (a) remove from any premises where
same may be located any and all documents, instruments, files and records,
and any receptacles or cabinets containing same, relating to the Accounts, or
the Agent may use, at the Borrower's expense, such of the Obligor's
personnel, supplies or space at the Obligor's places of business or
otherwise, as may be necessary to properly administer and control the
Accounts or the handling of collections and realizations thereon; (b) bring
suit, in the name of the Obligor's, or either of them, or the Lenders or the
Agent, and generally shall have all other rights respecting said Accounts,
including without limitation the right to accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any Accounts and issue credits in the name of the Borrower, or either of
them, or the Agent; (c) sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed merchandise, with or without
advertisement, at public or private sale, for cash, on credit or otherwise,
at the Agent's sole option and discretion, and any one or more of the Lenders
or the Agent may bid or become a purchaser at any such sale, free from any
right of redemption, which right is hereby expressly waived by the Borrower;
(d) foreclose the security interests created herein by any available judicial
procedure, or to take possession of any or all of the Inventory or the
Brattleboro Collateral without judicial process, and to enter any premises
where any Inventory and Equipment comprising part of the Brattleboro
Collateral may be located for the purpose of taking possession of or removing
the same and (e) exercise any other rights and remedies provided in Law, in
equity, by contract or otherwise. The Agent shall have the right, without
notice or advertisement, to sell, lease, or otherwise dispose of all or any
part of the Collateral whether in its then condition or after further
preparation or processing, in the name of any
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Obligor, any one or more of the Lenders or the Agent, or in the name of such
other party as the Agent may designate, either at public or private sale or
at any broker's board, in lots or in bulk, for cash or for credit, with or
without warranties or representations, and upon such other terms and
conditions as the Agent in its sole discretion may deem advisable, and the
Agent and any one or more of the Lenders shall have the right to purchase at
any such sale. If any Inventory and Equipment comprising part of the
Brattleboro Collateral shall require rebuilding, repairing, maintenance or
preparation, the Agent shall have the right, at its option, to do such of the
aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment comprising part of the Brattleboro Collateral in such saleable form
as the Agent shall deem appropriate. The Borrower agrees, at the request of
the Agent, to assemble the Inventory and Equipment comprising part of the
Brattleboro Collateral and to make it available to the Agent at premises of
the Borrower or elsewhere and to make available to the Agent the premises and
facilities of the Borrower for the purpose of the Agent's taking possession
of, removing or putting the Inventory and Equipment comprising part of the
Brattleboro Collateral in saleable form. However, if notice of intended
disposition of any Collateral is required by Law, it is agreed that ten (10)
days notice shall constitute reasonable notification and full compliance with
the law. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights, (after deducting all charges, costs and expenses,
including reasonable attorneys' fees) shall be applied by the Agent to the
payment of the Obligor's Obligations, whether due or to become due, in such
order as the Agent may elect, and the Obligors shall remain liable to the
Agent and the Lenders for any deficiencies, and the Agent and the Lenders in
turn agree to remit to the Obligors or their respective successors or
assigns, any surplus resulting therefrom. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any right shall
not preclude the exercise of any other rights, all of which shall be
cumulative. The Mortgage (Brattleboro, Vermont) shall govern the rights and
remedies of the Agent and the Lenders thereto.
ARTICLE 13. AGENCY
SECTION 13.01. THE AGENT. Each Lender hereby irrevocably designates
and appoints CITBC as the Agent for the Lenders under this Financing
Agreement and any modifications, supplements and amendments thereto and any
other Loan Documents executed in connection therewith and irrevocably
authorizes CITBC as Agent for such Lenders, to take such action on its behalf
under the provisions of the Financing Agreement and all such ancillary
documents and to exercise such powers and perform such duties as are
expressly delegated
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to the Agent by the terms of the Financing Agreement and all such ancillary
documents together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Financing Agreement, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with
any Lender and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Financing Agreement and
such ancillary documents or otherwise exist against the Agent.
SECTION 13.02. DELEGATION OF DUTIES. The Agent may execute any of
its duties under this Financing Agreement and all ancillary documents by or
through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties.
SECTION 13.03. EXCULPATORY PROVISIONS. Neither the Agent nor any
of its officers, directors, employees, agents, or attorneys-in-fact shall be
(a) liable to any Lender for any action lawfully taken or omitted to be taken
by it or such Person under or in connection with the Financing Agreement and
all ancillary documents (except for its or such Person's own gross negligence
or willful misconduct), or (b) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made by
an Obligor or any officer thereof contained in the Financing Agreement and
all ancillary documents or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, the Financing Agreement and all ancillary documents or for
the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Financing Agreement and all ancillary documents or for any
failure of an Obligor to perform its obligations thereunder. The Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, the Financing Agreement or any ancillary document or to
inspect the properties, books or records of an Obligor.
SECTION 13.04. RELIANCE BY AGENT. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, facsimile, message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Obligors), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under the Financing Agreement and any ancillary
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document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by all of the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under the Financing Agreement and all ancillary
documents in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
SECTION 13.05. NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
describing such Default or Event of Default. In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Agent shall have received such direction,
the Agent may in the interim (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable and in the best interests of the
Lenders.
SECTION 13.06. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Obligors and made its own decision to
enter into this Financing Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under the Financing Agreement and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition or creditworthiness of
the Obligors. The Agent, however, shall provide the Lenders with copies of
all financial statements, projections and business plans which come into the
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possession of the Agent or any of its officers, employees, agents or
attorneys-in-fact.
SECTION 13.07. INDEMNIFICATION. The Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by an Obligor,
and without limiting the obligation of an Obligor to do so), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of the Financing Agreement on any
ancillary documents or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted by the
Agent under or in connection with any of the foregoing; PROVIDED that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence
or willful misconduct. The agreements in this paragraph shall survive the
payment of the Obligations.
SECTION 13.08. THE AGENT IN ITS INDIVIDUAL CAPACITY. The Agent may
make loans to, and generally engage in any kind of business with an Obligor
as though the Agent were not the Agent hereunder. With respect to its loans
made or renewed by it or Revolving Credit Loan obligations hereunder as a
Lender, the Agent shall have the same rights and powers, duties and
liabilities under the Financing Agreement as any Lender and may exercise the
same as though it were not the Agent and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
SECTION 13.09. SUCCESSOR AGENT. The Agent may resign as Agent upon
thirty (30) days' prior notice to the Lenders and such resignation shall be
effective upon the appointment of a successor Agent. Upon receiving notice
from the Agent of the Agent's intention to resign as Agent, the Lenders shall
appoint a successor agent for the Lenders whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent and the term
"Agent" shall mean such successor agent effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or
any of the parties to this Financing Agreement. After any retiring Agent's
resignation hereunder as Agent the provisions of this Article 13 shall
continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
SECTION 13.10. ARRANGEMENTS REQUIRING CONSENT OF LENDERS.
Notwithstanding anything contained in this Financing Agreement to the
contrary, the Agent will not, without the
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prior written consent of all of the Lenders: amend the Financing Agreement to
(a) increase the Revolving Credit Commitments; (b) reduce the interest rate;
(c) reduce or waive any fees or the repayment of any Obligations due the
Lenders or the Agent; (d) extend the maturity of the Obligations; or (e)
alter or amend (i) this Section 13.10 or (ii) the definition of Eligible
Accounts Receivable and/or Eligible Inventory and the Agent's criteria for
determining compliance therewith. Except as otherwise hereinabove provided,
the Agent will not, without the prior written consent of the Required
Lenders: (a) amend the Financing Agreement or (b) waive any Event of Default
under the Financing Agreement. In all other respects, the Agent is
authorized to take such actions or fail to take such actions if the Agent, in
its reasonable discretion, deems such to be advisable and in the best
interest of the Lenders, including, but not limited to, the making of an
Overadvance or the termination of the Revolving Credit Commitments and/or the
Financing Agreement upon the occurrence of an Event of Default unless it is
specifically instructed to the contrary by the written instructions of the
Required Lenders.
Notwithstanding the foregoing, the Agent may (in its sole
discretion) and shall at the written direction of the Required Lenders upon
the occurrence of an Event of Default and upon written notice to the Lenders
and the Borrower, accelerate the Revolving Credit Loans, and the other
Obligations of the Borrower hereunder. In such event, the Revolving Credit
Loans shall be immediately deemed due and payable and each Lender's Revolving
Credit Commitment in the Revolving Credit Loans shall be settled in
accordance with this Financing Agreement based on the Revolving Credit Loans
outstanding as of the date of such written declaration. Thereafter, all
collections received for application to the Revolving Credit Loans as
provided in this Financing Agreement shall be applied first to the costs and
expenses of collection and Out-of-Pocket Expenses, if any, then to the
payment of interest on the Revolving Credit Loans, then to the principal
balance of the Revolving Credit Loans. The Lenders acknowledge that an
orderly repayment of the Revolving Credit Loans and/or liquidation of
Collateral may necessitate the making of new Revolving Credit Loans after a
declaration of acceleration by the Agent and/or the Required Lenders and that
all of the Lenders shall participate in such Revolving Credit Loans based on
their respective Revolving Credit Commitments. Such new Revolving Credit
Loans shall be in accordance with a program of orderly liquidation and shall
be treated as costs of collection, Out-of-Pocket Expenses and/or liquidation
with respect to the priority of repayment as provided in this paragraph and
as otherwise applicable.
Notwithstanding the foregoing, the Agent in its sole discretion may:
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(a) cure any ambiguity, defect or inconsistency in the terms of this
Financing Agreement;
(b) release collateral in bulk (i) as required pursuant to the
explicit terms of this Financing Agreement or any of the ancillary documents
thereto and (ii) in an amount not to exceed Two Million Dollars ($2,000,000)
in any Fiscal Year provided that at the election of the Agent there is a
corresponding reduction in the Obligations to the Lenders, as applicable and
as set forth in this Financing Agreement;
(c) within the criteria specified in the definition of "Eligible
Accounts Receivable" in Section 1.01 of this Financing Agreement, make
determinations of eligibility of Collateral with such non-material temporary
modification as the Agent may from time to time implement (provided that the
consent of the Lenders to any other modifications thereof shall be implied if
the Agent does not receive notice to the contrary within ten (10) business
days of sending notice of any proposed change to the Lenders); and
(d) establish reserves.
SECTION 13.11. RECAPTURE OF PAYMENTS. If the Agent is required at
any time to return to an Obligor or to a trustee, receiver, liquidator,
custodian or other similar official any portion of the payments made by such
Obligor to the Agent as a result of a bankruptcy with respect to such
Obligor, any guarantor or any other person or entity or otherwise, then each
Lender shall, on demand of the Agent, forthwith return to the Agent its Pro
Rata Share of any such payments made to such Lender by the Agent, together
with its Pro Rata Share of interest or penalties, if any, payable by the
Lenders. This provision shall survive the termination of this Financing
Agreement.
ARTICLE 14. RIGHTS AND OBLIGATIONS OF THE LENDERS AND THE AGENT
SECTION 14.01. ADJUSTMENTS AMONG LENDERS. Notwithstanding anything
herein to the contrary contained in this Financing Agreement, prior to the
occurrence of an Event of Default, in the event that any Lender shall obtain
payment in respect of a Revolving Credit Note, or interest thereon or upon or
following on Event of Default, in the event any Lender shall obtain payment
in respect of a Revolving Credit Note, or interest thereon, or receive any
Collateral or proceeds thereof with respect to any Revolving Credit Note,
whether voluntarily or involuntarily, and whether through the exercise of a
right of banker's Lien, set-off or counterclaim against the Borrower or
otherwise, in a greater proportion than any such payment obtained by any
other Lender in respect of the
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corresponding Revolving Credit Note held by such Lender, then the Lender so
receiving such greater proportionate payment or such greater proportionate
amount of Collateral in the case of an occurrence of an Event of Default
shall purchase for cash from the other Lender or Lenders such portion of each
such other Lender or Lenders' Revolving Credit Loan as appropriate, as shall
be necessary to cause such Lender receiving the proportionate overpayment to
share the excess payment with each Lender or shall provide the other Lenders
with the benefits of any such Collateral, or the proceeds thereof, as shall
be necessary to cause such Lender receiving the proportionate overpayment to
share the excess payment or benefits of such Collateral or proceeds ratably
with each Lender in the case of an occurrence of an Event of Default. Upon
or following an Event of Default payments on the Revolving Credit Note
received by each Lender and receipt of Collateral by each Lender shall be in
the same proportion as the proportion of: (a) the Obligations owing to such
Lender in respect of the Revolving Credit Note held by such Lender; to (b)
the Obligations owing to all of the Lenders in respect of all of the
Revolving Credit Notes; provided, however, that, with respect to the two
paragraphs above, if all or any portion of such excess payment or benefits is
thereafter recovered from the Lender that received the proportionate
overpayment, such purchase of Obligations or payment of benefits, as the case
may be, shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
SECTION 14.02. SHARING OF PAYMENTS. The Agent shall, after receipt
of any interest and fees earned under the Financing Agreement, remit to each
Lender: (a) its Pro Rata Share of all fees, provided, however, that no
Lender (other than CITBC in its role as Agent) shall share in (i) the
Collateral Management Fee or Documentation Fee or the fees provided for in
Section 6.03 of this Financing Agreement and (ii) applicable fees, costs,
expenses and Out-of-Pocket Expenses of the Agent which shall be remitted to
and retained by the Agent; and (b) interest computed at the rate and as
provided for in Section 6.02 of this Financing Agreement on all outstanding
amounts advanced by such Lender on each Settlement Date, prior to adjustment,
that were made subsequent to the last remittance by the Agent to the Lender
of the Borrower's interest.
SECTION 14.03. SALE OF PARTICIPATIONS. The Borrower acknowledges
each Lender may sell participations to one or more banks or other entities in
all or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, all or a portion of its Revolving Credit
Commitment, the Revolving Credit Loans owing to it, and the Revolving Credit
Note(s) held by it); PROVIDED, HOWEVER, that: (a) any such Lender's
obligations under this
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Financing Agreement (including, without limitation, its Revolving Credit
Commitment hereunder) shall remain unchanged, and (b) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) such Lender shall remain the holder of any such
Revolving Credit Note executed to its order hereunder for all purposes of
this Financing Agreement, and (d) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Financing
Agreement. The Borrower further acknowledges that in doing so, the Lenders
may grant to such participants certain rights which would require the
participant's consent to certain waivers, amendments and other actions with
respect to the provisions of this Financing Agreement.
Each Obligor authorizes each Lender to disclose to any participant
or purchasing lender (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning such
Obligor and their respective affiliates which has been delivered to such
Lender by or on behalf of an Obligor pursuant to this Financing Agreement or
which has been delivered to such Lender by or on behalf of an Obligor in
connection with such Lender's credit evaluation of an Obligor and its
affiliates prior to entering into this Financing Agreement.
SECTION 14.04. NATURE OF REVOLVING CREDIT COMMITMENTS. Each
Obligor hereby agrees that each Lender is solely responsible for its portion
of the Revolving Credit Commitments and that neither the Agent nor any Lender
shall be responsible for, nor assume any obligations for the failure of any
Lender to make available its portion of the Revolving Credit Loans. Further,
should any Lender refuse to make available its portion of the Revolving
Credit Loans, then any one or more of the other Lenders may, but without
obligation to do so, increase, unilaterally, its portion of the Revolving
Credit Loans in which event the Borrower is so obligated to that other Lender.
SECTION 14.05. SHARING OF COSTS AND EXPENSES. In the event that
the Agent, the Lenders or any one of them is sued or threatened with suit by
an Obligor or any one of them, or by any receiver, trustee, creditor or any
committee of creditors on account of any preference, voidable transfer or
lender liability issue, alleged to have occurred or been received as a result
of, or during the transactions contemplated under this Financing Agreement,
then in such event any money paid in satisfaction or compromise of such suit,
action, claim or demand and any expenses, costs and attorneys' fees paid or
incurred in connection therewith, whether by the Agent, the Lenders or any
one of them, shall be shared proportionately by the Lenders. In addition,
any
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costs, expenses, fees or disbursements incurred by outside agencies or
attorneys retained by the Agent to effect collection or enforcement of any
rights in the Collateral, including enforcing, preserving or maintaining
rights under this Financing Agreement shall be shared proportionately by the
Lenders to the extent not reimbursed by an Obligor or from the proceeds of
Collateral. The provisions of this paragraph shall not apply to any suits,
actions, proceedings or claims that (a) predate the date of this Financing
Agreement or (b) are based on transactions, actions or omissions that predate
the date of this Financing Agreement.
SECTION 14.06. SHARING OF PAYMENTS. The Borrower hereby agrees
that, in addition to (and without limitation of) any right of set-off,
banker's Lien or counterclaim a Lender may otherwise have, each Lender shall
be entitled, at its option, to offset balances held by it at any of its
offices, as the case may be, against any principal of or interest on its
Revolving Credit Loans payable to such Lender, that is not paid when due
(regardless of whether such balances are then due to the Borrower), in which
case such Lender shall promptly notify the Borrower and the Agent thereof,
provided that such Lenders failure to give such notice shall not affect the
validity thereof or create any liability on the part of such Lender
whatsoever. If a Lender shall effect payment of any principal of or interest
on Revolving Credit Loans held by such Lender under this Financing Agreement
through the exercise of any right of set-off, banker's Lien, counterclaim or
similar right, such Lender shall promptly purchase from the other Lenders
participations in the loans and/or advances held by the other Lenders in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
payment pro rata in accordance with the unpaid principal and interest on the
loans and/or advances held by each of them. To such end, all of the Lenders
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation in the Revolving Credit Loans held by the other Lenders may
exercise all rights of set-off, banker's Lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of the Revolving Credit Loans in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such right
or shall affect the right of any Lender to exercise and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower.
SECTION 14.07. ASSIGNMENTS. Each Lender shall have the right at
any time to assign to one or more commercial banks, commercial finance
lenders or other financial
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institutions all or a portion of its rights and obligations under this
Financing Agreement including, without limitation, its Revolving Credit
Commitments and Revolving Credit Loans. Upon such assignment and provided
such assignee assumes its portion of each Lender's obligations hereunder, (a)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
assignment, have the rights and obligations of a Lender hereunder and (b)
each Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such assignment, relinquish their rights and
be released from their obligations under this Financing Agreement. The
Borrower shall, if necessary, execute any documents reasonably required to
effectuate the assignments.
In the event any Lender makes any assignment, each such assignment
shall be of a constant, and not a varying, percentage of all of such Lender's
rights and obligations under this Financing Agreement. Upon the execution,
delivery, acceptance and recording, from and after the effective date
specified in an Assignment and Acceptance substantially in the form of
Exhibit G hereto (the "Assignment and Acceptance").
By executing and delivering an Assignment and Acceptance, the Lender
and the assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (a) other than as provided in such
Assignment and Acceptance, such Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Financing Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Financing Agreement or any other instrument or document
furnished pursuant hereto; (b) such Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of an Obligor or the performance or observance by an Obligor of any
of its obligations under this Financing Agreement or any other instrument or
document furnished pursuant hereto; (c) such assignee confirms that it has
received a copy of this Financing Agreement, together with copies of such
financial statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (d) such assignee will, independently and
without reliance upon the Agent, CITBC, or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Financing Agreement; (e) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under
this Financing Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (f) such
assignee agrees that it
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will perform in accordance with their terms all of the obligations which by
the terms of this Financing Agreement are required to be performed by it as a
Lender.
Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with all Revolving Credit Note subject to such
assignment, the Agent shall: (a) accept such Assignment and Acceptance, and
(b) give prompt notice thereof to the Borrower. Within five (5) Business
Days after its receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Agent in exchange for each surrendered
Revolving Credit Note a new Revolving Credit Note to the order of such
assignee in an amount equal to the applicable Revolving Credit Commitment
and/or Revolving Credit Loans assumed by it pursuant to such Assignment and
Acceptance and, if such Lender has retained a Revolving Credit Commitment
and/or Revolving Credit Loan hereunder, new Revolving Credit Note to the
order of such Lender in amounts equal to the applicable Revolving Credit
Commitment retained by it hereunder. Such new Revolving Credit Note shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A.
SECTION 14.08. ACKNOWLEDGEMENTS BY AGENT. The Lenders hereby
irrevocably authorize the Agent, at its option and in its discretion and
without the necessity of any notice from the Agent to the Lenders, (a) to
acknowledge that neither the Agent nor the Lenders have a Lien on any leased
property of the Borrower or any other property in which the Borrower does not
own any interest; (b) to (i) acknowledge a Purchase Money Lien that conforms
to the criteria set forth on the definition of said term in Section 1.01 of
this Financing Agreement and (ii) subordinate to any holder of such Purchase
Money Lien any Lien on the Equipment subject thereto that the Agent and the
Lenders have as long as the Borrower owning such Equipment is indebted to
such creditor; (iii) to release any Lien granted to or held by the Agent upon
any Collateral: (A) upon termination of the Revolving Credit Commitments and
this Financing Agreement and the payment and satisfaction of the Obligations;
(B) constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (C) constituting
property leased to the Borrower under a lease which has expired or been
terminated in a transaction permitted under this Financing Agreement or is
about to expire and which has not been, and is not intended by the Borrower
to be, renewed or extended; (D) consisting of an instrument evidencing
Indebtedness, which instrument has been pledged to the Agent for the ratable
benefit of the Lenders, if the Indebtedness evidenced thereby has been paid
in full; or (E) if approved, authorized or ratified in writing by all the
Lenders. Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to
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release particular types or items of Collateral pursuant to this Section.
SECTION 14.09. TERMINATION OF FINANCING AGREEMENT. The Agent, at
the direction of all of the Lenders, may terminate the Revolving Credit
Commitments and this Financing Agreement on April 30, 2000 or any Anniversary
Date of the Closing Date subsequent to April 30, 2000 by giving the Borrower
at least sixty (60) days' prior written notice of termination.
Notwithstanding the foregoing, the Agent may terminate the Financing
Agreement immediately upon the occurrence of an Event of Default, provided,
however, that if the Event of Default is an event listed in paragraph (e),
(f) or (g) of Section 12.01 hereof, the Agent may regard this Financing
Agreement as terminated and notice to that effect is not required.
Any of the Lenders may terminate this Financing Agreement on April
30, 2000 or any Anniversary Date of the Closing Date subsequent to April 30,
2000 by giving the Agent and the other Lenders at least ninety (90) days
prior written notice of termination. Within thirty (30) days of receipt of
such notice from any such Lender(s), the Agent shall either: (a) give notice
to the Borrower of termination of the Revolving Credit Commitment and this
Financing Agreement in accordance with the terms hereof, in which event the
obligations of the Lenders hereunder shall terminate as of the date on which
termination of this Financing Agreement with the Borrower shall become
operative and effective or (b) if the other Lenders so elect, they shall have
the right to purchase the terminating Lender's Pro Rata Share of its interest
hereunder for the full amount thereof, together with any accrued interest.
Termination of this Financing Agreement by any of the Lenders as herein
provided shall not affect the Lenders' respective rights and obligations
under this Financing Agreement incurred prior to the effective date of
termination as set forth in the preceding sentence. This Financing
Agreement, unless terminated as herein provided, shall continue.
The Borrower may terminate this Financing Agreement and the
Revolving Credit Commitment, in whole, only on or after all of the
obligations owing to CITEF by the Borrower under the Lease Agreement or any
loan agreement shall have been paid in full, and then only upon sixty (60)
days' prior written notice by the Borrower to the Agent, provided that the
Borrower pay to the Agent for the ratable benefit of the Lenders immediately
on demand the Libor Rate Prepayment Premium. All Obligations shall become
due and payable as of any termination hereunder or under Article 12 hereof
and, pending a final accounting, the Agent may withhold any balances in the
Borrower's accounts (unless supplied with an indemnity satisfactory to the
Agent) to cover all of the
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Obligations, whether absolute or contingent. All of the Agent's and the
Lenders' rights, liens and security interests shall continue after any
termination until all Obligations have been paid and indefeasibly satisfied
in full.
ARTICLE 15. MISCELLANEOUS
SECTION 15.01. WAIVERS. Each Obligor hereby waives diligence,
demand, presentment and protest and any notices thereof as well as notice of
nonpayment. No delay or omission of the Agent or any of the Lenders or any
Obligor to exercise any right or remedy hereunder, whether before or after
the happening of any Event of Default, shall impair any such right or shall
operate as a waiver thereof or as a waiver of any such Event of Default. No
single or partial exercise by the Agent or any of the Lenders of any right or
remedy precludes any other or further exercise thereof, or precludes any
other right or remedy.
SECTION 15.02. ENTIRE AGREEMENT. This Financing Agreement and the
documents executed and delivered in connection therewith constitute the
entire agreement between the Borrower, the Guarantors and the Agent and the
Lenders; supersede any prior agreements; subject to the provisions Section
13.10, can be changed only by a writing signed by the Borrower, the
Guarantors, the Agent and the Required Lenders; and shall bind and benefit
the Borrower, the Guarantor, the Agent and the Lenders and their respective
successors and assigns.
SECTION 15.03. USURY. In no event shall an Obligor, upon demand by
the Agent for payment of any indebtedness relating hereto, by acceleration of
the maturity thereof, or otherwise, be obligated to pay interest and fees in
excess of the amount permitted by Law. Regardless of any provision herein or
in any agreement made in connection herewith, the Lenders shall never be
entitled to receive, charge or apply, as interest on any indebtedness
relating hereto, any amount in excess of the maximum amount of interest
permissible under applicable Law. If the Agent or any one or more of the
Lenders ever receive, collect or apply any such excess, it shall be deemed a
partial repayment of principal and treated as such; and if principal is paid
in full, any remaining excess shall be refunded to the Borrower or the
Guarantor, as the case may be. This paragraph shall control every other
provision hereof and of any other agreement made in connection herewith.
SECTION 15.04. PAYMENT OF EXPENSES. All statements, reports,
certificates, opinions and other documents or information required to be
furnished by the
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Borrower or any Guarantor to Agent or any Lender under this Financing
Agreement or any other Loan Document shall be supplied without cost to Agent
or any Lenders. The Borrower or the Guarantors shall pay, on demand, (1) all
Out-of-Pocket Costs and Expenses of Agent and Lenders, including, without
limitation, the fees and disbursements of Xxxxx Xxxxxxxxxx, counsel to Agent
and Lenders, incurred in connection with (a) the negotiation, preparation,
execution and delivery of the Loan Documents, (b) any waiver of amendment of,
or supplement or modification to, the Loan Documents and (c) the review of
any of the other agreements, instruments or documents referred to in this
Agreement or relating to the transactions contemplated hereby including,
without limitation, ongoing review of environmental matters; (d) all cost
associated with the Title Insurance Policy; (e) all costs and expenses of the
Agent and Lenders (including fees and disbursements of legal counsel)
incident to the successful enforcement, collection, protection or
preservation of any right or claim of Agent or Lenders under the Loan
Documents and (f) all fees and expenses incurred in connection with the
perfection of the Lenders' Liens, all recording fees, mortgage taxes, serving
costs, and all searches; (2) the Collateral Management Fee; (3) the
Documentation Fee; and (4) the Unused Line Fee.
SECTION 15.05. INDEMNITY. The Borrower hereby agrees to indemnify
the Lenders and the Agent and each of their affiliates, officers, directors,
employees, attorneys, consultants and agents (collectively, "Indemnitees")
and agrees to defend and hold the Indemnitees harmless from and against any
and all loss, damage, claim, liability, injury, obligation, penalty, action,
suit, cost, or expense of whatsoever kind or nature, imposed on, incurred by
or asserted against any Indemnitee by reason of (a) any investigation,
litigation or other proceedings (including any threatened investigation,
litigation or other proceedings) relating to or arising in connection with
this Financing Agreement, any other Loan Document or the transactions
contemplated hereby or thereby (but excluding any such losses, liabilities,
claims or damages incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) and (b) any Environmental
Discharge; any handling, storage, use, disposal, manufacture, treatment,
recycling, remediation, removal, generation, release, discharge, refining or
dumping of any Hazardous Materials; any Remedial Action; or any violation or
alleged violation of Environmental Laws, arising from or in connection with
the past, present or future operations, properties or equipment of the
Borrower or its predecessors in interest. The Borrower also agrees to
reimburse any Indemnitee for all expenses incurred in connection with any
such investigation, litigation or other proceedings (whether actual or
threatened), or such Environmental Discharge; handling, storage, use,
disposal, manufacture, treatment, recycling, remediation, removal,
generation, release,
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discharge, refining or dumping of any Hazardous Materials; Remedial Action;
or violation or alleged violation of Environmental Laws including, without
limitation, the fees and disbursements of counsel incurred in connection with
any of the foregoing. The Borrower further agrees that this indemnification
shall survive termination of this Financing Agreement as well as the payment
of all Obligations or amounts payable hereunder.
SECTION 15.06. SEVERABILITY. If any provision hereof or of any
other Agreement made in connection herewith is held to be illegal or
unenforceable, such provision shall be fully severable, and the remaining
provisions of the applicable agreement shall remain in full force and effect
and shall not be affected by such provision's severance. Furthermore, in
lieu of any such provision, there shall be added automatically as a part of
the applicable agreement a legal and enforceable provision as similar in
terms to the severed provision as may be possible.
SECTION 15.07. WAIVER OF JURY TRIAL. THE BORROWER, THE GUARANTORS,
THE AGENT AND EACH LENDER EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE
BORROWER AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED.
SECTION 15.08. NOTICES. Except as otherwise herein provided, any
notice or other communication required hereunder shall be in writing, and
shall be deemed to have been validly served, given or delivered when hand
delivered or sent by telegram or facsimile, or three days after deposit in
the United State mails, with proper first class postage prepaid and addressed
to the party to be notified as follows:
(a)if to CITBC or the Agent at:
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Regional Manager
Fax (000) 000-0000
(b) if to any party which becomes a Lender subsequent to the date hereof,
such address as appears beneath such Lender's name on the signature page of
the Assignment and Acceptance such Lender executes in accordance with
Paragraph 10 of Section 13 of this Financing Agreement.
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(c) if to the Borrower at:
Specialty Paperboard, Inc.
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy to (provided, however, the failure to deliver such copy
will not invalidate any notices delivered to the Borrower nor create
any liability on the part of the Agent or any Lender):
Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields
First Security Building
000 Xxxx Xxxxx
X.X. Xxx 000
Xxxxx, Xxxxx 00000
(d) if to a Guarantor at:
c/o Specialty Paperboard
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
with a copy to (provided, however, the failure to deliver such copy
will not invalidate any notices delivered to the Borrower nor create
any liability on the part of the Agent or any Lender):
Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields
Field Security Building
000 Xxxx Xxxxx
X.X. Xxx 000
Xxxxx, Xxxxx 00000
or to such other address as any party may designate for itself by like notice.
SECTION 15.09. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS FINANCING AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 15.10. CONFIDENTIALITY. The Lenders shall maintain the
confidential nature of, and shall not use or disclose, any of the Borrower's
financial information, confidential information or trade secrets without
first obtaining the Borrower's written consent. Nothing in this Section
15.10 shall require the Agent or the Lenders to obtain the consent of the
Borrower or a Guarantor before exercising any of their respective rights
under the Loan Documents upon
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the occurrence of a Default or Event of Default. The obligations of the
Agent and the Lenders shall in no event apply to: (a) providing information
about the Borrower or a Guarantor to any financial institution contemplated
in Section 14.03 or 14.07; (b) any situation in which the Agent or any of the
Lenders is required by Law or required by any Governmental Authority or
governmental, regulatory or supervisory authority or official to disclose
information; (c) providing information to counsel to the Lenders in
connection with the transactions contemplated by the Loan Documents; (d)
providing information to independent auditors retained by the Lenders; (e)
any information that is in or becomes part of the public domain otherwise
than through a wrongful act of the Agent or any of the Lenders or any
employees or agents thereof; (f) any information that is in the possession of
the Agent or any of the Lenders prior to receipt thereof from the Borrower or
a Guarantor or any other Person known to such Lender to be acting on behalf
of the Borrower or a Guarantor; (g) any information that is independently
developed by the Agent or any of the Lenders; and (h) any information that is
disclosed to the Agent or any of the Lenders by a third party that has no
obligation of confidentiality with respect to the information disclosed.
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IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above. This Financing Agreement shall take
effect as of the date set forth above after being accepted below.
SPECIALTY PAPERBOARD, INC., as
Borrower
By /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
SPECIALTY PAPERBOARD/ENDURA, INC., as
Guarantor
By /s/ Xxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
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ARCON HOLDINGS CORP., as Guarantor
By /s/ Xxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
ARCON COATING XXXXX INC., as
Guarantor
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
CPG INVESTORS INC., as Guarantor
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
CPG HOLDINGS, INC., as Guarantor
By /s/ Xxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
CPG-XXXXXX XXXX INC., as Guarantor
By /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Treasurer
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
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CUSTOM PAPERS GROUP INC., as
Guarantor
By /s/ Xxxxx Xxxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxxx
Title: TREASURER
Address for Notices:
X.X. Xxx 000
Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Applicable Lending Office:
New York
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx Xxxxx, Vice President
Telecopy: (000) 000-0000
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THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Applicable Lending Office:
New York
Address for Notices:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx Xxxxx, Vice President
Telecopy: (000) 000-0000
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