1
Exhibit 10.1
LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER __, 1996
AMONG
UNIFRAX CORPORATION
AS BORROWER,
BANK OF AMERICA ILLINOIS, AS AGENT AND A LENDER,
NATIONAL CITY BANK, AS A LENDER,
AND
THE OTHER LENDERS PARTY HERETO
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND OTHER TERMS....................................................................................1
1.1. Definitions........................................................................................1
1.2. Other Definitional Provisions.....................................................................21
1.3. Interpretation of Agreement.......................................................................21
1.4. Compliance with Financial Restrictions............................................................22
1.5. Currency Equivalents Generally....................................................................22
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.......................................................................22
2.1. Loans.............................................................................................22
2.2. Letters of Credit.................................................................................26
2.3. Loan Account; Demand Deposit Account..............................................................28
2.4. Interest and Fees.................................................................................28
2.5. Requests for Loans and Letters of Credit; Borrowing Base Certificates; Other Information..........31
2.6. Statements........................................................................................32
2.7. Overdraft Loans...................................................................................32
2.8. Over Advances.....................................................................................33
2.9. All Loans One Obligation..........................................................................33
2.10. Making of Payments; Application of Collections; Charging of Accounts..............................33
2.11. Agent's Election Not to Enforce...................................................................35
2.12. Intentionally Omitted.............................................................................35
2.13. Setoff............................................................................................35
2.14. Settlements, Distributions and Apportionment of Payments..........................................35
3. COLLATERAL....................................................................................................36
3.1. Grant of Security Interest........................................................................36
3.2. Accounts Receivable...............................................................................38
3.3. Inventory.........................................................................................41
3.4. Equipment.........................................................................................41
3.5. Supplemental Documentation........................................................................42
3.6. Collateral for the Benefit of Agent and Lenders...................................................43
4. REPRESENTATIONS AND WARRANTIES................................................................................43
4.1. Organization......................................................................................43
4.2. Authorization.....................................................................................43
4.3. No Conflicts......................................................................................44
4.4. Validity and Binding Effect.......................................................................44
4.5. No Default........................................................................................44
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4.6. Financial Statements..............................................................................44
4.7. Insurance.........................................................................................45
4.8. Litigation; Contingent Liabilities................................................................45
4.9. Liens.............................................................................................45
4.10. Subsidiaries......................................................................................46
4.11. Partnerships; Joint Ventures......................................................................46
4.12. Business and Collateral Locations.................................................................46
4.13. Real Property.....................................................................................47
4.14. Eligibility of Collateral.........................................................................47
4.15. Control of Collateral; Lease of Property..........................................................47
4.16. Patents, Trademarks, etc..........................................................................47
4.17. Solvency..........................................................................................47
4.18. Contracts; Labor Matters..........................................................................48
4.19. Pension and Welfare Plans.........................................................................48
4.20. Regulations G and U...............................................................................48
4.21. Compliance........................................................................................49
4.22. Taxes.............................................................................................49
4.23. Investment Company Act Representation.............................................................49
4.24. Public Utility Holdings Company Act Representation................................................49
4.25. Environmental and Safety and Health Matters.......................................................49
4.26. Other Transactions................................................................................50
4.27. Related Agreements and Acquisition Documents......................................................50
5. COVENANTS.....................................................................................................51
5.1. Financial Statements and Other Reports............................................................51
5.2. Notices...........................................................................................53
5.3. Existence.........................................................................................55
5.4. Nature of Business................................................................................55
5.5. Books, Records and Access.........................................................................55
5.6. Insurance.........................................................................................56
5.7. Repair............................................................................................57
5.8. Taxes.............................................................................................57
5.9. Compliance........................................................................................57
5.10. Pension Plans.....................................................................................58
5.11. Merger, Purchase and Sale.........................................................................58
5.12. Restricted Payments...............................................................................58
5.13. Stock.............................................................................................59
5.14. Indebtedness......................................................................................59
5.15. Liens.............................................................................................59
5.16. Guaranties........................................................................................60
5.17. Investments.......................................................................................60
5.18. Subsidiaries......................................................................................61
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5.19. Intentionally Omitted.............................................................................61
5.20. Environmental Issues..............................................................................61
5.21. Related Agreements................................................................................62
5.22. Unconditional Purchase Options....................................................................62
5.23. Use of Proceeds...................................................................................62
5.24. Transactions with Related Parties.................................................................62
5.25. Amendment of Documents............................................................................62
5.26. Capital Expenditures Limitation...................................................................63
5.27. Minimum Fixed Charge Coverage Ratio...............................................................63
5.28. Minimum Net Worth.................................................................................64
5.29. Maximum Leverage..................................................................................64
5.30. Minimum Interest Coverage Ratio...................................................................65
5.31. Collateral at Sales Offices.......................................................................65
6. DEFAULT.......................................................................................................66
6.1. Event of Default..................................................................................66
6.2. Effect of Event of Default; Remedies..............................................................69
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S RIGHTS.................................................70
7.1. Notice of Disposition of Collateral...............................................................70
7.2. Application of Proceeds of Collateral.............................................................70
7.3. Care of Collateral................................................................................70
7.4. Performance of Borrower's Obligations.............................................................70
7.5. Agent's Rights....................................................................................71
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS.................................................71
8.1. Conditions Precedent to Initial Loans and Letters of Credit.......................................71
8.2. Continuing Conditions Precedent to all Loans; Certification.......................................75
9. INDEMNITY.....................................................................................................76
9.1. Environmental and Safety and Health Indemnity.....................................................76
9.2. General Indemnity.................................................................................76
9.3. Capital Adequacy..................................................................................77
10. AGENT........................................................................................................78
10.1. Appointment of Agent.............................................................................78
10.2. Nature of Duties of Agent........................................................................78
10.3. Agent in its Capacity as Lender..................................................................78
10.4. Independent Credit Analysis......................................................................79
10.5. General Immunity.................................................................................79
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10.6. Action by Agent..................................................................................80
10.7. Right to Indemnity...............................................................................81
10.8. Rights and Remedies to be Exercised by Agent Only................................................81
10.9. Agent's Resignation..............................................................................81
10.10. Disbursement of Proceeds of Loans and Other Advances.............................................82
10.11. Release of Collateral............................................................................82
10.12. Agreement to Cooperate...........................................................................82
10.13. Sharing of Collateral............................................................................82
10.14. Lenders to Act as Agents.........................................................................83
11. GENERAL......................................................................................................83
11.1. Borrower's Waiver................................................................................83
11.2. Power of Attorney................................................................................83
11.3. Expenses and Attorneys' Fees.....................................................................84
11.4. BAI's Fees and Charges...........................................................................85
11.5. Lawful Interest..................................................................................85
11.6. No Waiver by Agent or any Lender; Amendments.....................................................86
11.7. Termination of Credit............................................................................86
11.8. Notices..........................................................................................87
11.9. Assignments and Participations; Information......................................................87
11.10. Borrower's Documentation; Confidentiality........................................................89
11.11. Severability.....................................................................................90
11.12. Successors.......................................................................................90
11.13. Construction.....................................................................................90
11.14. Consent to Jurisdiction..........................................................................90
11.15. Waiver of Jury Trial.............................................................................90
11.16. Judgment.........................................................................................91
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this ____ day
of October, 1996 by and among BANK OF AMERICA ILLINOIS (in its individual
capacity, "BAI"), having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Agent and a Lender, NATIONAL CITY BANK ("NCB"),
having its principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as
a Lender, the other Lenders from time to time party hereto, and UNIFRAX
CORPORATION ("Borrower"), a Delaware corporation having its principal office at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H
-------------------
WHEREAS, Borrower may, from time to time, request loans or
other financial accommodations from Lenders, and the parties wish to provide for
the terms and conditions upon which such loans and other financial
accommodations shall be made;
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit (including any loan or advance or grant of credit by renewal or
extension) hereafter made to Borrower by, or on behalf of, Lenders, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1. Definitions.
------------
In addition to terms defined elsewhere in this Agreement or
any SCHEDULE or EXHIBIT hereto, when used herein, the following terms shall have
the following meanings (such meanings shall be equally applicable to the
singular and plural forms of the terms used, as the context requires):
"Account Debtor" means any Person who is or who may become
obligated to Borrower, under, with respect to, or on account of an Account
Receivable, General Intangible or other Collateral.
"Account Receivable" means any account of Borrower and any
other right of Borrower to payment for goods sold or leased or for services
rendered, whether or not evidenced by an instrument or chattel paper and whether
or not yet earned by performance.
"Acquisition" means (i) the redemption of eighty (80) shares
of capital stock of Borrower, (ii) the acquisition by Holdings of ninety percent
(90%) of the remaining capital stock of Borrower pursuant to the terms of the
Recapitalization Agreement; and (iii) the merger of Unifrax Investment with and
into Borrower.
"Acquisition Documents" means the Recapitalization Agreement
and the agreements, instruments and documents executed in connection therewith,
including without
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limitation the Subordinated Promissory Note, and the Certificate of Merger
between Unifrax Investment and Borrower and the agreements, instruments and
documents executed in connection therewith.
"Agent" means Bank of America Illinois, in its capacity as
agent for Lenders hereunder and under the Related Agreements, or any successor
agent pursuant to SECTION 10.
"Agreement" means this Loan and Security Agreement, as the
same may be amended, modified or supplemented from time to time.
"Annual Stock Repurchase Limit" has the meaning ascribed to
such term in SECTION 5.12.
"Application" means an application by Borrower, in a form, and
containing terms and provisions, reasonably acceptable to Agent and Issuer, for
the issuance by Issuer of a Letter of Credit.
"Applicable Currency" means, as to any particular payment or
Loan, Dollars or the Offshore Currency in which it is denominated or payable.
"Applicable Floating Margin" means, with respect to any
portion of the Loans constituting a Floating Rate Loan, the Applicable Margin
pertaining thereto.
"Applicable LIBOR Margin" means, with respect to any portion
of the Loans constituting a LIBOR Rate Loan, the Applicable Margin with respect
thereto.
"Applicable Margin" means, with respect to any portion of the
Revolving Loans constituting a LIBOR Rate Loan, a percentage equal to one and
three quarters percent (1.75%), with respect to any portion of the Term Loan
constituting a LIBOR Rate Loan, a percentage equal to two percent (2.0%), with
respect to any portion of Revolving Loans constituting a Floating Rate Loan, a
percentage equal to zero, and with respect to any portion of the Term Loan
constituting a Floating Rate Loan, a percentage equal to one-quarter of one
percent (0.25%); provided, that the Applicable Margin for Revolving Loans and
the Term Loan will be adjusted on the first day of each calendar quarter,
commencing on October 1, 1997, depending on the Leverage Ratio on the last day
of the calendar quarter immediately preceding such calendar quarter, as follows:
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Applicable LIBOR Applicable LIBOR Applicable Floating Applicable Floating
Margin for the Margin for the Margin for the Margin for the
Leverage Ratio Revolving Loans Term Loan Revolving Loans Term Loan
-------------- --------------- --------- --------------- ---------
Greater than or equal to 1.75% 2.00% 0% 0.25%
4.75:1.00
Greater than or equal to
3.50:1.00, but less than
4.75:1.00 1.50% 1.75% (0.25%) 0%
Less than 3.50:1.00 1.25% 1.50% (0.50%) (0.25%)
The calculation of the Leverage Ratio as of the last day of a calendar quarter
shall be based on the financial statements received by Agent pursuant to SECTION
5.1.1. Each adjustment to the Applicable Margin shall be effective retroactively
as of the first day of each calendar quarter.
"Assignee Deposit Account" has the meaning ascribed to such
term in SECTION 3.2(d).
"Assignment and Acceptance Agreement" means an agreement in
the form of EXHIBIT C pursuant to which a Lender assigns all or a portion of its
rights, and delegates all or such portion of its obligations, under this
Agreement and the Related Agreements, to another Person.
"Attorneys' Fees" has the meaning ascribed to such term in
SECTION 11.3.
"BA" means Bank of America National Trust & Savings
Association.
"BAI" has the meaning ascribed to such term in the Preamble.
"Banking Day" means any day other than a Saturday, Sunday or
legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Chicago, Illinois or San Francisco,
California; provided, with respect to LIBOR Rate Loans (including Offshore
Currency Loans), Banking Days shall not include a day on which dealings in
Dollars may not be carried on by BAI in the London interbank LIBOR market;
provided, further, that with respect to Offshore Currency Loans, Banking Days
shall not include a day on which dealings in the Applicable Currency may not be
carried on by BAI in the applicable foreign exchange interbank market.
"Base Net Worth" means Net Worth as of the Closing Date, after
giving effect to the Acquisition.
"Borrower" has the meaning ascribed to such term in the
Preamble.
"Borrowing Base" means (a) an amount equal to eighty-five
percent (85%) of the net amount of Eligible Accounts Receivable ("Accounts
Availability"), PLUS (b) the least of (i) an amount equal to the sum of (x)
sixty percent (60%) of the value (at the lower of cost or market) of Eligible
Inventory consisting of finished goods and raw materials and (y) the lesser of
(A) sixty
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percent (60%) of the value (at the lower of cost or market) of Eligible
Inventory consisting of work-in-process, and (B) Three Hundred Thousand Dollars
($300,000), (ii) Six Million Dollars ($6,000,000), and (iii) sixty percent (60%)
of Accounts Availability, LESS (c) such reserves (including without limitation
reserves for rebates) as Agent elects to establish from time to time in its
reasonable discretion.
"Borrowing Base Certificate" means a certificate in the form
of EXHIBIT A attached hereto, executed and certified as accurate by an officer
of Borrower designated in writing by Borrower to Agent.
"BPX" means BP Exploration (Alaska) Inc., a Delaware
corporation.
"Capital Expenditures" means, for any period, the aggregate of
all expenditures by Borrower and its Subsidiaries for the acquisition or leasing
of fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which would be
capitalized under GAAP on a consolidated balance sheet of Borrower and its
Subsidiaries.
"Capitalized Lease" means any lease which is or is required to
be capitalized on the balance sheet of the lessee at such time in accordance
with GAAP.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interest, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year from the date of investment, issued or guaranteed by the United States
Government or issued by an agency or instrumentality thereof;
(b) commercial paper, maturing not more than one year from the
date of issue, which is issued by either
(i) a corporation (except any Company or Related Party of a
Company) organized under the laws of any State of the United States of
America or of the District of Columbia and rated at least A-1 by
Standard & Poors Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P")
or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), at the date of
investment, or
(ii) Agent or any Lender (or its holding company);
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the date of
issue, which is issued by any Lender, or issued by
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any bank organized under the laws of the United States of America or any state
thereof or the District of Columbia or any United States branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than Two Hundred Fifty Million Dollars ($250,000,000), or issued by any
other financial institution if the amount of such investment is less than One
Hundred Thousand Dollars ($100,000);
(d) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing or that may be put back to the issuer
thereof within one year from the date of acquisition thereof and, at the time of
acquisition, rated at least A-1 by S & P or P-1 by Moody's;
(e) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (c)
above; or
(f) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(a) through (e) of this definition.
"Closing Date" means the first date on which Loans are made,
or Letters of Credit are issued, under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
"Collateral" has the meaning ascribed to such term in SECTION
3.1.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether now or
hereafter outstanding, and includes, without limitation, all series and classes
of such common stock.
"Companies" means, collectively, Borrower and its
Subsidiaries; and "Company" means any one of the Companies.
"Credit" means the facility established under this Agreement
pursuant to which Lenders will make Revolving Loans to Borrower (the "Revolving
Credit") and the Term Loan to Borrower (the "Term Credit") and/or cause Issuer
to issue Letters of Credit for the account of Borrower.
"Default Rate" means, with respect to a Loan, the rate of
interest which is applicable to such Loan after the occurrence and during the
continuance of an Event of Default and upon written notice by Agent to Borrower,
as determined pursuant to SECTION 2.4.
"Demand Deposit Account" has the meaning ascribed to such term
in SECTION 2.3.
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"Depository Accounts" has the meaning ascribed to such term in
SECTION 3.2(d).
"Discontinued Operations" has the meaning set forth in the
Recapitalization Agreement.
"Disproportionate Advance" has the meaning ascribed to such
term in SECTION 2.1.1(a).
"Dollar Equivalent" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in an Offshore Currency, the equivalent amount in Dollars as
determined by Agent at such time on the basis of the Spot Rate for the purchase
of Dollars with such Offshore Currency.
"Dollars" and "$" each mean lawful money of the United States.
"EBITDA" means for any period, the sum of (a) net income (or
net loss) for such period, plus (b) interest expense for such period, plus (c)
tax expense for such period, plus (d) depreciation, amortization and other
non-cash charges for such period, all determined for Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP. For purposes
hereof, EBITDA for the first three calendar quarters of Fiscal Year 1996 is set
forth on EXHIBIT D.
"Eligible Account Receivable" means an Account Receivable
which meets the following requirements:
(a) it is genuine and in all respects what it purports to be;
(b) it arises from either (i) the performance of services by
Borrower, which services have been fully performed and acknowledged and/or
accepted by the Account Debtor with respect thereto or (ii) the sale or lease of
goods by Borrower; and if it arises from the sale or lease of goods, (A) such
goods comply with such Account Debtor's specifications (if any) and have been
shipped to, or delivered to and accepted by, such Account Debtor and Borrower
does not have knowledge that the Account Debtor has failed to accept delivery of
all or a portion of such goods, and (B) Borrower has possession of shipping and
delivery receipts evidencing such shipment, delivery and acceptance;
(c) it is evidenced by an invoice rendered to the Account
Debtor with respect thereto which (i) is dated not earlier than the date of
shipment or performance, and (ii) is not unpaid on the date that is ninety (90)
days after the date of the invoice evidencing the Account Receivable;
(d) it is not owing by an Account Debtor with respect to which
twenty-five percent (25%) or more of the aggregate Accounts Receivable owing by
such Account Debtor to Borrower taken together are not Eligible Accounts
Receivable for any reason;
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(e) it is not subject to any assignment, claim or Lien, other
than (i) a first priority Lien in favor of Agent, for the benefit of itself,
Issuer and Lenders, (ii) a Lien permitted under SECTION 5.15, and (iii) a Lien
consented to by Requisite Lenders in writing;
(f) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not subject to a
contra, setoff, counterclaim, claim denying liability thereunder, credit or
allowance (except any contra, setoff, counterclaim, claim denying liability
thereunder, credit or allowance which has been deducted in computing the net
amount of the applicable invoice as shown in the original schedule or Borrowing
Base Certificate furnished to Agent identifying or including such Account
Receivable) or adjustment by the Account Debtor with respect thereto, and such
Account Debtor has not refused to accept any of the goods or services which are
the subject of such Account Receivable or offered or attempted to return any of
such goods;
(g) there are no proceedings or actions which are then pending
against the Account Debtor with respect thereto or to which such Account Debtor
is a party which are reasonably likely to result in any material adverse change
in such Account Debtor's ability to pay any Account Receivable in full when due;
(h) it does not arise out of a contract which, by its terms,
forbids, restricts or makes void or unenforceable the assignment by Borrower to
Agent, for the benefit of itself, Issuer and Lenders, of the Account Receivable
arising with respect thereto;
(i) the Account Debtor with respect thereto is not a Related
Party of Borrower or a director, manager, officer, employee or agent of a
Company, a Related Party of Borrower or an Obligor, unless Borrower's decision
to extend credit to such Account Debtor is determined by the standards Borrower
employs to extend credit to Account Debtors that are not Related Parties and
such Account Receivable has terms no less favorable to Borrower than the
standard terms of Accounts Receivable owing by Account Debtors that are not
Related Parties;
(j) the Account Debtor with respect thereto is a resident or
citizen of, and is located within, the United States of America or the provinces
of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario or New Brunswick
of Canada, unless the Account Receivable is fully covered by a letter of credit,
banker's acceptance or other credit support terms reasonably satisfactory to
Agent;
(k) it is not an Account Receivable arising from a "sale on
approval," "sale or return" or "consignment," or subject to any other repurchase
or return agreement;
(l) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by Borrower, any Related Party of Borrower or any Obligor
(or by any agent or custodian of Borrower, any Related Party of Borrower or any
Obligor) for the account of or subject to further and/or future direction from
the Account Debtor thereof;
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(m) it is not an Account Receivable which in any way fails to
meet or violates any warranty, representation or covenant in any material
respect contained in this Agreement or any Related Agreement relating directly
to Accounts Receivable;
(n) it arises in the ordinary course of Borrower's business;
(o) if the Account Debtor is the United States of America or
any state or local governmental entity, or any department, agency or
instrumentality thereof, Borrower has assigned its rights to payment of such
Account Receivable to Agent, for the benefit of itself, Issuer and Lenders,
pursuant to the Assignment of Claims Act of 1940, as amended, or pursuant to any
similar state or local law, regulation or requirement;
(p) it is not owing by any single Account Debtor whose
aggregate obligations to Borrower with respect to Accounts Receivable already
exceed twenty percent (20%) of all Accounts Receivable in the aggregate; and
(q) the Account Receivable is not evidenced by chattel paper
or an instrument.
"Eligible Inventory" means Inventory which meets the following
requirements:
(a) it is owned by Borrower and is not subject to any prior
assignment, claim or Lien, other than (i) a first priority Lien in favor of
Agent, for the benefit of itself, Issuer and Lenders, (ii) a Lien permitted
under SECTION 5.15, and (iii) Liens consented to by Requisite Lenders in
writing;
(b) it is (except as Agent may otherwise consent in writing)
new and unused and held for sale;
(c) except as provided in clause (d) below or as Agent may
otherwise consent, it is in the possession and control of Borrower or its
agents;
(d) if it is in the possession or control of a bailee,
warehouseman, processor, consignee or other Person other than Borrower, Agent is
in possession of such agreements, instruments and documents as Agent may
reasonably require (each in form and content reasonably acceptable to Agent and
duly executed, as appropriate, by the bailee, warehouseman, processor, consignee
or other Person in possession or control of such Inventory, as applicable), and
if Agent so requests warehouse receipts in Agent's name, for the benefit of
itself, Issuer and Lenders, covering such Inventory;
(e) it is not Inventory which is dedicated to, identifiable
with, or is otherwise specifically to be used in the manufacture of, goods which
are to be sold or leased to the United States of America or any department,
agency or instrumentality thereof and in respect of which Inventory Borrower
shall have received any progress or other advance payment which is or may be
against any Account Receivable generated upon the sale or lease of any such
goods;
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(f) it is not Inventory produced in violation of the Fair
Labor Standards Act and subject to the "hot goods" provisions contained in Title
29 U.S.C. section 215 or any successor statute or section;
(g) it is not (i) packaging or shipping materials, (ii) goods
used in connection with maintenance or repair of Borrower's properties or assets
or (iii) general supplies;
(h) it is not Inventory which in any way fails to meet or
violates any warranty, representation or covenant in any material respect
contained in this Agreement or any Related Agreement relating directly to
Inventory;
(i) Agent has not determined in its reasonable discretion that
it is unacceptable due to age, type, category, quality and/or quantity; and
(j) it is not Inventory the use of which by Borrower or the
manufacture or sale thereof by Borrower, is subject to any licensing, patent,
royalty, trademark, tradename or copyright agreement of any other Person which
would materially adversely affect the ability of Agent to sell or otherwise
dispose of such Inventory during the continuance of any Event of Default.
"Environmental Laws" means the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree or other requirement
regulating, relating to, or imposing liability or standards of conduct
(including but not limited to permit requirements, and emission or effluent
restrictions) concerning any Hazardous Materials or any hazardous, toxic or
dangerous waste, substance or constituent, or any pollutant or contaminant or
other substance, whether solid, liquid or gas, as now or at any time hereafter
in effect.
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under any Environmental Law or (b) damages arising
from or costs incurred by such governmental entity in response to a Release of
any Hazardous Material or the spillage, disposal or release into the environment
of any other hazardous, toxic or dangerous waste, substance or constituent, or
other substance.
"Equipment" means all equipment of Borrower of every
description, including without limitation fixtures, furniture, vehicles and
trade fixtures, together with any and all accessions, parts and equipment
attached thereto or used in connection therewith, and any substitutions therefor
and replacements thereof.
"Equity Interests" means warrants, options or other stock
purchase rights to acquire the Capital Stock of Borrower or Holdings, as the
case may be (but excluding any debt security which is convertible into or
exchangeable for, Common Stock of Borrower or Holdings, as the case may be).
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" means any corporation, partnership, or other
trade or business (whether or not incorporated) that is, along with a Company, a
member of a controlled group of corporations or a controlled group of trades or
businesses, as described in Sections 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA, or a member of the same affiliated service group
within the meaning of Section 414(m) of the Code.
"Eurocurrency Reserve Requirement" means, with respect to any
LIBOR Rate Loan for any Interest Rate Period, a percentage equal to the daily
average during such Interest Rate Period of the percentages in effect on each
day of such Interest Rate Period, as prescribed by the Federal Reserve Board,
for determining the aggregate maximum reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves) applicable to
"Eurocurrency liabilities" pursuant to Regulation D or any other then applicable
regulation of the Federal Reserve Board which prescribes reserve requirements
applicable to "Eurocurrency liabilities." Without limiting the effect of the
foregoing, the Eurocurrency Reserve Requirement shall reflect any other reserves
required to be maintained by Lenders against (i) any category of liabilities
that includes deposits by reference to which the LIBOR Rate is to be determined,
or (ii) any category of extensions of credit or other assets that includes LIBOR
Rate Loans. For purposes of this Agreement, any LIBOR Rate Loan hereunder shall
be deemed to be "Eurocurrency liabilities," as defined in Regulation D, and, as
such, shall be deemed to be subject to such reserve requirements without the
benefit of, or credit for, pro ration, exceptions or offsets which may be
available to any Lender from time to time under Regulation D.
"Event of Default" has the meaning ascribed to such term in
SECTION 6.1.
"Excess Availability" means , as of any date, (a) Revolving
Loan Availability as of such date; minus (b) the sum of (i) the amount of all
then outstanding unpaid Revolving Loans as of such date, plus (ii) the aggregate
amount of all then outstanding and unpaid Trade Accounts Payable of Borrower,
which are more than forty-five (45) days past due, plus (iii) any Taxes then
due.
"Excess Cash Flow" means, for any period, the sum of the
following, without duplication, determined for Borrower on a consolidated basis
in accordance with GAAP: (i) EBITDA for such period, minus (ii) interest and
Taxes paid in cash during such period, minus (iii) the aggregate amount of
Capital Expenditures of Borrower during such period to the extent such
expenditures are made and permitted to be made hereunder, minus (iv) principal
payments of the Term Loan made during such period, except to the extent such
payments are made as a result of the application of the payments described in
SECTION 2.1.3(a)(i), SECTION 5.6 or as a result of the disposition of any of
Borrower's assets, minus (v) principal payments made during such period in
respect of the Subordinated Debt, to the extent such payments are permitted
under the
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Subordination Agreement and are not otherwise deducted from EBITDA, minus (vi)
all dividends and other payments by Borrower to Holdings permitted by SECTION
5.12 to the extent not deducted in determining net income of Borrower for such
period, plus (vii) decreases in Working Capital for such period, minus (viii)
increases in Working Capital for such period.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Banking Day, for the next preceding Banking Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Banking Day, the average of the quotations for such day on
such transactions received by Agent from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fiscal Year" means any period of twelve (12) consecutive
calendar months ending on December 31. References to a Fiscal Year with a number
corresponding to any calendar year (e.g. "Fiscal Year 1996") refer to the Fiscal
Year ending on the thirty-first (31st) day of December occurring during such
calendar year.
"Fixed Charge Coverage" means, for any period, the ratio of
(a) EBITDA for such period, to (b) the sum of Taxes paid in cash by Borrower
during such period, plus interest paid in cash by Borrower during such period,
plus payments made by Borrower under the Tax Sharing Agreement during such
period, plus principal in respect of Indebtedness of Borrower scheduled to be
paid during such period; provided, that for any period ending on or prior to
September 30, 1997, the amount of Taxes and interest paid in cash and payments
made under the Tax Sharing Agreement during such period shall mean the amount
the Taxes and interest paid in cash and payments made under the Tax Sharing
Agreement from the Closing Date through the end of such period as annualized for
a twelve (12) month period.
"Fixtures" means all fixtures of Borrower of every description
and all substitutions and replacements of any thereof.
"Floating Rate" means, at anytime, a rate per annum equal to
the sum of the Reference Rate at such time plus the Applicable Floating Margin
at such time.
"Floating Rate Loan" means any portion of the Revolving Loans
or the Term Loan which bears interest at a rate determined with reference to the
Floating Rate.
"Funded Debt" means the aggregate outstanding amount of all
interest-bearing Indebtedness of Borrower, determined on a consolidated basis in
accordance with GAAP, including without limitation all Loans.
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"FX Trading Office" means the Foreign Exchange Trading Center,
Chicago, Illinois, of BA, or such other of BA's offices as Agent may designate
from time to time.
"GAAP" means generally accepted accounting principles as in
effect from time to time (except as otherwise provided in SECTION 1.4), as
applied in the preparation of the audited financial statements referred to in
SECTION 4.6.
"General Intangibles" means all general intangibles now owned
or hereafter acquired by Borrower, including without limitation all right, title
and interest of Borrower, in and to: (a) all tax refunds and tax refund claims;
(b) registered and unregistered patents, trademarks, service marks, copyrights,
tradenames, applications for any of the foregoing; (c) all trade secrets and
other confidential information relating to the business of Borrower; and (d) all
rights and remedies under the Acquisition Documents.
"Hazardous Materials" means any toxic substance, hazardous
substance, hazardous material, hazardous chemical or hazardous waste defined or
qualifying as such in (or for the purposes of) any Environmental Law, or any
pollutant or contaminant, or any hazardous, toxic or dangerous waste, substance
or constituent, and shall include, but not be limited petroleum, including crude
oil, any radioactive material, including but not limited to any source, special
nuclear or by-product material as defined at 42 U.S.C. Section 2011 ET SEQ., as
amended or hereafter amended, polychlorinated biphenyls and asbestos in any form
or condition.
"Holdings" means Unifrax Holding Co., a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (a)
any obligation of such Person for borrowed money, including without limitation
(i) any obligation of such Person evidenced by bonds, debentures, notes or other
similar debt instruments and (ii) any obligation for borrowed money which is
non-recourse to the credit of such Person but which is secured by a Lien on any
asset of such Person, (b) any obligation of such Person on account of deposits
or advances, (c) any obligation of such Person for the deferred purchase price
of any property or services, except Trade Accounts Payable, (d) any obligation
of such Person as lessee under a Capitalized Lease, (e) any obligation of such
Person with respect to interest rate swaps, interest rate caps, interest rate
collars or other interest hedging agreements, (f) any obligation of such Person
in respect of foreign exchange contracts, (g) any obligation of such Person with
respect to letters of credit, acceptances, guarantees or similar obligations of
another Person issued for the account of such Person, and (h) any Indebtedness
of another Person secured by a Lien on any asset of such first Person, whether
or not such Indebtedness is assumed by such first Person. For all purposes of
this Agreement, the Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general partner or any joint venture
to the extent such Person is personally liable for the Indebtedness of such
joint venture.
"Interest Coverage" means, for any period, the ratio of (a)
EBITDA for such period, to (b) interest paid in cash by Borrower during such
period; provided, that for any period ending on or prior to September 30, 1997,
the amount of interest paid in cash during such period shall mean
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the amount of interest paid in cash from the Closing Date through the end of
such period as annualized for a twelve (12) month period.
"Interest Rate Period" means with respect to any portion of
the Revolving Loan or Term Loan which is to bear interest at a rate determined
with reference to the LIBOR Rate, the period commencing on the date on which the
LIBOR Rate is deemed applicable to such portion of the Loan and ending on the
numerically corresponding day one (1), two (2), three (3), four (4) or six (6)
months thereafter; provided, however, that:
(a) any Interest Rate Period which would otherwise end on a
day which is not a Banking Day shall end on the next succeeding Banking Day
unless such next succeeding Banking Day falls in another calendar month, in
which case such Interest Rate Period shall end on the next preceding Banking
Day;
(b) any Interest Rate Period which begins on the last Banking
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Rate Period)
shall end on the last Banking Day of the calendar month at the end of such
Interest Rate Period; and
(c) no Interest Rate Period shall extend beyond the
Termination Date.
"Inventory" means any and all of Borrower's goods (including
without limitation goods in transit) wheresoever located, which are held for
sale, furnished under any contract of service, or held as raw materials, work in
process, or supplies or materials used or consumed in Borrower's business, or
which are held for use in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, and any and all goods the sale
or other disposition of which has given rise to an Account Receivable or any
other property described in SECTION 3.1(a), which are returned to and/or
repossessed and/or stopped in transit by, or at any time hereafter are in the
possession or under the control of, Borrower, Agent or any Lender or any agent
or bailee of any of them, and all documents of title or other documents
representing the same.
"Investment" of any Person means any investment, made in cash
or by delivery of any kind of property or asset, in any other Person, whether by
acquisition of shares of stock or similar interest, Indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise.
"Issuer" means BAI, any Related Party of BAI, or any other
Lender reasonably acceptable to Agent to issue Letters of Credit under this
Agreement upon the Application of Borrower.
"L/C Draft" means a draft drawn on Issuer pursuant to a Letter
of Credit.
"Lenders" means, collectively, BAI, NCB and any other Person
that becomes a Lender under this Agreement and each of their respective
successors and assigns as provided in this Agreement; and "Lender" means any one
of Lenders.
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"Letter of Credit" means a standby or commercial letter of
credit issued by Issuer on the Application of Borrower.
"Letter of Credit Obligations" means, at any time, an amount
equal to the sum of, without duplication, (a) the aggregate outstanding face
amount of all Letters of Credit, plus (b) the aggregate outstanding face amount
of all accepted but unpaid L/C Drafts, plus (c) the unreimbursed amount of any
payment by Issuer in respect of any L/C Draft.
"Leverage Ratio" means, as of the last day of any calendar
quarter, the ratio of (a) Funded Debt as of such date less cash and Cash
Equivalent Investments of Borrower as of such date, to (b) EBITDA for the twelve
(12) month period ending on such date.
"Liabilities" means all of the liabilities, obligations
(including obligations of performance) and indebtedness of Borrower to Agent or
any Lender of any kind or nature, however created, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing or due or
to become due, and arising under, or in connection with, this Agreement, any
Note, any Related Agreement (including without limitation any Application or
Letter of Credit with respect thereto), including without limitation all
interest, charges, reasonable expenses, Attorneys' Fees and other sums
chargeable to Borrower by Agent or any Lender hereunder or thereunder.
"Liabilities" shall also include any and all amendments, extensions, renewals of
any of the foregoing.
"LIBOR Base Rate" means, with respect to each Interest Rate
Period for a LIBOR Rate Loan, the rate per annum at which deposits in the
Applicable Currency are offered to the LIBOR Office of BAI two (2) Banking Days
prior to the beginning of such Interest Rate Period by major banks in the London
interbank eurodollar market as at or about the relevant local time of such LIBOR
Office, for delivery on the first day of such Interest Rate Period, for the
number of days comprised therein and in an amount equal to the amount of the
LIBOR Rate Loan to be outstanding during such Interest Rate Period. As used
herein, "relevant local time" as to any LIBOR Office means 11:00 a.m., London
time, when such LIBOR Office is located in Europe or the Middle East, and 10:00
a.m., Chicago time, when such LIBOR Office is located in North America or the
Caribbean.
"LIBOR Office" means with respect to any Lender the office or
offices reasonably selected by such Lender which shall be making or maintaining
the LIBOR Rate Loans of such Lender hereunder or such other office or offices
reasonably selected by such Lender through which such Lender determines its
LIBOR Base Rate. A LIBOR Office of any Lender may be, at the option of such
Lender, either a domestic or foreign office.
"LIBOR Rate" means, with respect to each Interest Rate Period
for a LIBOR Rate Loan, a rate per annum (rounded upward, if necessary, to the
nearest one hundredth of one percent (1/100th of 1%)) determined pursuant to the
following formula:
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LIBOR Rate = LIBOR Base Rate + Applicable LIBOR Margin
---------------------------------
1-Eurocurrency Reserve Requirement
"LIBOR Rate Loan" means any portion of the Revolving Loans or
Term Loan which bears interest at a rate determined with reference to the LIBOR
Rate, and may be an Offshore Currency Loan or a Loan denominated in Dollars.
"Lien" means any security interest, mortgage, pledge,
hypothecation, judgment lien or similar legal process, title retention lien, or
other lien or encumbrance, including without limitation the interest of a vendor
under any conditional sale or other title retention agreement and the interest
of a lessor under any Capitalized Lease, but excluding operating leases for
purposes of GAAP not intended to create a security interest.
"Loan" means (a) any Revolving Loan made pursuant to SECTION
2.1.1, (b) the Term Loan made pursuant to SECTION 2.1.2 and (c) any other loan
or advance made to Borrower by Agent or any Lender under or pursuant to this
Agreement.
"Loan Account" has the meaning ascribed to such term in
SECTION 2.3.
"Margin Stock" has the meaning ascribed to such term in
Regulation U of the Federal Reserve Board or any regulation substituted
therefor, as in effect from time to time.
"Material Adverse Change" means (a) a material adverse change
in the condition (financial or otherwise), operations or properties, of
Borrower, (b) an impairment of Agent's interest, for the benefit of itself,
Issuer and Lenders, in any material portion of the Collateral or the material
diminution in value of the Collateral taken as a whole, or (c) the prospect of
payment or performance of any material obligation or material agreement of
Borrower or any other Obligor hereunder or under any Related Agreement is
materially impaired.
"Material Adverse Effect" means (a) a material adverse effect
upon the condition (financial or otherwise), operations or properties, of
Borrower, (b) an impairment of Agent's interest, for the benefit of itself,
Issuer and Lenders, in any material portion of the Collateral or the material
diminution in value of the Collateral taken as a whole, or (c) the prospect of
payment or performance of any material obligation or material agreement of
Borrower or any other Obligor hereunder or under any Related Agreement is
materially impaired.
"Maximum Facility Amount" has the meaning ascribed to such
term in SECTION 2.1.5.
"Maximum Loan Amount" means, with respect to any Lender, the
maximum amount of Loans which such Lender has agreed, pursuant to the terms and
conditions of this Agreement, to make available to Borrower, as set forth on the
signature page hereto or in an Assignment and Acceptance Agreement executed by
such Lender.
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"Maximum Revolving Loan Amount" means, with respect to any
Lender, the maximum amount of Revolving Loans which such Lender has agreed,
pursuant to the terms and conditions of this Agreement, to make available to
Borrower, as set forth on the signature page hereto or in an Assignment and
Acceptance Agreement executed by such Lender.
"Maximum Term Loan Amount" means, with respect to any Lender,
the maximum amount of the Term Loan which such Lender has agreed to make
available to Borrower, as set forth on the signature page hereto or in an
Assignment and Acceptance Agreement executed by such Lender.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA that is maintained for employees of Borrower or
any ERISA Affiliate.
"Net Worth" means, at any time, the consolidated assets of
Borrower and its Subsidiaries at such time, less the consolidated liabilities of
Borrower and its Subsidiaries at such time, each as determined in accordance
with GAAP.
"NCB" has the meaning ascribed to such term in the Preamble.
"Note" means any promissory note of Borrower evidencing any
loan or advance made by any Lender to Borrower pursuant to this Agreement, as
the same may be amended, modified or supplemented from time to time.
"Obligor" means Borrower and each other Person who is or shall
become primarily or secondarily liable on any of the Liabilities, or who grants
to Agent, for the benefit of itself, Issuer and Lenders, a Lien on any property
of such Person as security for any of the Liabilities.
"Occupational Safety and Health Law" means the Occupational
Safety and Health Act of 1970 and any other federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to
or imposing liability or standards of conduct concerning employee health and/or
safety which is applicable to any Company.
"Offshore Currency" means Deutche Marks or Reals.
"Offshore Currency Loan" means any LIBOR Rate Loan denominated
in an Offshore Currency.
"Over Advance" has the meaning ascribed to such term in
SECTION 2.8.
"Overdraft Loan" has the meaning ascribed to such term in
SECTION 2.7.
"Participant" means any Person, now or at any time or times
hereafter, participating with any Lender, pursuant to the provisions of SECTION
11.9, in the Loans made or Letters of Credit issued, pursuant to this Agreement
or any Related Agreement.
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"Payment Liabilities" means all Liabilities other than (i)
contingent obligations of Borrower with respect to which neither Agent nor any
Lender has asserted a claim against Borrower, and (ii) non-monetary obligations
of performance; provided, that Payment Liabilities shall include the Letter of
Credit Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined
in Section 3(2) of ERISA, that is subject to the provisions of Title IV of ERISA
(other than a Multiemployer Plan) that is maintained for employees of Borrower
or any ERISA Affiliate.
"Permitted Acquisition" means any acquisition after December
31, 1997 by Borrower or any Subsidiary formed by Borrower for such purpose (a
"New Subsidiary"), by any means, of all or substantially all of the assets or
capital stock of any Person that is a going concern and that is in a similar or
related field of business as Borrower as of the date hereof (including
reasonable extensions of such business operations), that satisfies the following
conditions:
(a) no Event of Default or Unmatured Event of Default is in
existence at the time of such acquisition or would be caused thereby after
giving effect thereto;
(b) total consideration for all such acquisitions (including
without limitation cash purchase price, liabilities assumed, deferred or
financed purchase price and purchase price characterized as consulting
agreements, noncompetition payments and the like), does not exceed the sum of
Two Million Dollars ($2,000,000) and the aggregate amount of Excess Cash Flow of
Borrower for each Fiscal Year ending on or after December 31, 1997 not applied
to the principal balance of the Term Loan pursuant to SECTION 2.1.3(a)(i);
provided, that total consideration for all such acquisitions in any Fiscal Year
shall not exceed Two Million Dollars ($2,000,000);
(c) Agent has received at least ten (10) days' prior written
notice thereof and, as soon as available, copies of all agreements delivered in
connection therewith;
(d) if a New Subsidiary is formed, Agent has obtained a Lien
on such New Subsidiary's stock and assets; and
(e) Agent has received a certificate from Borrower's chief
executive officer, president or chief financial officer certifying that all of
the applicable conditions contained herein to treating such acquisition as a
Permitted Acquisition have been satisfied.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, limited
liability company, association, corporation, institution, entity, or government
(whether national, federal, state, county, city, municipal or otherwise,
including without limitation any instrumentality, division, agency, body or
department thereof).
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"Pre-Settlement Determination Date" has the meaning ascribed
to such term in SECTION 2.14.
"Pro Rata Share" means, with respect to any Lender, a fraction
(expressed as a percentage in nine (9) decimal places), the numerator of which
shall be the Maximum Loan Amount of such Lender and the denominator of which
shall be the aggregate amount of the Maximum Loan Amounts of all Lenders.
"Recapitalization Agreement" means that certain
Recapitalization Agreement dated as of _____________, 1996 among Sellers,
Borrower, Unifrax Investment and Holdings.
"Reference Rate" means, at any time, the rate of interest then
most recently announced by BAI at Chicago, Illinois as its reference rate. Each
change in the interest rate on any Loan (other than a LIBOR Rate Loan) shall
take effect on the effective date of the change in the Reference Rate.
"Register" has the meaning ascribed to such term in SECTION
11.9(d).
"Related Agreement" means any agreement, instrument or
document (including without limitation notes, guarantees, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, subordination agreements,
intercreditor agreements, trust account agreements and all other written matter)
heretofore, now, or hereafter delivered to Agent or any Lender with respect to
or in connection with or pursuant to this Agreement or any of the Liabilities,
and executed by or on behalf of a Company or any other Obligor, as each of the
same may be amended, modified or supplemented from time to time and shall
specifically include any Notes.
"Related Party" means, with respect to any Person, any other
Person (a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such first
Person or a subsidiary of such first Person, (b) that beneficially owns or holds
ten percent (10%) or more of the equity interest of such first Person or a
subsidiary of such first Person or (c) ten percent (10%) or more of the equity
interest of which is beneficially owned or held by such first Person or a
subsidiary of such first Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Release" means any actual or threatened spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Materials into the environment.
"Reportable Event" has the meaning given to such term in
ERISA.
"Requisite Lenders" means Lenders having, in the aggregate,
Pro Rata Shares of at least fifty-one percent (51%).
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"Revolving Credit" has the meaning ascribed to such term in
the definition of "Credit."
"Revolving Credit Amount" means the maximum amount of
Revolving Loans which Lenders will make available to Borrower, which amount is
equal to Twenty Million Dollars ($20,000,000).
"Revolving Loan" has the meaning ascribed to such term in
SECTION 2.1.1.
"Revolving Loan Availability" means the lesser of (a) the
Revolving Credit Amount minus the Letter of Credit Obligations and (b) the
Borrowing Base (as calculated pursuant to the most recent Borrowing Base
Certificate delivered pursuant to this Agreement) minus the Letter of Credit
Obligations.
"Same Day Funds" means (i) with respect to disbursements and
payments in Dollars, immediately available funds, and (ii) with respect to
disbursements and payments in an Offshore Currency, same day or other funds as
may be determined by the Agent to be customary in the place of disbursement or
payment for the settlement of international banking transactions in the relevant
Offshore Currency.
"Sellers" mean BP America Inc., a Delaware corporation, The
Standard Oil Company, an Ohio corporation, and BPX.
"Seller Subordinated Debt" means obligations of Borrower to
BPX in respect of the Subordinated Promissory Note.
"Senior Notes" means Borrower's ________ percent (___%) Senior
Notes due 2003, in aggregate principal amount limited to One Hundred Million
Dollars ($100,000,000), issued or to be issued in connection with the
Acquisition, as the same may be amended, modified, supplemented, renewed or
refinanced from time to time.
"Senior Note Documents" means the Indenture dated as of
October __, 1996 between Borrower (as successor in interest to Unifrax
Investment) and ____________________, as Trustee, as the same may be amended,
modified or supplemented from time to time.
"Settlement Date" has the meaning ascribed to such term in
SECTION 2.14.
"Spot Rate" for a currency means the rate quoted by BA as the
spot rate for the purchase by BA of such currency with another currency through
its FX Trading Office at approximately 10:30 a.m. (Chicago time) on the date two
(2) Banking Days prior to the date as of which the foreign exchange computation
is made.
"Subordinated Debt" means, collectively, that portion of any
liabilities, obligations or Indebtedness of Borrower which contains terms
satisfactory to Requisite Lenders and is subordinated, in a manner satisfactory
to Requisite Lenders (as evidenced by Requisite Lenders'
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written agreement of satisfaction), as to right and time of payment of principal
and interest thereon, to all of the Liabilities and shall include, without
limitation, the Seller Subordinated Debt.
"Subordinated Promissory Note" means the Subordinated
Promissory Note of even date herewith in the original principal amount of Seven
Million Dollars ($7,000,000), issued by Borrower to BPX.
"Subordination Agreement" means the Subordination Agreement of
even date herewith between BPX, Agent and the trustee under the Senior Note
Documents.
"Subsidiary" means any Person of which or in which a Company
and its other Subsidiaries own directly or indirectly more than fifty percent
(50%) of (a) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board of
directors of such Person, if it is a corporation, (b) the membership interests,
the capital interest or profits interest of such Person, if it is a limited
liability company, partnership, joint venture or similar entity or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Supplemental Documentation" has the meaning ascribed to such
term in SECTION 3.5.
"Taxes" with respect to any Person means taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or any
of its properties, franchises or assets.
"Tax Sharing Agreement" means the Tax Sharing Agreement of
even date herewith between Borrower and Holdings as such Tax Sharing Agreement
is in effect on the Closing Date and as the same may be amended pursuant to any
amendment, alteration, modification or waiver thereto that is not materially
adverse to the interests of Borrower or Lenders.
"Term Credit" has the meaning ascribed to such term in the
definition of the term "Credit".
"Termination Date" means September 28, 2001.
"Term Loan" means the Term Loan referred to in SECTION 2.1.2.
"Trade Accounts Payable" of any Person means trade accounts
payable of such Person incurred in the ordinary course of such Person's business
and having payment terms materially consistent with past practices of such
Person.
"UCC" means the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time. References to sections
of the UCC shall be construed to also refer to any successor sections.
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"Unifrax Investment" means Unifrax Investment Corp., a
Delaware corporation.
"Unmatured Event of Default" means any event or condition
which, with the lapse of time or giving of notice to Borrower, would constitute
an Event of Default.
"Working Capital" means the consolidated current assets of
Borrower and its Subsidiaries minus the consolidated current liabilities of
Borrower and its Subsidiaries, each as determined in accordance with GAAP,
excluding cash, Cash Equivalent Investments, the principal balance of the
Revolving Loan and current maturities of long-term Indebtedness.
"XPE GmbH" means XPE Vertriebs GmbH, a limited liability
company incorporated in Germany.
"XPE Ltda." means NAF Brasil Ltda., a company incorporated in
Brazil.
1.2. Other Definitional Provisions.
------------------------------
Unless otherwise defined or the context otherwise requires,
all financial and accounting terms used herein or in any certificate or other
document made or delivered pursuant hereto shall be defined in accordance with
GAAP. If any changes in accounting principles from those used in the preparation
of the financial statements referred to in SECTION 4.6 hereafter occur as a
result of the promulgation of rules, regulations, pronouncements, or opinions by
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and result in a change in the method of calculation of financial covenants,
standards, or terms found in this Agreement, upon the request of Borrower or the
Requisite Lenders, Borrower, Agent and Requisite Lenders agree to enter into
negotiations to amend such financial covenants, standards or terms so as to
equitably reflect such changes with the desired result that the evaluations of
the Borrower's financial condition shall be the same after such changes as if
such changes had not been made; provided, however, that until Borrower, Agent
and Requisite Lenders have reached a definitive agreement on such amendments,
Borrower's financial condition shall continue to be evaluated on the same
principles as those used in the preparation of the financial statements referred
to in SECTION 4.6 prior to such change in accounting principles.
Unless otherwise defined therein, all terms defined in this
Agreement shall have the defined meanings when used in any Related Agreement or
Supplemental Documentation. Terms used in this Agreement which are defined in
any SCHEDULE or EXHIBIT hereto shall, unless the context otherwise indicates,
have the meanings given them in such SCHEDULE or EXHIBIT. Other terms used in
this Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
1.3. Interpretation of Agreement.
----------------------------
A SECTION, an EXHIBIT or a SCHEDULE is, unless otherwise
stated, a reference to a section hereof, an exhibit hereto or a schedule hereto,
as the case may be. Section captions used in
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this Agreement are for convenience only and shall not affect the construction of
this Agreement. The words "hereof," "herein," "hereto" and "hereunder" and words
of similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.
1.4. Compliance with Financial Restrictions.
---------------------------------------
Compliance with each of the financial ratios and restrictions
contained in SECTION 5 shall, except as otherwise provided herein, be determined
in accordance with GAAP, consistently followed, subject to SECTION 1.2.
1.5. Currency Equivalents Generally.
-------------------------------
For all purposes of this Agreement (but not for purposes of
the preparation of any financial statements delivered pursuant hereto), the
equivalent in any Offshore Currency or other currency of an amount in Dollars,
and the equivalent in Dollars of an amount in any Offshore Currency or other
currency, shall be determined at the Spot Rate.
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.
2.1. Loans.
------
2.1.1. Revolving Loans.
----------------
(a) Subject to the terms and conditions of this Agreement and
in reliance upon the warranties and representations of Borrower set forth herein
and the warranties and representations of each other Obligor set forth in the
Related Agreements, each Lender, severally and not jointly, agrees to make its
Pro Rata Share of such loans or advances (individually each a "Revolving Loan"
and collectively the "Revolving Loans") from time to time before the Termination
Date to Borrower as Borrower may from time to time request; provided, that Agent
may, but shall not be obligated to, make such Revolving Loans to Borrower on
behalf of Lenders as a Disproportionate Advance as provided below; provided,
further, that, except as provided in SECTION 2.8, the aggregate Dollar
Equivalent of the outstanding principal amount of the Revolving Loans shall not
at any time exceed Revolving Loan Availability. Revolving Loans made by or on
behalf of Lenders may be repaid and, subject to the terms and conditions hereof,
reborrowed to but not including the Termination Date unless the Credit extended
under this Agreement is otherwise terminated as provided in this Agreement. No
Lender shall be obligated at any time to make available to Borrower its Pro Rata
Share of any requested Revolving Loan if such amount, plus its Pro Rata Share of
all Revolving Loans then outstanding to Borrower, would exceed such Lender's
Maximum Revolving Loan Amount.
No Lender shall be obligated to make available its Pro Rata
Share of any Revolving Loans during the occurrence and continuance of any Event
of Default or Unmatured Event of Default; provided, that notwithstanding the
foregoing or anything contained herein to the contrary, regardless of whether an
Event of Default or an Unmatured Event of Default exists and is
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continuing, each Lender shall, at the request of Agent, continue to be obligated
to make its Pro Rata Share of the Revolving Loans available to Borrower for a
period of up to five (5) Banking Days, but in any event, no Lender shall be
obligated at any time to make available to Borrower its Pro Rata Share of any
such requested Revolving Loan if such amount, plus its Pro Rata Share of all
Revolving Loans then outstanding would exceed such Lender's Maximum Revolving
Loan Amount. Neither Agent nor any Lender shall be responsible for any failure
by any other Lender to perform its obligations to make advances hereunder, and
the failure of any Lender to make its Pro Rata Share of any advance hereunder
shall not relieve any other Lender of its obligation, if any, to make its Pro
Rata Share of Loans hereunder, nor require such other Lender to make more than
its Pro Rata Share of any Loans hereunder.
If Borrower makes a request for a Revolving Loan pursuant to
the terms hereof, Agent shall notify each Lender by telecopy or other similar
form of teletransmission of the proposed advance (A) on the same day Agent is
notified by Borrower of Borrower's request for an advance hereunder if such
notice is received by Agent by 10:00 a.m., Chicago time on such day or (B) on
the next Banking Day following the day Agent is notified by Borrower of
Borrower's request for an advance hereunder if such notice is received by Agent
after 10:00 a.m. Chicago time, on such day. Each Lender will make the amount of
its Pro Rata Share of each proposed advance available to Agent for the account
of Borrower in Same Day Funds and in the Applicable Currency (x) in the case of
a proposed advance comprised of Loans in Dollars, by 12:00 noon (Chicago time)
on the day requested (y) in the case of a proposed advance in an Offshore
Currency, by such time on such day as the Agent may specify. Agent shall
promptly remit to Borrower such Same Day Funds received from a Lender.
Notwithstanding the foregoing, if Borrower makes a request as
provided herein for a Revolving Loan that will constitute a Floating Rate Loan,
or if Agent makes a Revolving Loan pursuant to any other provision of this
Agreement or any Related Agreement, Agent may, in its sole discretion, in lieu
of the immediately preceding paragraph, elect to advance the amount of the
proposed Revolving Loan to Borrower disproportionately (a "Disproportionate
Advance") out of Agent's own funds on behalf of Lenders, and request settlement
in accordance with SECTION 2.14, such that upon such settlement, each Lender's
share of the outstanding Revolving Loans to Borrower (including, without
limitation, the amount of any Disproportionate Advance) equals its Pro Rata
Share and such Disproportionate Advance shall be deemed to be repaid. If and to
the extent that a Lender does not settle with Agent as required above, Borrower
agrees to repay to Agent forthwith on demand such amount required to be paid by
such Lender to Agent, together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to Agent, at the interest rate applicable at such time for such Revolving Loans;
provided, that Borrower's obligation to repay such advance to Agent shall not
relieve any Lender of its liability to Agent or Borrower for failure to settle
as provided above.
(b) In the event the aggregate Dollar Equivalent of the
outstanding principal balance of the Revolving Loans exceeds Revolving Loan
Availability, Borrower shall, unless Agent permits such Over Advance as provided
in SECTION 2.8 or Requisite Lenders shall otherwise
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consent, within one (1) Banking Day of written notice from Agent, make such
repayments of the Revolving Loans or take such other actions as shall be
necessary to eliminate such excess.
(c) All Revolving Loans hereunder shall be paid by Borrower on
the Termination Date, unless payable sooner pursuant to the provisions of this
Agreement, but may, at Borrower's election, be repaid in whole or in part at any
time prior to such date without premium or penalty (other than as expressly
provided in SECTION 2.4.5 with respect to LIBOR Rate Loans repaid prior to the
end of the applicable Interest Rate Period).
2.1.2. Term Loan.
----------
(a) Subject to the terms and conditions of this Agreement and
in reliance upon the warranties and representations of Borrower set forth herein
and the warranties and representations of each other Obligor set forth in the
Related Agreements, each Lender, severally and not jointly, agrees to make its
Pro Rata Share of a loan (the "Term Loan") to Borrower on the Closing Date in
the amount of Twenty-Five Million Dollars ($25,000,000).
(b) Unless otherwise required to be sooner paid pursuant to
SECTION 2.1.3 or any other provision of this Agreement, the principal balance of
the Term Loan shall be repaid in fifteen (15) consecutive installments, on the
last day of each calendar quarter as follows: (i) four (4) installments each in
the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000)
commencing December 31, 1997 and ending September 30, 1998; (ii) four (4)
installments each in the amount of Five Hundred Thousand Dollars ($500,000)
commencing December 31, 1998 and ending September 30, 1999; and (iii) seven (7)
installments each in the amount of Two Million Two Hundred Fifty Thousand
Dollars ($2,250,000) commencing December 31, 1999 and ending June 30, 2001;
together with a final installment of the unpaid principal balance of the Term
Loan on September 28, 2001.
2.1.3. Prepayments of the Loans.
-------------------------
(a) MANDATORY PREPAYMENTS.
(i) EXCESS CASH FLOW. In addition to the other payments
required hereunder, within one hundred (100) days after the end of each
Fiscal Year (commencing with Fiscal Year 1997), Borrower shall make a
mandatory prepayment of the Term Loan in an amount equal to fifty
percent (50%) of Borrower's Excess Cash Flow for such Fiscal Year. Such
mandatory prepayment shall be applied to the unpaid installments of the
Term Loan in the inverse order of their maturities; provided, that the
mandatory prepayment in respect of Borrower's Excess Cash Flow for
Fiscal Year 1997 shall be applied to the unpaid installments of the
Term Loan due March 31, 1998, June 30, 1998, September 30, 1998 and
December 31, 1998 in the inverse order of their maturities.
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(ii) TERMINATION DATE. Notwithstanding any other provision of
this Agreement, if not theretofore paid in full, the outstanding
principal balance of the Term Loan shall be due and payable in full on
the Termination Date.
(b) VOLUNTARY PREPAYMENTS OF THE TERM LOAN. Borrower may on
any Banking Day, prepay the principal of the Term Loan in whole or in part
without any premium or penalty (other than as expressly provided in SECTION
2.4.5 with respect to LIBOR Rate Loans repaid prior to the end of the applicable
Interest Rate Period); provided, however, that a prepayment of the Term Loan may
be made with the proceeds of a Revolving Loan only if, immediately before and
after giving effect to such prepayment, no Event of Default or Unmatured Event
of Default then exists and is continuing or would result therefrom. Any partial
prepayment of principal shall be in a minimum amount equal to the lesser of (i)
the outstanding principal balance of the Term Loan and (ii) Two Hundred Fifty
Thousand Dollars ($250,000) or an integral multiple thereof, and shall be
applied to the unpaid installments of the Term Loan in the inverse order of
their maturities; provided, that any voluntary prepayment in Fiscal Year 1997
shall be applied to the unpaid installments of the Term Loan due March 31, 1998,
June 30, 1998, September 30, 1998 and December 31, 1998 in the inverse order of
their maturities. Any principal of the Term Loan which is repaid may not be
reborrowed as a Term Loan.
2.1.4. Prepayment of all Liabilities; Reduction of Revolving
-----------------------------------------------------
Credit Amount.
--------------
Upon three (3) Banking Days prior written notice to Agent,
Borrower may prepay all of the Loans and Letter of Credit Obligations in full at
any time, without premium or penalty (other than as expressly provided in
SECTION 2.4.5 with respect to LIBOR Rate Loans repaid prior to the end of the
applicable Interest Rate Period), by prepaying the outstanding principal balance
of the Revolving Loans and the Term Loan, together with (a) all accrued and
unpaid interest on the Payment Liabilities and (b) all other outstanding Payment
Liabilities. Borrower may permanently reduce the Revolving Credit Amount in
increments of Two Hundred Fifty Thousand Dollars ($250,000).
2.1.5. Maximum Outstanding Liabilities.
--------------------------------
Notwithstanding any other provision of this Agreement, (i) the
aggregate Dollar Equivalent of the outstanding principal balance of the Loans
plus the Letter of Credit Obligations shall not exceed Forty-Five Million
Dollars ($45,000,000) (the "Maximum Facility Amount"); (ii) the aggregate Dollar
Equivalent of the outstanding principal balance of the Term Loan shall not
exceed Twenty-Five Million Dollars ($25,000,000); and (iii) the aggregate Dollar
Equivalent of the principal balance of the Revolving Loans plus the Letter of
Credit Obligations shall not exceed Twenty Million Dollars ($20,000,000);
provided, however, that the foregoing shall not limit the right of Agent or
Lenders to advance Revolving Loans to Borrower pursuant to any other provision
of this Agreement or any Related Agreement that permits Agent or Lenders to
advance Revolving Loans to Borrower. Any Revolving Loan advanced by Agent to
Borrower under any of the foregoing provisions shall be deemed to be a Revolving
Loan made by Agent on behalf of Lenders to Borrower.
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2.2. Letters of Credit.
------------------
(a) In addition to Loans made pursuant to SECTION 2.1, Agent
will, upon receipt of duly executed Applications and such other documents,
instruments and/or agreements as Issuer or Agent may reasonably require,
request, on Borrower's behalf, that Issuer issue Letters of Credit for the
account of Borrower on such terms as are reasonably satisfactory to Agent and
Issuer, PROVIDED, HOWEVER that no Letter of Credit will be issued if, after
taking such Letter of Credit into account, the Dollar Equivalent of the Letter
of Credit Obligations exceed the least of (A) Five Million Dollars ($5,000,000),
(B) the Revolving Credit Amount minus the outstanding principal balance of the
Revolving Loans and (C) the Borrowing Base minus the outstanding principal
balance of the Revolving Loans. If such excess shall at any time exist, Borrower
shall, unless Requisite Lenders shall otherwise consent, promptly make such
payments as are necessary to eliminate such excess or shall promptly post cash
Collateral in the amount of such excess. No Letter of Credit shall be used to
support worker's compensation obligations if the aggregate amount of such
Letters of Credit exceeds One Million Dollars ($1,000,000) or have a tenor of
more than one year from the issue date thereof or an expiry date after the
thirtieth (30th) day prior to the Termination Date.
(b) Borrower agrees to pay to Issuer, on demand, Issuer's
standard issuance, amendment, negotiation and administrative operating fees and
charges in effect from time to time for issuing and administering any Letters of
Credit on Borrower's Application and if not so paid, each Lender shall, without
regard to any other provision of this Agreement or any other Related Agreement,
any defense that Borrower may have to its obligation to pay Issuer in connection
with such fees and charges or any defense that any Lender may have in connection
with the participation described in SECTION 2.2(e) in connection with any Letter
of Credit or L/C Draft, pay Issuer for such Lender's Pro Rata Share of such fees
and charges, and any payments so made by Lenders to Issuer shall be deemed to be
Revolving Loans to Borrower. Each Lender (other than a Lender that is Issuer)
acknowledges and agrees that it shall not be entitled to any of the fees and
charges of Issuer. Borrower further agrees to pay Agent, for the benefit of
Lenders, a per annum commission equal to the Applicable LIBOR Margin then in
effect for Revolving Loans (calculated on the basis of a year consisting of
three hundred sixty (360) days and paid for actual days elapsed) of the daily
average of the undrawn amount of each Letter of Credit issued on Borrower's
Application and on each L/C Draft accepted in connection therewith. Such Letter
of Credit commissions shall be paid in arrears on the first day of each calendar
quarter, commencing January 1, 1997. Upon at least two (2) Banking Days' advance
notice to Borrower (or during the continuance of an Event of Default, without
notice to Borrower), Agent may provide for the payment of any fees, charges or
commissions due hereunder by advancing the amount thereof to Borrower as a
Revolving Loan. At all times that any Default Rate is being charged under this
Agreement, the Letter of Credit commission shall be equal to two percent (2.0%)
per annum in excess of the otherwise applicable commission.
(c) Subject to the remaining sentences of this clause (c),
Borrower agrees to reimburse Issuer, on demand, for each payment made by Issuer
under or pursuant to any Letter of Credit or L/C Draft issued or made on
Borrower's behalf and if not so reimbursed, each Lender
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shall, without regard to any other provision of this Agreement or any other
Related Agreement, any defense that Borrower may have to its obligation to
reimburse Issuer in connection with such payment or any defense that any Lender
may have in connection with the participation described in SECTION 2.2(e) in
connection with any such Letter of Credit or L/C Draft, reimburse Issuer for
such Lender's Pro Rata Share of such payment, and any payments so made by
Lenders to Issuer shall be deemed to be Revolving Loans to Borrower. Agent and
Lenders agree that so long as there is sufficient Revolving Loan Availability
and provided that no Event of Default is then continuing in existence or would
be caused thereby, upon the written request of Borrower, Agent will provide for
the payment of any reimbursement obligations of Borrower under SECTION 2.2 and
any interest accrued thereon by advancing the amount thereof to Borrower as a
Revolving Loan. Prior to such advance, the amount of such reimbursement
obligations shall bear interest at the Floating Rate. Agent shall have the
option, pursuant to SECTION 2.8, to so provide for such payments even if there
is not sufficient Revolving Loan Availability or if an Event of Default is then
continuing in existence or would be caused thereby and such amounts will bear
interest at the rate set forth in SECTION 2.8. In the event a Letter of Credit
or L/C Draft is not reimbursed by Borrower or otherwise from a Revolving Loan as
provided herein, Borrower agrees to pay Agent, for the benefit of itself and
Lenders, on demand, interest at the Default Rate on any amounts paid by Issuer
in respect of a Letter of Credit or an L/C Draft issued or made on Borrower's
behalf until the reimbursement of Issuer by Borrower of such payment.
(d) At the election of Agent at any time during the existence
and continuance of an Event of Default, Borrower shall, upon Agent's demand,
deliver to Agent cash Collateral equal to the aggregate Letter of Credit
Obligations. Any such cash Collateral and/or any amounts received by Agent in
payment of the Loan made pursuant to this paragraph (d) shall be held by Agent,
for the benefit of itself, Issuer and Lenders, in the Assignee Deposit Account
or a separate account appropriately designated as a cash Collateral account in
relation to this Agreement and the Letters of Credit and shall be retained by
Agent, for the benefit of itself, Issuer and Lenders, as security in respect of
the Liabilities under or in connection with the Letters of Credit and L/C
Drafts. Such amounts shall not be used by Agent to pay any amounts drawn or paid
under or pursuant to any Letter of Credit or L/C Draft, but may be applied to
reimburse Issuer for drawings or payments under or pursuant to Letters of Credit
or L/C Drafts which Issuer has paid. Any amounts remaining in any cash
Collateral account established pursuant to this paragraph (d) following the
first to occur of the nonexistence of all Events of Default or the reimbursement
in full of all Payment Liabilities in respect of outstanding Letter of Credit
Obligations, shall be returned to Borrower.
(e) Immediately upon the issuance of a Letter of Credit in
accordance with this Agreement, each Lender shall be deemed to have irrevocably
and unconditionally purchased and received from Issuer, without recourse or
warranty, an undivided interest and participation therein to the extent of such
Lender's Pro Rata Share (including without limitation, all obligations of Issuer
thereunder to fund a draw with respect thereto); provided, that such interest
and participation therein shall not entitle a Lender to any of Issuer's standard
issuance, amendment, negotiation, or administration operating fees and charges
in connection with such Letter of Credit. Borrower indemnifies each of Agent and
each Lender against any and all liability and expense it may incur in
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connection with any Letter of Credit or L/C Draft to Persons other than Agent or
any Lender and agrees to reimburse each of Agent and each Lender for any such
payment made by Agent or any Lender to Issuer, except for any liability incurred
or payment made as a result of Agent's or such Lender's gross negligence or
willful misconduct.
2.3. Loan Account; Demand Deposit Account.
-------------------------------------
Agent shall establish or cause to be established on its books
in Borrower's name one or more accounts (each a "Loan Account") to evidence
Loans made to Borrower. Agent or Lenders, as appropriate, will credit or cause
to be credited to commercial accounts (each a "Demand Deposit Account")
maintained by Borrower at BAI's ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
office, the amount of any sums advanced as Loans hereunder, which shall be
disbursed at Borrower's direction. Any amounts advanced as Loans hereunder which
are credited to Borrower's Demand Deposit Account, together with any other
amounts advanced to Borrower as a Loan pursuant to this Agreement, will be
debited to the applicable Loan Account and result in an increase in the
principal balance outstanding in such Loan Account in the amount thereof.
2.4. Interest and Fees.
------------------
2.4.1. Interest.
---------
(a) INTEREST TO MATURITY. Unless Borrower elects to have a
portion of the Loans bear interest at the LIBOR Rate, each Loan shall be deemed
to be a Floating Rate Loan and the unpaid principal amount thereof (other than
Overdraft Loans and Over Advances) shall bear interest until maturity at a per
annum rate equal to the Floating Rate.
(b) LIBOR RATE OPTION. Borrower shall have the right, from
time to time (but not prior to the fourth (4th) day after the Closing Date), to
designate portions of the Loans as bearing interest at the then applicable LIBOR
Rate, by means of a written notice to Agent specifying (i) the amount of such
Loans that will bear interest at a LIBOR Rate (provided, that LIBOR Rate Loans
shall be in a minimum amount of the Dollar Equivalent of Five Hundred Thousand
Dollars ($500,000) and in minimum increments of the Dollar Equivalent of Two
Hundred Fifty Thousand Dollars ($250,000)); (ii) the date on which the
applicable Interest Rate Period shall begin; (iii) the Interest Rate Period
applicable thereto; and (iv) the Applicable Currency. All designations of Loans
as LIBOR Rate Loans must be received by Agent not later than 10:00 a.m., Chicago
time, three (3) Banking Days prior to the date the applicable Interest Rate
Period is to begin (or is to be continued); provided, that in the case of
Offshore Currency Loans, all such designations must be received by Agent not
later than 10:00 a.m., Chicago time, four (4) Banking Days prior to the date the
applicable Interest Rate Period is to begin (or is to be continued).
Notwithstanding the foregoing, (A) all undesignated portions of the Loans shall
bear interest at the rate set forth in SECTION 2.4.1(a), (B) the Dollar
Equivalent of the aggregate Offshore Currency Loans shall not exceed Five
Million Dollars ($5,000,000) at any time, and (C) in no event may more than five
(5) LIBOR Rate Loans having different Interest Rate Periods be outstanding at
any one time. Each designation by Borrower of a LIBOR Rate Loan shall be
irrevocable. Notwithstanding anything contained herein to the contrary, if an
Event of Default
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exists (x) no LIBOR Rate Loan may be commenced or continued, and (y) at the end
of its Interest Rate Period, each LIBOR Rate Loan shall be converted to a
Floating Rate Loan and if not denominated in Dollars, such LIBOR Rate Loan shall
be redenominated in Dollars at its Dollar Equivalent.
(c) DEFAULT RATE. If any Event of Default is in existence, at
the option of Requisite Lenders and upon written notice by Agent to Borrower,
the entire unpaid principal balance of the Loans shall bear interest until no
such Events of Default are in existence at a rate per annum equal to the greater
of (i) the applicable interest rate from time to time in effect plus two percent
(2%) and (ii) two percent (2%) above the applicable interest rate in effect at
the time of such Event of Default.
(d) OVERDRAFT LOANS; OVER ADVANCES. Overdraft Loans and Over
Advances shall bear interest at the rate(s) determined pursuant to SECTION 2.7
or SECTION 2.8, as applicable.
2.4.2. Fees.
-----
(a) NONUSE FEE. Borrower agrees to pay to Agent, for the
benefit of itself and Lenders, a fee equal to one-quarter of one percent (0.25%)
per annum on the daily average amount by which the Revolving Credit Amount
exceeds the outstanding principal balance of the Revolving Loans plus the Letter
of Credit Obligations. The fee provided for in this SECTION 2.4.2 shall be
payable quarterly in arrears on the first day of each calendar quarter
commencing January 1, 1997, and on the date the Revolving Credit terminates for
the period then ended. The amount of any outstanding Offshore Currency Loan on
any date shall be determined based upon the Dollar Equivalent of such Offshore
Currency Loan on the last day of the applicable calendar quarter.
(b) FEE LETTER. Borrower agrees to pay the fees set forth in
that certain Fee Letter dated as of the date hereof between Agent and Borrower.
2.4.3. Payment of Interest and Fees.
-----------------------------
Until maturity, interest on the Loans shall be payable in
arrears on the first (1st) day of each calendar quarter, commencing on January
1, 1997, and at maturity; provided, that interest on LIBOR Rate Loans shall be
payable in arrears on the last day of the Interest Rate Period applicable
thereto and at maturity. After maturity, whether by acceleration or otherwise,
accrued but unpaid interest shall be payable on demand. Upon at least two (2)
Banking Days' advance notice to Borrower (or during the continuance of an Event
of Default, without notice to Borrower), Agent may provide for the payment of
any unpaid accrued interest and any fees when due by charging the Demand Deposit
Account or any bank account maintained by Borrower with Agent or by advancing
the amount thereof to Borrower as a Revolving Loan.
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2.4.4. Method of Calculating Interest and Fees.
----------------------------------------
Interest on the unpaid principal amount of each Loan shall
accrue from and including the date such Loan is made to, but not including, the
date such Loan is paid. Interest and any fees shall be calculated on the basis
of a year consisting of three hundred sixty (360) days and paid for actual days
elapsed; provided, that the computation of interest on LIBOR Rate Loans shall
include the date on which the applicable Interest Rate Period began, but shall
exclude the last day of the applicable Interest Rate Period. LIBOR Rate Loans
not repaid on the last day of the Interest Rate Period applicable thereto shall
be continued as LIBOR Rate Loans in the Applicable Currency (to the extent
Borrower provides written notice thereof to Agent and satisfies the requirements
of SECTION 2.4.1(b)) or converted into Floating Rate Loans (and redenominated in
Dollars at its Dollar Equivalent to the extent such Loan was an Offshore
Currency Loan) and bear interest as provided herein, from and including the last
day of such Interest Rate Period. Changes in any interest rate provided for
herein which are due to changes in the Reference Rate shall take effect on the
date of the change in the Reference Rate.
2.4.5. Funding Indemnification.
------------------------
If any payment of a LIBOR Rate Loan occurs on a date which is
not the last day of the applicable Interest Rate Period, whether because of
acceleration, prepayment or otherwise, Borrower will indemnify each Lender and
Agent for any loss or cost incurred by it resulting therefrom, including without
limitation any loss or cost in liquidating or employing deposits acquired to
fund or maintain such Loan. Agent shall deliver a written statement as to the
amount due, if any, under this SECTION 2.4.5, after consultation with each
Lender so affected. Such written statement shall set forth in reasonable detail
the calculations upon which Agent and such Lender determined such amount and
shall be final, conclusive and binding on Borrower and Lenders in the absence of
manifest error. Determination of amounts payable under this SECTION 2.4.5 shall
be calculated as though each Lender funded its LIBOR Rate Loans through the
purchase of a deposit of the type and maturity corresponding to the LIBOR Rate
Loan and applicable Interest Rate Period bearing interest at the LIBOR Base Rate
and Applicable Currency whether or not the Lender actually funded the Loan in
that manner. The amount specified in the written statement shall be payable on
demand after receipt by Borrower of the written statement.
2.4.6. Availability of Interest Rate Options.
--------------------------------------
If any Lender determines that maintenance of any of its LIBOR
Rate Loans would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, such Lender shall immediately notify
Agent thereof and Agent shall suspend the availability of such LIBOR Rate Loans
and require any LIBOR Rate Loans outstanding and so affected to be repaid or, at
Borrower's option, converted to Floating Rate Loans; or if any Lender determines
that (i) deposits of a type or maturity appropriate to match fund LIBOR Rate
Loans are not available, (ii) the LIBOR Rate does not accurately reflect the
cost of making such Loans, or (iii) such Lender's ability to make or maintain
LIBOR Rate Loans has been materially adversely affected by the occurrence of any
event after the date hereof, then such Lender shall immediately notify Agent
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thereof and Agent shall suspend the availability of the LIBOR Rate Loans, as
applicable, after the date of any such determination, and any existing LIBOR
Rate Loans shall be converted to Floating Rate Loans as soon as practicable and
in any case no later than the end of the applicable Interest Rate Period.
2.4.7. Obligation to Mitigate.
-----------------------
Agent and each Lender agrees that if it becomes aware of
either (i) the occurrence of an event or the existence of a condition described
in SECTION 2.4.6 or SECTION 9.3 that would cause Agent or such Lender to make a
determination of the nature described therein, or (ii) the imposition,
assessment or collection of any Taxes on or in respect of any Loan or Letter of
Credit (other than Taxes based on the income of Agent or such Lender, as the
case may be), Agent or Lender will, to the extent consistent with its internal
policies, use reasonable efforts to make, fund or maintain the affected Loans or
Letters of Credit through another lending office of such Agent or Lender, if
any, if, as a result thereof, the additional amounts (after taking into account
the additional expenses incurred in connection with utilizing such other lending
office) that would otherwise be required to be paid to Agent or such Lender in
respect thereof, would be reduced, or LIBOR Rate Loans could be maintained, as
the case may be, and if, as determined by Agent or such Lender in its reasonable
discretion, the issuing, making, funding or maintaining of such Loans or Letters
of Credit through such other lending office would not adversely affect Agent or
such Lender or such Loans or Letters of Credit. Borrower hereby agrees to pay
all reasonable expenses incurred by Agent or any Lender in using another lending
office pursuant to this SECTION 2.4.7.
2.5. Requests for Loans and Letters of Credit; Borrowing Base
--------------------------------------------------------
Certificates; Other Information.
--------------------------------
(a) Loans or Letters of Credit shall be requested in writing
or by telephone, except for Overdraft Loans and Revolving Loans made pursuant to
any other provision of this Agreement or any Related Agreement that permits
Agent to advance Revolving Loans to Borrower.
(b) In the event that Borrower shall at any time, or from time
to time, (i) make a request for a Loan hereunder or (ii) be deemed to have
requested an Overdraft Loan, Borrower agrees to forthwith provide Agent and
Lenders with such information, at such frequency and in such format, as is
reasonably required by Agent, such information to be current as of the time of
such request.
(c) Borrower further agrees to provide to Agent and Lenders a
current Borrowing Base Certificate on or before the twentieth (20th) day of each
month for the preceding month and at such other times as Agent may reasonably
request. Such Borrowing Base Certificate shall be in substantially the same form
as that attached hereto as EXHIBIT A, executed and certified as accurate by such
officers or employees of Borrower as Borrower designates in writing to Agent
pursuant to duly adopted resolutions of Borrower's Board of Directors
authorizing such action.
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(d) Borrower may request, telephonically or by written
authorization, the disbursement of Revolving Loans by Agent or Lenders and by
written authorization, the issuance of Letters of Credit by Issuer, as
appropriate. Borrower shall provide Agent with documentation reasonably
satisfactory to Agent indicating the names of those employees of Borrower
authorized by Borrower to sign Borrowing Base Certificates and/or to make
telephonic requests for Loans, written requests for Letters of Credit, and/or to
authorize disbursement of the proceeds of Loans by wire transfer or otherwise,
and Agent and Lenders shall be entitled to rely upon such documentation until
notified in writing by Borrower of any change(s) in the names of the employees
so authorized. Agent and Lenders shall be entitled to act on the instructions of
anyone identifying himself as one of the persons authorized to request Loans, or
disbursements of Loan proceeds by telephone and Borrower shall be bound thereby
in the same manner as if the person were actually so authorized. Borrower agrees
to indemnify and hold each of Agent and each Lender harmless from any and all
claims, damages, liabilities, losses, costs and expenses (including Attorneys'
Fees) which may arise or be created by the acceptance of instructions for making
or paying Loans in writing or by telephone, except for such claims, damages,
liabilities, losses, costs and expenses arising as a result of the gross
negligence or willful misconduct of Agent or any Lender. Subject to SECTION
2.4.1(b), each such request must be received by Agent no later than 10:00 a.m.
(Chicago time) (i) with respect to Revolving Loans on the date on which such
Revolving Loan is requested to be made and (ii) with respect to Letters of
Credit, on the date that is five (5) Banking Days prior to the date on which
such Letter of Credit is requested to be issued.
2.6. Statements.
-----------
All Loans and Letters of Credit and payments hereunder shall
be recorded on Agent's books, which shall be rebuttably presumptive evidence of
the amount of such Loans and Letters of Credit outstanding at any time
hereunder. Agent will account monthly as to all Loans and Letters of Credit and
payments hereunder and, absent demonstrable error, each monthly accounting will
be fully binding on Borrower unless, within sixty (60) days of Borrower's
receipt thereof, Borrower shall provide Agent with a reasonably specific listing
of exceptions. Notwithstanding any term or condition of this Agreement to the
contrary, however, the failure of Agent to record the date and amount of any
Loan or Letter of Credit hereunder shall not limit or otherwise affect the
obligation of Borrower to repay any such Loan or the amount of any Letter of
Credit Obligation.
2.7. Overdraft Loans.
----------------
Agent, in its sole and absolute discretion, and subject to the
terms hereof, may make a Revolving Loan to Borrower in an amount equal to the
amount of any overdraft which may from time to time exist with respect to the
Demand Deposit Account or any bank account which Borrower may now or hereafter
have with Agent. The existence of any such overdraft shall be deemed to be a
request by Borrower for such Loan. Borrower acknowledges that Agent is under no
duty or obligation to make any Loan to Borrower to cover any overdraft. Borrower
further agrees that if the making of a Loan to cover any Overdraft would result
in an Over Advance, such overdraft shall constitute a separate Loan under this
Agreement (an "Overdraft
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Loan"), which shall bear, from the date on which the overdraft occurred until
paid, interest in an amount equal to one hundred thirty percent (130%) of the
highest rate of interest then actually being charged for Revolving Loans (other
than Overdraft Loans) made hereunder. If Agent, in its sole and absolute
discretion, decides not to make a Loan to cover part or all of any overdraft,
Agent may return any check(s) which created such overdraft.
2.8. Over Advances.
--------------
If the aggregate outstanding Revolving Loans to, and Letter of
Credit Obligations of, Borrower exceed Revolving Loan Availability (such excess
Payment Liabilities are herein referred to as "Over Advances"), Agent, in its
sole and absolute discretion, may, for a period of five (5) Banking Days, permit
such Over Advance to exist without the consent of any Lender (but subject to
SECTION 2.1.1(a)) and continue to make Revolving Loans on behalf of Lenders, and
after the expiration of such five (5) Banking Day period, no such event or
occurrence shall cause or constitute a waiver by any Lender of its right to
refuse to make any further Revolving Loans at any time that an Over Advance
exists or would result therefrom; provided, that Agent may not (i) make
Revolving Loans on behalf of Lenders under this SECTION 2.8 to the extent such
Revolving Loans would cause a Lender's Pro Rata Share of the Dollar Equivalent
of the Revolving Loans to exceed such Lender's Maximum Revolving Loan Amount or
(ii) make Revolving Loans on behalf of Lenders under this SECTION 2.8 to the
extent such Revolving Loans would cause the then Dollar Equivalent of the
outstanding Revolving Loans and Letter of Credit Obligations to exceed in the
aggregate, the sum of Five Million Dollars ($5,000,000) and the amount of the
Dollar Equivalent of the outstanding Revolving Loans and Letter of Credit
Obligations as of the date Agent became aware of the Over Advance. During any
period in which an Over Advance exists, the amount of Over Advances shall bear
interest at a rate equal to one hundred thirty percent (130%) of the highest
rate of interest then actually being charged for Revolving Loans made hereunder.
2.9. All Loans One Obligation.
-------------------------
The Revolving Loans, the Term Loan and all other Loans under
this Agreement shall constitute one Loan, and all Indebtedness and other
Liabilities of Borrower under this Agreement and any of the Related Agreements
shall constitute one general obligation secured by Agent's Lien, for the benefit
of itself, Issuer and Lenders, on all of the Collateral and by all other Liens
heretofore, now, or at any time or times hereafter granted by Borrower or any
other Obligor to Agent, for the benefit of itself, Issuer and Lenders. Borrower
agrees that all of the rights of Agent and Lenders set forth in this Agreement
shall apply to any modification of or supplement to this Agreement, any
Schedules or Exhibits hereto, and the Related Agreements, unless otherwise
agreed in writing.
2.10. Making of Payments; Application of Collections; Charging of
-----------------------------------------------------------
Accounts.
---------
(a) All payments hereunder (including payments with respect to
any Notes) shall be made without set-off or counterclaim and shall be made to
Agent, on the date due at BAI's office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be designated by Agent to Borrower
in writing. Except as otherwise expressly provided herein, all
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payments by Borrower shall be made to Agent for the account of Lenders, and,
with respect to principal of, interest on, and any other amounts relating to,
any Offshore Currency Loan, shall be made in the Offshore Currency in which such
Loan is denominated or payable, and, with respect to all other amounts payable
hereunder, shall be made in Dollars. Such payments shall be made in Same Day
Funds, and (i) in the case of Offshore Currency payments, no later than such
time on the dates specified herein as may be determined by Agent to be necessary
for such payment to be credited on such date in accordance with normal banking
procedures in the place of payment, and (ii) in the case of any Dollar payments,
no later than 12:30 p.m. (Chicago time) on the date specified herein. Any
payment which is received by the Agent later than 12:30 p.m. (Chicago time), or
later than the time specified by the Agent as provided in clause (i) above (in
the case of Offshore Currency payments), shall be deemed to have been received
on the following Banking Day and any applicable interest or fee shall continue
to accrue.
(b) (i) Agent shall have the right to apply any payments in
respect of the Payment Liabilities or proceeds of Collateral received by Agent
(whether deposited in an Assignee Deposit Account or otherwise received by
Agent) to the whole or the principal and/or interest of any Loans and/or any
other Payment Liabilities, whether or not then due, in such order of application
as Agent may determine; provided, that so long as an Event of Default does not
continue to exist, (A) mandatory prepayments described in SECTION 2.1.3(a) shall
be applied to the Term Loan as provided in SECTION 2.1.3(a), (B) proceeds of
Equipment sold, transferred or otherwise disposed of pursuant to SECTION 3.4(b)
shall be applied to the Term Loan or made available to Borrower as provided in
SECTION 3.4(b), (C) proceeds of casualty insurance described in SECTION 5.6
shall be applied to the Payment Liabilities or made available to Borrower as
provided in SECTION 5.6, and (D) all proceeds of Accounts Receivable and
Inventory received by Agent (whether deposited in an Assignee Deposit Account or
otherwise received by Agent), shall, at Borrower's option, (x) be transferred to
Borrower's Demand Deposit Account or other operating account in accordance with
written instructions provided by Borrower, or (y) be applied as follows: FIRST,
to payment of amounts then due with respect to fees (including Attorneys' Fees),
charges and expenses for which Borrower is liable pursuant to this Agreement and
the Related Agreements; SECOND, to payment of amounts then due with respect to
interest on the Loans made to or for the benefit of Borrower; third, to payment
of principal of Overdraft Loans; and FOURTH, to payment of the principal of the
other Loans made to Borrower then due and owing in such order of application as
Agent may determine.
(ii) Notwithstanding anything to the contrary herein, no
checks, drafts or other instruments received by Agent shall constitute final
payment with respect to any Liabilities unless and until such item of payment
has actually been collected.
(c) Borrower hereby authorizes Agent, and Agent may, in its
sole and absolute discretion, upon at least two (2) Banking Days' advance notice
to Borrower (or during the continuance of an Event of Default, without notice to
Borrower), charge to Borrower at any time when due all or any portion of any of
the Payment Liabilities (and interest thereon, if any) including but not limited
to any Attorneys' Fees and other costs and expenses of Agent and Lenders for
which Borrower is liable pursuant to the terms of this Agreement or any Related
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Agreement, or for which any other Obligor is liable pursuant to the terms of any
Related Agreement, by charging Borrower's Demand Deposit Account or any bank
account of Borrower with Agent or by advancing the amount thereof to Borrower as
a Revolving Loan; provided, however, that the provisions of this SECTION 2.10(c)
shall not affect Borrower's obligation to pay when due all amounts payable by
Borrower under this Agreement, any Note or any Related Agreement, whether or not
there are sufficient funds therefor in Borrower's Demand Deposit Account or any
such other bank account of Borrower.
2.11. Agent's Election Not to Enforce.
--------------------------------
Notwithstanding any term or condition of this Agreement to the
contrary, Agent, in the sole and absolute discretion of Requisite Lenders, at
any time and from time to time, may suspend or refrain from enforcing any or all
of the restrictions imposed in this SECTION 2, but no such suspension or failure
to enforce shall impair any right or power of Agent or any Lender under this
Agreement, including without limitation any right of each Lender to refrain from
making a Loan or Issuer to refrain from issuing a Letter of Credit, if all
conditions precedent applicable to such Lender's obligation to make such Loan or
Issuer's obligation to issue such Letter of Credit have not been satisfied.
2.12. Intentionally Omitted.
----------------------
2.13. Setoff.
-------
In addition to and not in limitation of all other rights and
remedies (including other rights of offset or banker's lien) that Agent and
Lenders may have under applicable law, each of Agent and each Lender shall, upon
the occurrence and during the continuance of any Event of Default or any
Unmatured Event of Default have the right to appropriate and apply to the
payment of the Payment Liabilities, in such order of application as Requisite
Lenders may elect, any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or moneys of Borrower then or
thereafter with Agent or any Lender. Agent and each Lender shall promptly advise
Borrower of any such setoff and application but failure to do so shall not
affect the validity of such setoff and application.
2.14. Settlements, Distributions and Apportionment of Payments.
---------------------------------------------------------
On a weekly basis (or more frequently if required by Agent) (a
"Settlement Date"), Agent shall provide each Lender with a statement of the
outstanding balance of the Liabilities as of the end of the Banking Day
preceding the Settlement Date (the "Pre-Settlement Determination Date") and the
current balance of the Revolving Loans constituting Floating Rate Loans funded
by each Lender, specifying the amounts outstanding to Borrower (whether made
directly by such Lender to Borrower or constituting a settlement by such Lender
of a previous Disproportionate Advance made by Agent on behalf of such Lender to
Borrower). If such statement discloses that such Lender's current balance of the
Revolving Loans constituting Floating Rate Loans as of the Pre-Settlement
Determination Date exceeds such Lender's Pro Rata Share of the Revolving Loans
constituting Floating Rate Loans outstanding as of the Pre-Settlement
Determination Date, then
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Agent shall, on the Settlement Date, transfer to such Lender, by wire transfer,
the net amount due to such Lender in accordance with such Lender's instructions,
and if such statement discloses that such Lender's current balance of the
Revolving Loans constituting Floating Rate Loans as of the Pre-Settlement
Determination Date is less than such Lender's Pro Rata Share of the Revolving
Loans constituting Floating Rate Loans outstanding as of the Pre-Settlement
Determination Date, then such Lender shall, on the Settlement Date, transfer to
Agent, by wire transfer the net amount due to Agent in accordance with Agent's
instructions. In addition, without duplication, payments actually received by
Agent with respect to the following items shall be distributed by Agent to
Lenders as follows:
(a) Within one (1) Banking Day of receipt thereof by Agent,
payments to be applied to interest on the Loans shall be paid to each Lender in
proportion to its Pro Rata Share in the Applicable Currency, subject to any
adjustments for any Disproportionate Advances so that Agent shall receive
interest on the Disproportionate Advances and each Lender shall only receive
interest on the amount of funds actually advanced by such Lender;
(b) Within one (1) Banking Day of receipt thereof by Agent,
payments of principal in respect of the Loans shall be paid to each Lender in a
proportion to its Pro Rata Share in the Applicable Currency; and
(c) Within one (1) Banking Day of receipt thereof by Agent,
payments to be applied to the unused line fee set forth in SECTION 2.4.2 and the
Letter of Credit commission set forth in SECTION 2.2(b), shall each be paid to
each Lender in proportion to its Pro Rata Share, subject to any adjustments for
any Disproportionate Advances.
Notwithstanding the foregoing, if a Lender has failed to remit its Pro Rata
Share of any Loans required to be made pursuant to hereto or has failed to make
a settlement payment to Agent pursuant to this SECTION 2.14, no payment shall be
made to such Lender by Agent at any time such Lender's share of the outstanding
Loans is less than such Lender's Pro Rata Share. If Agent or any Lender fails to
pay the other any payment due under this Agreement on its due date, the party to
whom such payment is due shall be entitled to recover interest from the party
obligated to make such payment at a rate per annum equal to the Federal Funds
Rate. No provision of this Agreement shall entitle any Lender to any portion of
the fees described in the Fee Letter.
3. COLLATERAL.
3.1. Grant Of Security Interest.
---------------------------
As security for the payment of all Loans now or hereafter made
by, or on behalf of, Lenders to Borrower hereunder or under any Note, and as
security for the payment or other satisfaction of all other Liabilities
(including without limitation the Letter of Credit Obligations), Borrower hereby
grants to Agent, for the benefit of itself, Issuer and Lenders, a security
interest in and to the following property of Borrower, whether now owned or
existing, or hereafter acquired or coming into existence, wherever now or
hereafter located (all such property is hereinafter referred to collectively as
the "Collateral"):
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(a) Accounts Receivable (whether or not Eligible Accounts);
(b) Equipment and Fixtures;
(c) Inventory (whether or not Eligible Inventory);
(d) General Intangibles;
(e) Documents of title;
(f) All chattel paper and instruments evidencing, arising out
of or relating to any obligations to Borrower for goods sold or leased or
services rendered, or otherwise arising out of or relating to any property
described in this SECTION 3.1;
(g) Any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies of or in the
name of Borrower now or hereafter with Agent, any Lender or any Participant and
any and all property of every kind or description of or in the name of Borrower
now or hereafter, for any reason or purpose whatsoever, in the possession or
control of, or in transit to, or standing to Borrower's credit on the books of,
Agent, any agent or bailee for Agent, any Lender, or any Participant;
(h) All interest of Borrower in any goods the sale or lease of
which shall have given or shall give rise to, and in all guaranties and other
property securing the payment of or performance under, any Accounts Receivable,
General Intangibles or any chattel paper or instruments referred to in clause
(f) above;
(i) Any and all other property of Borrower, of any kind or
description (including but not limited to real estate of Borrower), subject to a
separate mortgage, pledge or security interest in favor of Agent, for the
benefit of itself and Lenders, or in which Agent now or hereafter acquires a
security interest securing any Liabilities, whether pursuant to a written
agreement or instrument other than this Agreement or otherwise;
(j) All interest of Borrower in leases of real or personal
property, whether as lessor or lessee (including any option to purchase
thereunder);
(k) All replacements, substitutions, additions or accessions
to or for any of the foregoing;
(l) To the extent related to the property described in clauses
(a) through (k) above, all books, correspondence, credit files, records,
invoices and other papers and documents, including without limitation, to the
extent so related, all tapes, cards, computer runs, computer software and other
papers and documents in the possession or control of Borrower or any computer
bureau from time to time acting for Borrower, and, to the extent so related, all
rights in, to and under all policies of insurance, including claims of rights to
payments thereunder and proceeds therefrom, including business interruption
insurance and any credit insurance; and
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(m) All products and proceeds (including but not limited to
any Accounts Receivable or other proceeds arising from the sale or other
disposition of any property described above, any returns of Inventory sold by
Borrower, and the proceeds of any insurance covering any of the property
described above) of any of the foregoing.
3.2. Accounts Receivable.
--------------------
(a) If requested by Agent, Borrower shall notify Agent
immediately of all material disputes and claims by any Account Debtor and settle
or adjust them, or cause them to be settled or adjusted, at no expense to Agent
or Lenders. If requested by Agent, Borrower will make proper entries in its
books and records, disclosing the assignment of Accounts Receivable to Agent,
for the benefit of itself, Issuer and Lenders.
(b) Borrower warrants and covenants that: (i) to the best of
Borrower's knowledge, all of the Accounts Receivable are and will continue to be
bona fide existing obligations created by the sale of goods, the rendering of
services, or the furnishing of other good and sufficient consideration to
Account Debtors in the regular course of business; and (ii) all shipping or
delivery receipts and other documents furnished or to be furnished to Agent in
connection therewith are and will be genuine in all material respects.
(c) Agent is authorized and empowered (which authorization and
power, being coupled with an interest, is irrevocable until the last to occur of
termination of this Agreement and payment and performance in full of all of the
Payment Liabilities under this Agreement) at any time in its reasonable
discretion:
(i) To request, in the name of Agent, in the Borrower's or the
name of a third party, at reasonable intervals determined by Agent,
confirmation from any Account Debtor or party obligated under or with
respect to any Collateral of the amount shown by the Accounts
Receivable or other Collateral to be payable, or any other matter
stated therein;
(ii) After the occurrence and during the continuance of an
Event of Default, to endorse in Borrower's name and to collect any
chattel paper, checks, notes, drafts, instruments or other items of
payment tendered to or received by Agent in payment of any Account
Receivable or other obligation owing to Borrower;
(iii) After the occurrence and during the continuance of an
Event of Default, to notify, either in Agent's name or Borrower's name,
and/or to require Borrower to notify, any Account Debtor or other
Person obligated under or in respect of any Collateral, of the fact of
Agent's Lien thereon, for the benefit of itself, Issuer and Lenders,
and of the collateral assignment thereof to Agent, for the benefit of
itself, Issuer and Lenders;
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(iv) After the occurrence and during the continuance of an
Event of Default, to direct, either in Borrower's name or Agent's name,
and/or to require Borrower to direct, any Account Debtor or other
Person obligated under or in respect of any Collateral to make payment
directly to Agent of any amounts due or to become due thereunder or
with respect thereto; and
(v) After the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or exchange
all or any part of any Collateral or any amounts due thereunder or with
respect thereto, or compromise or extend or renew for any period
(whether or not longer than the initial period) any and all sums which
are now or may hereafter become due or owing upon or with respect to
any of the Collateral, or enforce, by suit or otherwise, payment or
performance of any of the Collateral either in Agent's own name or in
the name of Borrower.
Under no circumstances shall Agent be under any duty to act in regard to any of
the foregoing matters. The costs relating to any of the foregoing matters,
including Attorneys' Fees and out-of-pocket expenses, and the cost of any
Depository Account, Assignee Deposit Account, or other bank account or accounts
which may be required hereunder, shall be borne solely by Borrower whether the
same are incurred by Agent, and Agent may advance same to Borrower as a
Revolving Loan.
(d) Borrower will notify its Account Debtors to make all
payments in respect of Borrower's Accounts Receivable directly to one or more
lockbox accounts at financial institutions reasonably acceptable to Agent. All
deposits to such lockbox accounts, and all of the checks, drafts, cash and other
remittances received by Borrower in payment or as proceeds of, or on account of,
any of the Accounts Receivable or other Collateral, shall be deposited in
special bank accounts (the "Depository Accounts") on such terms, and at such
banks or financial institutions, as Agent shall consent, in its reasonable
judgment. Said proceeds shall be deposited in precisely the form received except
for Borrower's endorsement where necessary to permit collection of items, which
endorsement Borrower agree to make. Pending such deposit, Borrower agrees not to
commingle any such checks, drafts, cash and other remittances received by it
with any of its funds or property, but will hold them separate and apart
therefrom, until deposit thereof is made in the Depository Accounts. Except
during the existence and continuance of an Event of Default, all funds in
Borrower's Depository Accounts shall be available to Borrower, at its direction
(except to the extent such funds are to be applied to the Payment Liabilities as
otherwise provided in this Agreement). During the existence and continuance of
an Event of Default, all funds in the Depository Accounts at the end of each
Banking Day will be wire transferred or transferred by other means acceptable to
Agent to one or more special bank accounts (each on "Assignee Deposit Account")
at BAI, over which Agent alone has power of withdrawal. Borrower acknowledges
that the maintenance of the Assignee Deposit Accounts is solely for the
convenience of Agent in facilitating its own operations, and Borrower has not
and shall not have any right, title or interest in the Assignee Deposit Accounts
or in the amounts at any time appearing to the credit thereof. Upon the full and
final liquidation of all Payment Liabilities, Agent will pay over to Borrower
any
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excess amounts received by Agent as payment or proceeds of Collateral, whether
received by Agent as a deposit in an Assignee Deposit Account, contained in a
lockbox account or any Depository Account or received by Agent as a direct
payment on any of the sums due hereunder.
(e) Borrower appoints Agent, or any Person whom Agent may from
time to time designate, as Borrower's attorney and agent-in-fact with power: (i)
after the occurrence and during the continuance of an Event of Default, to
notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Agent; (ii) to receive, open and
dispose of all mail addressed to Borrower, but received by Agent; (iii) at
reasonable intervals determined by Agent, to send requests for verification of
Accounts Receivable or other Collateral to Account Debtors; (iv) after the
occurrence and during the continuance of an Event of Default, to open an
Assignee Deposit Account, Depository Accounts, lockbox accounts or other
accounts under Agent's sole control for the collection of Accounts Receivable or
other Collateral, if not required contemporaneously with the execution hereof;
and (v) to do all other things which Agent is permitted to do under this
Agreement or any Related Agreement or which are reasonably necessary to carry
out this Agreement and the Related Agreements. Neither Agent nor any of its
directors, officers, employees or agents will be liable for any acts of
commission or omission nor for any error in judgment or mistake of fact or law,
unless the same shall have resulted from gross negligence or willful misconduct.
The foregoing appointment and power, being coupled with an interest, is
irrevocable until all Payment Liabilities under this Agreement are paid and
performed in full and this Agreement is terminated. Borrower expressly waives
presentment, demand, notice of dishonor and protest of all instruments and any
other notice to which it might otherwise be entitled.
(f) After the occurrence and during the continuance of an
Event of Default, if any Account Receivable or General Intangible arises out of
a contract with the United States or any state or local governmental entity, or
any department, agency, or instrumentality of any thereof, Borrower will,
immediately notify Agent in writing and, at the request of Requisite Lenders,
execute any instruments and take any steps reasonably required by Agent in order
that all monies due and to become due under such contract shall be assigned to
Agent, for the benefit of itself, Issuer and Lenders, and notice thereof given
to the applicable governmental entity under the Federal Assignment of Claims Act
of 1940, as amended, or other applicable laws or regulations.
(g) If any Account Receivable is evidenced by chattel paper or
promissory notes, trade acceptances, or other instruments for the payment of
money, Borrower will, unless Agent shall otherwise agree, deliver the originals
of same to Agent, appropriately endorsed to Agent's order and, regardless of the
form of such endorsement, Borrower hereby expressly waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto.
3.3. Inventory.
----------
(a) Borrower warrants and covenants that: (i) all of the
Inventory is, and at all times shall be, owned by Borrower free of all claims
and Liens (except as set forth in and permitted by SECTION 5.15); and (ii)
Borrower will not make any further assignment of any thereof
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or create or permit to exist any further Lien thereon, unless approved in
writing by Requisite Lenders, nor permit any of Agent's rights therein to be
affected by any attachment, levy, garnishment or other judicial process.
(b) Neither Agent nor any Lender shall be liable or
responsible to Borrower in any way for the safekeeping of any Inventory
delivered to it, to any bailee appointed by or for it, to any warehouseman, or
under any other circumstances, except that Agent and each Lender shall be
responsible for its own gross negligence or willful misconduct. Any and all risk
of loss for any or all of the foregoing shall be upon Borrower, except for such
loss as shall result from Agent's or any Lender's gross negligence or willful
misconduct.
(c) If reasonably requested by Agent, Borrower shall, upon
acquiring an interest in any Inventory, deliver to Agent schedules of such
Inventory, together with, to the extent applicable or available, supplier's
invoices, warranties, production, costs and other records as Agent may
reasonably request. If reasonably requested by Agent, Borrower shall deliver to
Agent schedules of the sale of any Inventory promptly upon its sale. Any
material change in the value, or condition of any Inventory, and any material
errors discovered in schedules delivered to Agent and Lenders, shall be reported
to Agent promptly. Borrower represents and warrants that, as to each Schedule of
Inventory delivered to Agent or any Lender:
(i) The descriptions, origins, sizes, qualities, quantities,
weights, and markings of all goods stated thereon, or on any attachment
thereto, are true and correct in all material respects;
(ii) All of the goods are new and unused, except as otherwise
described therein; and
(iii) All Inventory not included on such schedule has been
previously scheduled.
(d) If requested by Agent, Borrower will notify Agent
immediately if Borrower obtains possession (by return, repossession or
otherwise) of any Inventory with a value in excess of One Hundred Thousand
Dollars ($100,000) which has been sold, and will inform Agent of the identity of
such returned or repossessed Inventory, the applicable Account Debtor and the
amount of the applicable Account Receivable.
3.4. Equipment.
----------
(a) Borrower shall at all times keep the Equipment in good
operating condition and repair, ordinary wear and tear excepted, and Borrower
shall not, without the prior written consent of Requisite Lenders, sell, lease,
or otherwise dispose of any Equipment, or any part thereof or interest therein;
provided, however, that without Requisite Lenders' consent (but with notice to
Agent), Borrower may dispose of obsolete or non-useful Equipment in the ordinary
course of its business in an arm's length transaction for an amount
substantially equivalent to the
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fair market value of such Equipment; provided, the Equipment disposed of in any
Fiscal Year has an aggregate fair market value of One Million Dollars
($1,000,000) or less.
(b) In the event any Equipment is sold, transferred or
otherwise disposed of as provided in SECTION 3.4(a), unless Requisite Lenders
shall agree otherwise or unless such Equipment is encumbered by a prior Lien in
favor of another Person permitted under SECTION 5.15, Borrower shall deliver all
of the proceeds (net of the costs and expenses incurred in connection with such
sale) of any such sale, transfer or disposition to Agent, which proceeds shall
be applied to the unpaid installments of the Term Loan in the inverse order of
their maturities; provided, that so long as no Event of Default then exists,
Borrower may elect (by written notice to Agent) to use such proceeds to
purchase, within sixty (60) days of receipt of such proceeds, replacement assets
of a kind then used or useable in the business of Borrower.
(c) Borrower will, upon the reasonable request of Agent,
submit to Agent a current listing of all of Borrower's Equipment. As long as no
Event of Default or Unmatured Event of Default exists which is continuing,
listings of Borrower's Equipment will not be required to be delivered (i) until
thirty (30) days after Agent's request therefor or (ii) more frequently than
once each calendar quarter.
3.5. Supplemental Documentation.
---------------------------
At Agent's request, Borrower shall execute and deliver, or
cause to be executed and delivered, to Agent, at any time or times hereafter,
such agreements, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Agent to perfect and maintain perfected Agent's Lien on the Collateral, for
the benefit of itself, Issuer and Lenders (all the above hereinafter referred to
as "Supplemental Documentation"), in form and substance reasonably acceptable to
Agent, and pay all taxes, fees and other costs and expenses associated with any
recording or filing of the Supplemental Documentation. Borrower hereby
irrevocably makes, constitutes and appoints Agent (and all Persons designated by
Agent for that purpose) as Borrower's true and lawful attorney (and
agent-in-fact) (which appointment and power, being coupled with an interest, is
irrevocable until the last to occur of termination of this Agreement and payment
and performance in full of all of the Payment Liabilities under this Agreement)
to sign the name of Borrower on any of the Supplemental Documentation and to
deliver any of the Supplemental Documentation to such Persons as Agent may
elect; provided, that Agent shall not act as such attorney and agent-in-fact
until ten (10) days after it has provided written notice to Borrower requesting
Borrower to sign and deliver such Supplemental Documentation and Borrower has
failed to do so with such ten (10) day period. Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
3.6. Collateral for the Benefit of Agent and Lenders.
------------------------------------------------
All Liens granted to Agent hereunder and under the Related
Agreements and all Collateral delivered to Agent hereunder and under the Related
Agreements shall be deemed to
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have been granted and delivered to Agent, for the benefit of itself, Issuer and
Lenders, to secure the Liabilities.
4. REPRESENTATIONS AND WARRANTIES.
To induce Agent and Lenders to make Loans to, and Issuer to
issue Letters of Credit for the account of, Borrower under this Agreement,
Borrower makes the following representations and warranties to Agent and
Lenders, all of which shall be true and correct as of the date the initial Loan
is made and the initial Letter of Credit is issued and shall survive the
execution of this Agreement and the making of the initial Loan:
4.1. Organization.
-------------
Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each Company other
than Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its respective incorporation.
Each Company is in good standing and is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for those jurisdictions where the failure to
be qualified is not reasonably likely to have a Material Adverse Effect. Except
as set forth on SCHEDULE 4.1, on the date hereof, each Company conducts business
in its own name exclusively. SCHEDULE 4.1 sets forth a complete and accurate
list, as of the date of this Agreement, of (a) the jurisdiction of formation of
each Company, (b) each jurisdiction in which such Company is qualified to do
business and (c) all of such Company's tradenames, trade styles or doing
business forms and a description of how such forms are used by such Company.
4.2. Authorization.
--------------
Borrower is duly authorized to execute and deliver this
Agreement, any Notes, and any Related Agreements or Supplemental Documentation
contemplated by this Agreement, and is and will continue to be duly authorized
to borrow monies hereunder and to perform its obligations under this Agreement,
any Notes and any such Related Agreements and Supplemental Documentation. Each
Company other than Borrower is duly authorized to execute and deliver any
Related Agreements or Supplemental Documentation contemplated to be delivered by
such Company and is and will continue to be duly authorized to perform its
obligations thereunder. The execution, delivery and performance by (a) Borrower
of this Agreement, any Notes, and any Related Agreements or Supplemental
Documentation contemplated by this Agreement, and the borrowings hereunder and
(b) each Company other than Borrower of any Related Agreements or Supplemental
Documentation to which it is a party, do not and will not require any consent or
approval of any governmental agency or authority.
4.3. No Conflicts.
-------------
The execution, delivery and performance by Borrower of this
Agreement, any Notes, and any Related Agreements or Supplemental Documentation
contemplated by this
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Agreement to which it is a party do not and will not conflict with (i) any
provision of applicable law, (ii) its By-laws, (iii) its Certificate of
Incorporation, (iv) any material agreement binding upon Borrower, or (v) any
court or administrative order or decree applicable to Borrower, and do not and
will not require, or result in, the creation or imposition of any Lien on any
asset of Borrower, except as provided herein. The execution, delivery and
performance by each Company other than Borrower of any Related Agreements or
Supplemental Documentation to which it is a party, do not and will not conflict
with (i) any provision of applicable law, (ii) the organizational documents of
such Company, (iii) any material agreement binding upon such Company, or (iv)
any court or administrative order or decree applicable to such Company, and do
not and will not require, or result in, the creation or imposition of any Lien
on any asset of such Company, except as provided herein.
4.4. Validity and Binding Effect.
----------------------------
This Agreement, any Notes, and any Related Agreements or
Supplemental Documentation contemplated by this Agreement, when duly executed
and delivered, will be legal, valid and binding obligations of each Company
party thereto, as applicable, enforceable against such Company in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies.
4.5. No Default.
-----------
No Company is in default under any agreement or instrument to
which such Company is a party or by which any of its respective properties or
assets is bound or affected, which default is reasonably likely to have a
Material Adverse Effect. No Event of Default or Unmatured Event of Default has
occurred and is continuing.
4.6. Financial Statements.
---------------------
(a) Borrower has furnished to Agent and Lenders the following:
(i) the audited balance sheet of the "Unifrax Group" (as
defined in the Recapitalization Agreement) as of December 31, 1995 and
the related audited statements of income, changes in parent company
investment and cash flows for the year then ended; and
(ii) the unaudited combined balance sheet as of June 30, 1996
and the related unaudited combined statements of income, changes in
parent company investment and cash flow of the Unifrax Group for the
six (6) month period ended on June 30, 1996.
The foregoing financial statements present fairly, in all material respects, the
financial position and results of operations of the Unifrax Group in accordance
with GAAP (except for year-end adjustments and footnotes with respect to the
unaudited financial statements) as
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50
applied by Sellers. As of the date hereof, except as described on Schedule 4.6,
since December 31, 1995, there has been no Material Adverse Change with respect
to Borrower.
(b) Borrower has also furnished to Agent and Lenders certain
projections dated September 25, 1996 giving effect to the Acquisition. The
foregoing projections constitute Borrower's good faith estimate of Borrower's
financial position and results of operations as of the dates and for the periods
indicated. As of the date of this Agreement, Borrower knows of no fact that
materially adversely affects the reliability, accuracy and completeness of the
foregoing projections.
4.7. Insurance.
----------
SCHEDULE 4.7 hereto is in all material respects a complete and
accurate summary as of the date hereof of the property and casualty insurance
program carried by Borrower on the date hereof. SCHEDULE 4.7 includes the
insurer's(s') name(s), policy number(s), expiration date(s), amount(s) of
coverage, type(s) of coverage, the annual premium(s), deductibles and
self-insured retention and describes any retrospective rating plan, fronting
arrangement or any other self-insurance or risk assumption agreed to by Borrower
or imposed upon Borrower by any such insurer. This summary also includes any
self-insurance program that is in effect.
4.8. Litigation; Contingent Liabilities.
-----------------------------------
(a) Except for those referred to in SCHEDULE 4.8, as of the
date hereof, there are no claims, litigation, arbitration proceedings or
governmental proceedings pending or threatened against or affecting any Company
which, if determined adversely to such Company, are reasonably likely to have a
Material Adverse Effect.
(b) Other than any liability incident to the claims,
litigation or proceedings disclosed in SCHEDULE 4.8 or SCHEDULE 4.19, or
provided for or disclosed in the financial statements referred to in SECTION
4.6, as of the date hereof, no Company has any contingent liabilities which are
reasonably likely to have a Material Adverse Effect.
4.9. Liens.
------
None of the Collateral or other property of any Company is
subject to any Lien (including but not limited to Liens pursuant to Capitalized
Leases under which such Company is a lessee) except: (a) Liens in favor of
Agent, for the benefit of itself, Issuer and Lenders; (b) Liens for current
Taxes not delinquent or Taxes being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as may
be required by GAAP are being maintained; (c) landlord's, carriers',
warehousemen's, mechanics', materialmen's and other like statutory Liens arising
in the ordinary course of business securing obligations which are not overdue or
which are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; (d) Liens listed on SCHEDULE 4.9; (e) Liens permitted by
SECTION 5.15; (f) deposits under worker's compensation, unemployment insurance
and social security legislation or to secure
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the performance of bids, tenders, contracts or leases or to secure obligations
under surety, appeal, indemnity, performance or similar bonds, all in the
ordinary course of business; (g) banker's Liens and other similar Liens in
respect of bank deposits; (h) zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances pertaining to the real
property of Borrower and existing on the date hereof, which do not materially
detract from the value of the property subject thereto or interfere in any
material respect with the ordinary conduct of business of Borrower; and (i)
Liens consented to in writing by Requisite Lenders.
4.10. Subsidiaries.
-------------
As of the date hereof, all Subsidiaries of each Company are
listed on SCHEDULE 4.10. SCHEDULE 4.10 sets forth, as of the date hereof, for
each such Subsidiary, a complete and accurate statement of the owners of
Holdings and each Company and each owner's percentage ownership therein.
4.11. Partnerships; Joint Ventures.
-----------------------------
As of the date hereof, no Company is a partner or joint
venturer in any partnership or joint venture other than the partnerships and
joint ventures listed on SCHEDULE 4.11. As of the date hereof, SCHEDULE 4.11
sets forth, for each such partnership or joint venture, a complete and accurate
statement of (a) the owners and each owner's percentage ownership of each such
partnership or joint venture, (b) the state or other jurisdiction of formation
or incorporation, as appropriate, of each such partnership or joint venture, (c)
each state or other jurisdiction in which each such partnership or joint venture
is qualified to do business and (d) all of each such partnership's or joint
venture's trade names, trade styles or doing business forms on the date of this
Agreement.
4.12. Business and Collateral Locations.
----------------------------------
(a) On the date hereof, the office where Borrower keeps its
books and records concerning its Accounts Receivable and other Collateral, and
Borrower's chief place of business and chief executive office, is located at the
address of Borrower set forth on the signature pages of this Agreement. SCHEDULE
4.12 accurately identifies, as of the date hereof, the office where each Company
other than Borrower has its chief executive office. SCHEDULE 4.12 contains a
complete and accurate list, as of the date of this Agreement, of each Company's
places of business other than that referred to in the first two sentences of
this paragraph (a).
(b) Except for the sales offices referred to on SCHEDULE 4.12,
Schedule 4.12 contains a complete and accurate list, as of the date of this
Agreement, of the locations of (i) all of Borrower's Inventory, Equipment and
Fixtures and (ii) if any Collateral is not in the possession or control of
Borrower or the owner of such Collateral, the name and mailing address of each
bailee, processor, warehouseman, consignee or other Person in possession or
control thereof.
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4.13. Real Property.
--------------
SCHEDULE 4.13 contains a complete and accurate list, as of the
date of this Agreement of (a) the address and legal descriptions of any real
property owned by Borrower and (b) in the case of Fixtures located on property
not owned by Borrower occupying such property, the name(s) and mailing addresses
of the record owners of such property, excluding, however, the sales offices
referred to on SCHEDULE 4.12.
4.14. Eligibility of Collateral.
--------------------------
Each Account Receivable or item of Inventory which Borrower
shall, expressly or by implication (by inclusion on a Borrowing Base Certificate
or otherwise), request Agent to classify as an Eligible Account Receivable or as
Eligible Inventory, respectively, will, as of the time when such request is
made, conform in all material respects to the requirements of such
classification set forth in the respective definitions of "Eligible Account
Receivable" and "Eligible Inventory" set forth herein.
4.15. Control of Collateral; Lease of Property.
-----------------------------------------
SCHEDULE 4.15 contains a complete and accurate list as of the
date hereof of (a) all leases (including Capitalized Leases) under which
Borrower is the lessee covering any machinery, equipment or real property used
by Borrower (excluding, however, the sales offices referred to on SCHEDULE 4.12)
and (b) the name and mailing address of each lessor or owner of such machinery,
equipment or real property.
4.16. Patents, Trademarks, Etc.
-------------------------
Each Company possesses adequate licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade styles, and
tradenames to continue to conduct its respective business in all material
respects as heretofore conducted by it, and all such licenses, patents, patent
applications, copyrights, trademarks, trademark applications, trade styles, and
tradenames existing on the date hereof of that are material to the operation of
Borrower's business or of a material value are listed on SCHEDULE 4.16.
4.17. Solvency.
---------
Each Company has capital sufficient to carry on its businesses
and transactions and all businesses and transactions in which it is about to
engage, and is able to pay its debts as they mature. Each Company is solvent and
owns property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay its debts.
4.18. Contracts; Labor Matters.
-------------------------
Except as disclosed on SCHEDULE 4.18, as of the date hereof:
(a) no Company is a party to any contract or agreement, or is subject to any
judgment, decree or order, which is reasonably likely to have a Material Adverse
Effect; (b) no Company has any employment
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53
contracts with any of its employees; (c) no Company has any contract with any
Person that is material to such Company's business or financial condition, (d)
no collective bargaining agreement to which any Company is a party or is
otherwise subject is scheduled to expire prior to the Termination Date; (e) no
Company has, within the two (2)-year period preceding the date of this
Agreement, taken any action which would have constituted or resulted in a "plant
closing" or "mass layoff" within the meaning of the Federal Worker Adjustment
and Retraining Notification Act of 1988 or any similar applicable federal, state
or local law (except with respect to the Discontinued Operations in compliance
with applicable law), and no Company has a reasonable expectation that any such
action is or will be required at any time prior to the initial Termination Date
and (f) on the date of this Agreement (i) no Company is a party to any labor
dispute which is reasonably likely to have a Material Adverse Effect, and (ii)
there are no strikes or walkouts relating to any labor contracts to which any
Company is a party or is otherwise subject.
4.19. Pension and Welfare Plans.
--------------------------
Each Pension Plan complies, and has been administered in
compliance, in all material respects, with all applicable statutes and
governmental rules and regulations; no Reportable Event has occurred and is
continuing with respect to any Pension Plan which is reasonably likely to have a
Material Adverse Effect; neither any Company nor any ERISA Affiliate has
withdrawn from any Multiemployer Plan in a "complete withdrawal" or a "partial
withdrawal" as defined in Section 4203 or 4205 of ERISA, respectively, which is
reasonably likely to have a Material Adverse Effect; no steps have been
instituted to terminate any Pension Plan which is reasonably likely to have a
Material Adverse Effect; no contribution failure has occurred with respect to
any Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA; and no condition exists or event or transaction has occurred in
connection with any Pension Plan or Multiemployer Plan that is reasonably likely
to have a Material Adverse Effect. Except as listed in SCHEDULE 4.19, as of the
date hereof, no Company has any liability to pay any welfare benefits under any
employee welfare benefit plan within the meaning of Section 3(l) of ERISA to
former employees thereof or to current employees with respect to claims incurred
after the termination of their employment other than as required by Section
4980B of the Code or Part 6 of Subtitle B of Title 1 of ERISA.
4.20. Regulations G and U.
--------------------
No Company is engaged in the business of purchasing or selling
Margin Stock or extending credit to others for the purpose of purchasing or
carrying Margin Stock, and no part of the proceeds of any borrowing hereunder
will be used to purchase or carry any Margin Stock or for any other purpose
which would violate any of the margin regulations of the Federal Reserve Board.
4.21. Compliance.
-----------
Except as described on SCHEDULE 4.21 or SCHEDULE 4.25, as of
the date hereof, each Company is in compliance with all statutes and
governmental rules and regulations applicable to it, the noncompliance with
which is reasonably likely to have a Material Adverse Effect.
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54
4.22. Taxes.
------
As of the date hereof, each Company has filed all tax returns
which are required to have been filed and has paid, or made adequate provisions
for the payment of, all of its Taxes which are due and payable, except such
Taxes, if any, as are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as may
be required by GAAP have been maintained. Except as set forth on SCHEDULE 4.22,
as of the date hereof, there has been no audit of the federal income tax
liability of any of the Companies by the Internal Revenue Service. The current
status of each such audit (if any) is described on SCHEDULE 4.22. As of the date
hereof, no Company is aware of any proposed assessment against any Company for
additional Taxes (or any basis for any such assessment) which is reasonably
likely to have a Material Adverse Effect.
4.23. Investment Company Act Representation.
--------------------------------------
No Company is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.24. Public Utility Holdings Company Act Representation.
---------------------------------------------------
No Company is a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "Holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.25. Environmental and Safety and Health Matters.
--------------------------------------------
Except as disclosed on SCHEDULE 4.25, each Company and/or each
property, operations and facility that such Company owns, operates or controls
(a) complies in all respects with (i) all applicable Environmental Laws, except
for those laws with respect to which the failure to comply is not reasonably
likely to have a Material Adverse Effect and (ii) all applicable Occupational
Safety and Health Laws, except for those laws with respect to which the failure
to comply is not reasonably likely to have a Material Adverse Effect; (b) is not
subject to any pending judicial or administrative proceeding alleging the
violation of any Environmental Law or Occupational Safety and Health Law which
is reasonably likely to have a Material Adverse Effect; (c) has not received any
notice (i) that it may be in violation of any Environmental Law or Occupational
Safety and Health Law, (ii) threatening the commencement of any proceeding
relating to allegedly unlawful, unsafe or unhealthy conditions, or (iii)
alleging that it is or may be responsible for any response, cleanup, or
corrective action, including but not limited to any remedial
investigation/feasibility studies, under any Environmental Law or Occupational
Safety and Health Law that in the case of any of (i), (ii) or (iii) is
reasonably likely to have a Material Adverse Effect; (d) is not the subject of
any pending federal or state investigation that is reasonably likely to have a
Material Adverse Effect evaluating whether any investigation, remedial action or
other response is needed to respond to (i) a Release or threatened Release into
the environment of any Hazardous Material or (ii) any allegedly unsafe or
unhealthful condition; (e) has not filed any notice under or relating to any
Environmental Law or Occupational Safety and Health Law that is
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55
reasonably likely to have a Material Adverse Effect indicating or reporting (i)
any past or present Release into the environment of, or treatment, storage or
disposal of, any Hazardous Material or (ii) any potentially unsafe or
unhealthful condition, and, to the best of Borrower's knowledge, there exists no
reasonable basis for such notice irrespective of whether such notice was
actually filed; and (f) has no contingent liability that is reasonably likely to
have a Material Adverse Effect in connection with (i) any actual or potential
Release into the environment of, or otherwise with respect to, any Hazardous
Material, whether on any premises owned or occupied by such Company or, to the
best of Borrower's knowledge, on any other premises or (ii) any unsafe or
unhealthful condition. Except as disclosed on SCHEDULE 4.25, there are no
Hazardous Materials on, in or under any property or facilities owned, operated
or controlled by any Company, including but not limited to such Hazardous
Materials that may be contained in underground storage tanks, except those
Hazardous Materials necessary for the operation of a Company's business that are
used in compliance with all applicable Environmental Laws, except for those laws
with respect to which the failure to comply is not reasonably likely to have a
Material Adverse Effect.
4.26. Other Transactions.
-------------------
The Acquisition has been consummated in accordance with and
pursuant to the terms of the Acquisition Documents, and in compliance in all
material respects with all applicable laws. The execution of all such
Acquisition Documents has been duly authorized by all necessary action on the
part of any Company party thereto and will not require any consent or approval
of any governmental agency or authority that has not been obtained prior to the
date hereof. The execution of all such Acquisition Documents does not conflict
with (i) any provisions of applicable law, (ii) the organizational documents of
any Company party thereto, (iii) any material agreement binding upon such
Company or (iv) any court or administrative order or decree applicable to such
Company.
4.27. Related Agreements and Acquisition Documents.
---------------------------------------------
As of the date hereof, all representations and warranties of
each Company contained in any Related Agreements and all representations and
warranties of each Company party thereto (other than the Sellers) contained in
any Acquisition Document (whether such representations and warranties were made
to Agent or any Lender or to another Person) are true and correct in all
material respects as if made on the date hereof and Borrower hereby adopts and
affirms all such representations and warranties.
5. COVENANTS.
From the date of this Agreement and thereafter until the
Credit is terminated and all Payment Liabilities of Borrower hereunder are paid
in full, Borrower agrees that, unless Agent (at the written direction of
Requisite Lenders) shall otherwise consent in writing, it will:
5.1. Financial Statements and Other Reports.
---------------------------------------
Furnish to Agent and each Lender, in form reasonably
satisfactory to Agent:
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5.1.1. Financial Reports:
------------------
(a) ANNUAL AUDITED FINANCIAL STATEMENTS. Within ninety (90)
days after each Fiscal Year, a copy of the annual audited financial statements
of Borrower prepared on a consolidated and consolidating basis and in conformity
with GAAP and certified by an independent certified public accountant who shall
be reasonably satisfactory to Agent, together with a certificate from such
accountant in form and substance reasonably satisfactory to Agent, (i)
acknowledging to Agent and Lenders such accountant's understanding that Agent,
Lenders and any Participant are relying on such annual audit report and (ii)
containing (A) a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this SECTION 5 and (B) a
computation of Excess Cash Flow for such Fiscal Year.
(b) MONTHLY FINANCIAL STATEMENT. Within thirty (30) days after
the end of each month of each Fiscal Year (commencing with the month ending
December 31, 1996), a copy of the unaudited consolidated and consolidating
financial statement of Borrower, prepared in the same manner as the audit report
referred to in preceding clause (a) (except for year end adjustments and
footnotes), signed by Borrower's chief executive officer, president or chief
financial officer and consisting of at least a balance sheet as at the close of
such month and statements of earnings and cash flows for such month and for the
period from the beginning of such Fiscal Year to the close of such month.
(c) OFFICER'S CERTIFICATE. Together with the financial
statements under the preceding clauses (a) and (b), a certificate of Borrower's
chief executive officer, president or chief financial officer in the form of
EXHIBIT B, dated the date of such annual audit report or such monthly financial
statement, as the case may be, containing a statement that no Event of Default
or Unmatured Event of Default has occurred and is continuing, or, if there is
any such event, describing it and the steps, if any, being taken to cure it, and
containing (A) a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this SECTION 5, and (B) a
computation of Excess Availability.
(d) ANNUAL BUDGETS. Within thirty (30) days after the end of
each Fiscal Year, an annual budget for Borrower for the succeeding Fiscal Year,
prepared on a consolidated and consolidating basis and in conformity with the
financial statements furnished under the preceding clauses (a) and (b), signed
by Borrower's chief executive officer, president or chief financial officer and
consisting of at least a balance sheet, an income statement and a cash flow
statement, each calculated on a month by month basis.
(e) MANAGEMENT LETTERS. Within ten (10) days after receipt
thereof by any Company, copies of any management letters or comparable letters
delivered to such Company by any accountant retained by such Company.
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5.1.2. Agings.
-------
Within twenty (20) days after the end of each month, an aging
of all Accounts Receivable of Borrower and an aging of all accounts payable of
Borrower as of the end of such month, in each case in form and content
reasonably acceptable to Agent.
5.1.3. Inventory Certification.
------------------------
Within twenty (20) days after the end of each month, an
Inventory certification report as of the end of the month for all Inventory
locations of Borrower in form and content reasonably acceptable to Agent.
5.1.4. Borrowing Base Certificate.
---------------------------
The Borrowing Base Certificate required under SECTION 2.5(c).
5.1.5. Other Reports and Information:
------------------------------
(a) SEC AND OTHER REPORTS. If applicable, copies of each
filing and report made by any Company or Holdings with or to any securities
exchange or the Securities and Exchange Commission and of each material
communication from any Company to shareholders generally, promptly upon the
filing or making thereof;
(b) REPORT OF CHANGES RELATING TO BORROWER, SUBSIDIARIES OR
PARTNERSHIPS. Promptly from time to time, a written report of any change in the
information set forth in SCHEDULE 4.1, SCHEDULE 4.10 or SCHEDULE 4.11 concerning
any Company, any partnership or any joint venture;
(c) PATENTS, ETC. Promptly from time to time, a written report
of any change to the list of patents, trademarks, copyrights and other
information set forth in SCHEDULE 4.16 (provided, that changes to the
information listed on SCHEDULE 4.16 pertaining to registrations in countries
other than the United States shall be provided by Borrower to Agent annually
within sixty (60) days after the end of each Fiscal Year); and
(d) OTHER REPORTS. Any information required to be provided
pursuant to other provisions of this Agreement, and such other reports or
information from time to time reasonably requested by Agent on behalf of itself
or any Lender.
5.1.6. Annual Insurance Certificate.
-----------------------------
Within thirty (30) days after the end of each anniversary of
the Closing Date, Borrower shall provide new insurance certificates satisfying
the requirements of SECTION 5.6.
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5.2. Notices.
--------
Notify Agent in writing of any of the following promptly upon
learning of the occurrence thereof (or, in the case of clauses (e) and (f) of
this SECTION 5.2, at least ten (10) days prior to the occurrence thereof),
describing the same and, if applicable, the steps being taken by the Person(s)
affected with respect thereto:
(a) DEFAULT. The occurrence of (i) an Event of Default or
Unmatured Event of Default and (ii) to the extent not included in clause (i) of
this SECTION 5.2(A), the default by any Company or any other Obligor under any
note, indenture, loan agreement, mortgage, lease, deed or other material similar
agreement to which such Company or any other Obligor, as appropriate, is a party
or by which it is bound, other than any such default which is not reasonably
likely to have a Material Adverse Effect;
(b) LITIGATION. The institution of any litigation,
arbitration, proceeding or governmental proceeding affecting any Company or any
other Obligor, or any Collateral or other property subject to a Lien in favor of
Agent, for the benefit of itself, Issuer and Lenders, whether or not considered
to be covered by insurance, if the amount claimed exceeds Five Hundred Thousand
Dollars ($500,000);
(c) JUDGMENT. The entry of any judgment or decree against any
Company or any other Obligor, if the amount of such judgment exceeds Three
Hundred Fifty Thousand Dollars ($350,000);
(d) PENSION PLANS AND WELFARE PLANS. The occurrence of a
Reportable Event with respect to any Pension Plan; the filing of a notice of
intent to terminate a Pension Plan by any Company or any ERISA Affiliate; the
institution of proceedings to terminate a Pension Plan by the PBGC or any other
Person; the withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by any Company, any
ERISA Affiliate or any other Obligor from any Multiemployer Plan; the failure of
any Company, any other Obligor or any ERISA Affiliate to make a required
contribution to any Pension Plan, including but not limited to the any failure
to pay an amount sufficient to give rise to a Lien under Section 302(f) of
ERISA; the taking of any action with respect to a Pension Plan which could
result in the requirement that any Company or any ERISA Affiliate furnish a bond
or other security to the PBGC or such Pension Plan; the occurrence of any other
event with respect to any Pension Plan which could result in the incurrence by
any Company or any ERISA Affiliate of any material liability, fine or penalty;
or the establishment of a new plan subject to ERISA or an amendment to any
existing plan which will result in a material increase in contributions or
benefits under such plan or the incurrence of any material increase in the
liability of any Company, any other Obligor (or an ERISA Affiliate to the extent
there is joint and several liability with any Company) or any Subsidiary, with
respect to any "employee welfare benefit plan" as defined in Section 3(l) of
ERISA which covers former employees thereof or current employees and their
beneficiaries with respect to claims incurred after the termination of their
employment;
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(e) BUSINESS AND COLLATERAL INFORMATION. Except with respect
to the sales offices referred to on SCHEDULE 4.12, any change or proposed change
in any of the information set forth on SCHEDULE 4.12, SCHEDULE 4.13 or SCHEDULE
4.15 (as to real property only) including but not limited to (i) any change in
the location where any Inventory or Equipment or other Collateral is kept, (ii)
the identity of any new bailee, processor, warehouseman, consignee or other
Person in possession or control of any Inventory or Equipment or other
Collateral, (iii) any change in the name or address of the lessor or owner of
any real property or equipment leased to any Company or any other Obligor, (iv)
any proposed change in the location of any Company's or any other Obligor's
chief executive office or chief place of business, (v) any proposed opening,
closing or other change in the list of offices and other places of business of
any Company and (vi) any opening, closing or other change in the offices and
other places of business of each other Obligor;
(f) CHANGE OF NAME. Any change in the name of any Company or
any other Obligor;
(g) ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. The
occurrence of any event, or the acquisition of any information which, if it had
occurred or was true on or before the Closing Date, would have been required to
have been disclosed and included on SCHEDULE 4.25 to the extent such event or
the event described in such information is reasonably likely to have a Material
Adverse Effect, and to the existence of any Environmental Lien and receipt of
any notice from any federal, state or local government or agency with respect to
any actual or alleged violation of any Environmental Law or any Occupational
Safety and Health Law;
(h) MATERIAL ADVERSE CHANGE OR EFFECT. The occurrence of a
Material Adverse Change or the occurrence of any event that would be reasonably
likely to have a Material Adverse Effect;
(i) DEFAULT BY OTHERS. Any material default by any Account
Debtor or other Person obligated to any Company or any other Obligor, under any
contract, note or other evidence of amounts payable or due or to become due to
such Company, or such other Obligor if the amount payable under such contract,
note or other evidence of amounts payable or due or to become due is reasonably
likely to have a Material Adverse Effect;
(j) MOVEABLE COLLATERAL. If any of the Collateral shall
consist of Equipment of a type normally used in more than one state, whether or
not actually so used, the change in location of any use of any such Equipment in
any state other than a state in which Borrower or the applicable Obligor shall
have previously advised Agent such Equipment will be used. Borrower agrees that
such Equipment will not, unless Agent shall otherwise consent in writing, be
used outside the continental United States;
(k) CHANGE IN MANAGEMENT OR LINE(S) OF BUSINESS. Any
substantial change in the senior management of any Company or any material
change in any Company's line(s) of business; and
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(l) OTHER NOTICES. Any notices required to be provided
pursuant to any Related Agreement or the other provisions of this Agreement.
5.3. Existence.
----------
Maintain and preserve, and cause each other Company to
maintain and preserve, its respective existence as a corporation or other form
of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names, trade
styles, franchises and other authority to the extent the failure to so maintain
and preserve is reasonably likely to have a Material Adverse Effect.
5.4. Nature of Business.
-------------------
Engage in, and cause each other Company to engage in, similar
or related fields of business as it is engaged in on the date hereof, including
reasonable extensions of such business operations.
5.5. Books, Records and Access.
--------------------------
Maintain, and cause each other Company to maintain, complete
and accurate books and records (including but not limited to records relating to
Accounts Receivable, Inventory, Equipment and other Collateral and property), in
which full and correct entries in conformity in all material respects with GAAP
shall be made of all dealings and transactions in relation to its respective
business and activities; permit, and cause each other Company to permit, access
by Agent and Lenders and their agents and employees to the books and records of
each Company at such Company's place or places of business at intervals to be
determined by Agent upon reasonable prior notice and during normal business
hours and without hindrance or delay; and permit and cause each other Company to
permit Agent and Lenders and their agents and employees to inspect Borrower's
Inventory and Equipment and each other Company's inventory and equipment, to
perform appraisals of Borrower's Equipment and each other Company's equipment
and to inspect, audit, check and make copies and/or extracts from the books,
records, computer data and records, computer programs, journals, orders,
receipts, correspondence and other data relating to Inventory, Accounts
Receivable, Equipment and any other Collateral and property or relating to any
other transactions between the parties hereto. So long as no Event of Default is
in existence and continuing, all audits, inspections and visits by Agent and
Lenders and/or their agents or employees shall be at intervals to be determined
by Agent upon reasonable prior notice and during normal business hours and
without hindrance or delay. Borrower shall not be liable for any costs and
expenses of such inspections, audits, visits or appraisals by Agent and Lenders
and their agents and employees unless an Event of Default exists.
5.6. Insurance.
----------
Maintain, and cause each Company to maintain, insurance to
such extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated including, without limitation business
interruption insurance and product liability insurance, and
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keep the Collateral insured for its full insurable value against loss or damage
by fire, theft, explosion, sprinklers and such other risks as are customarily
insured against by Persons engaged in business similar to that of the applicable
Company, with such companies, in such amounts and under policies in such form as
shall be reasonably satisfactory to Requisite Lenders. Certificates of such
policies of insurance in form and substance reasonably satisfactory to Agent
have been delivered to Agent prior to the date hereof together with evidence of
payment of all premiums therefor then due, and Agent and Lenders acknowledge
that as of the date hereof the same are satisfactory. Borrower shall cause each
issuer of an insurance policy to provide Agent, prior to the Closing Date, with
an endorsement or an independent instrument (i) containing such terms as shall
be reasonably acceptable to Agent, (ii) with respect to property and casualty
insurance, showing Agent, for the benefit of itself, Issuer and the Lenders, as
loss payee and, (iii) naming Agent, for the benefit of itself, Issuer and the
Lenders, and each Lender, as additional insured. Borrower hereby directs all
insurers under Borrower's policies of insurance to pay all proceeds payable
thereunder in respect of the Collateral directly to Agent, as its interest may
appear and applied to the Payment Liabilities, whether or not then due, in such
order of application as Agent may determine ;provided, that if no Event of
Default has occurred and is continuing, (A) proceeds of insurance for losses
equal to or less than Five Hundred Thousand Dollars ($500,000) per occurrence
shall be remitted by Agent to Borrower to repair, replace, restore or substitute
the damaged property, and (B) proceeds of insurance for losses in excess Five
Hundred Thousand Dollars ($500,000) per occurrence shall be applied to the
Payment Liabilities as provided herein, except that if Agent has received a
certificate from Borrower reasonably satisfactory to Requisite Lenders to the
effect that (i) such proceeds are necessary and in an amount sufficient,
together with any funds that may be contributed by Borrower, to pay all costs of
repair, replacement, restoration or substitution of such damaged property to an
economical unit of substantially the same character and value as such property
was prior to such damage, (ii) the damaged property can be repaired, replaced,
restored or substituted to an economical unit of substantially the same
character and value as such property was prior to such damage prior to the
termination of the Credit, and (iii) the inability to use such damaged property
during the period during which such damaged property is to be repaired,
replaced, restored or substituted is not reasonably likely to have a Material
Adverse Effect, such proceeds shall be held by Agent in the Assignee Deposit
Account to be disbursed from time to time to pay the cost of repair,
replacement, restoration or substitution either, at Requisite Lenders' option,
to Borrower or directly to contractors, subcontractors, and material suppliers
and subject to such conditions to disbursement as Requisite Lenders may
reasonably impose to assure that the work is fully completed in a good and
workmanlike manner and paid for and that no Liens arise by reason thereof.
Notwithstanding anything contained herein to the contrary, if an Event of
Default arises and continues after the occurrence of such loss, the amount of
proceeds with respect to such loss held by Agent in the Assignee Deposit Account
shall, at the request of Requisite Lenders, be applied by Agent to the Payment
Liabilities, whether or not then due, in such order of application as Agent may
determine. Borrower appoints Agent and any Person whom Agent may from time to
time designate (and all officers, employees or agents designated by Agent or
such Person) as Borrower's true and lawful attorney and agent in fact with
power, during the continuance of an Event of Default, to make, settle and adjust
claims under such policies of insurance, endorse the name of Borrower on any
check, draft, instrument or other item
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of payment for the proceeds of such policies of insurance relating to the
Collateral which are payable to Agent or any Lender hereunder and make all
determinations and decisions with respect to such policies of insurance. The
foregoing appointment and power, being coupled with an interest, is irrevocable
until all Payment Liabilities under this Agreement are paid and performed in
full and this Agreement is terminated. In the event any Company at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required herein or to pay any premium in whole or in part relating
thereto when due, then Agent, without waiving or releasing any obligation of or
default by Borrower hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which Requisite
Lenders deem advisable. All sums so disbursed by Agent, including Attorneys'
Fees, court costs, expenses and other charges relating thereto, shall be payable
on demand by Borrower to Agent, and Agent may, in its sole and absolute
discretion, advance such sums to Borrower as a Revolving Loan.
5.7. Repair.
-------
Maintain, preserve and keep, and cause each other Company to
maintain, preserve and keep, its Equipment and other properties in good
operating condition and repair, ordinary wear and tear and casualty excepted;
and from time to time make, and cause each other Company to make, all reasonable
and proper repairs, renewals, replacements, additions, betterments and
improvements thereto and to such extent so that at all times the efficiency
thereof shall be fully preserved and maintained in all material respects.
5.8. Taxes.
------
Pay, and cause each other Company to pay, when due, all of its
Taxes, unless and only to the extent that such Company is contesting such Taxes
in good faith and by appropriate proceedings and such Company has set aside on
its books such reserves or other appropriate provisions therefor as may be
required by GAAP; not file a consolidated tax return together with any other
Person other than the other Companies and Holdings, unless consented to in
writing by Agent; not, and not permit any Subsidiary to, enter into any tax
sharing arrangement except as described on SCHEDULE 5.8; and not change, or
permit any other Company to change, its Fiscal Year or tax year without Agent's
prior written consent.
5.9. Compliance.
-----------
Comply, and cause each other Company to comply, with all
statutes and governmental rules and regulations applicable to it, except where
the failure to so comply would not be reasonably likely to have a Material
Adverse Effect.
5.10. Pension Plans.
--------------
Not permit, and not permit any other Company to permit, any
condition to exist in connection with any Pension Plan that would reasonably be
expected to constitute grounds for the PBGC to institute proceedings to have
such Pension Plan terminated or a trustee appointed to
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administer such Pension Plan, which is reasonably likely to have a Material
Adverse Effect; not fail, and not permit any other Company to fail, to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA; and not engage in, or permit to
exist or occur, or permit any other Company to engage in, or permit to exist or
occur, any other condition, event or transaction with respect to any Pension
Plan which could result in the incurrence by such Company of any liability, fine
or penalty, which is reasonably likely to have a Material Adverse Effect.
5.11. Merger, Purchase and Sale.
--------------------------
Not, and not permit any other Company to: (a) be a party to
any merger, liquidation or consolidation, except that any Subsidiary may merge
or consolidate with, or liquidate into, any other Subsidiary or merge or
consolidate with, or liquidate into, the Borrower; (b) except for sales of
Inventory in the normal course of its business and sales of Equipment permitted
pursuant to SECTION 3.4(a), sell, transfer, convey, lease or otherwise dispose
of any of its property, (c) sell or assign, with or without recourse, any
Accounts Receivable, notes receivable or chattel paper, except as provided in
this Agreement and (d) except for Permitted Acquisitions, purchase or otherwise
acquire all or substantially all of the assets or stock of any Person.
5.12. Restricted Payments.
--------------------
Except as contemplated in connection with the Acquisition, not
purchase or redeem, or permit any other Company to purchase or redeem, any
shares of its stock, declare or pay any distributions or dividends (other than
stock dividends) or set aside any funds for any such purpose or prepay, purchase
or redeem any Subordinated Debt or any of the Indebtedness evidenced by the
Senior Note Documents. Notwithstanding the foregoing, the provisions of SECTION
5.12 shall not prohibit: (a) the payment of any dividend by any Subsidiary to
Borrower; (b) the acquisition of any shares of Capital Stock of Borrower, either
(i) solely in exchange for shares of Capital Stock of Borrower or (ii) if no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing, through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of Borrower) of shares of
Capital Stock of Borrower; (c) if no Event of Default or Unmatured Event of
Default shall have occurred and be continuing, the acquisition, prepayment or
redemption of the Subordinated Debt or any Indebtedness evidenced by the Senior
Note Documents, either (i) solely in exchange for shares of Capital Stock of
Borrower or (ii) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of Borrower) of shares of
Capital Stock of Borrower; (d) payments by Borrower to Holdings pursuant to and
in accordance with the Tax Sharing Agreement; (e) payments by Borrower to
Holdings to pay the reasonable out-of-pocket operating expenses incurred by
Holdings for the benefit of Borrower and in its capacity as holding company for
Borrower so long as the aggregate amount of such payments in any Fiscal Year
does not exceed One Hundred Thousand Dollars ($100,000); or (f) payments by
Borrower to redeem or repurchase or to enable Holdings to redeem or repurchase
Capital Stock of Borrower or Holdings, as the case may be, or Equity Interests
issued to or on behalf of directors, officers and employees of Borrower or any
of its Subsidiaries pursuant to Borrower's standard policy with respect to
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employees of Borrower or its Subsidiaries who have died or become disabled or
whose employment has been terminated or pursuant to the terms of employment
contracts, other agreements or employee benefit plans of Holdings or any Company
so long as no Event of Default then exists or would be caused thereby and the
aggregate amount of such payments during any Fiscal Year does not exceed Three
Hundred Thousand Dollars ($300,000) (the "Annual Stock Repurchase Limit") and
during the term of this Agreement does not exceed Seven Hundred Fifty Thousand
Dollars ($750,000); provided, that if the payments by Borrower under clause (f)
in any Fiscal year do not exceed the Annual Stock Repurchase Limit, the
unutilized amount may be utilized solely in the succeeding Fiscal Year.
5.13. Stock.
------
Not take any action, or permit any other Company to take any
action, which would result in a decrease in any Company's ownership interest in
any Subsidiary.
5.14. Indebtedness.
-------------
Not, and not permit any other Company to, incur or permit to
exist any Indebtedness (including but not limited to Indebtedness as lessee
under Capitalized Leases and including any intercompany Indebtedness among the
Companies), except: (a) the Liabilities; (b) the Seller Subordinated Debt and
other Indebtedness of a Company having maturities and terms, and which is
subordinated to payment of the Liabilities, in a manner approved in writing by
Requisite Lenders; (c) Indebtedness of XPE GmbH and XPE Ltda. to Borrower in an
amount not to exceed Five Million Dollars ($5,000,000) at any time; (d) other
Indebtedness of XPE GmbH not to exceed Five Hundred Thousand Dollars ($500,000)
at any time; (e) Indebtedness of XPE Ltda. not to exceed Five Hundred Thousand
Dollars ($500,000) at any time; (f) other Indebtedness outstanding on the date
hereof and listed on SCHEDULE 5.14; (g) Indebtedness in connection with Liens
permitted under SECTION 5.15(C), so long as the aggregate amount of such
Indebtedness outstanding at any time does not exceed One Million Dollars
($1,000,000); (h) Indebtedness of any Subsidiary of Borrower to another
Subsidiary of Borrower; (i) Indebtedness arising from guarantees permitted by
SECTION 5.16; (j) Indebtedness arising from the repurchase of Common Stock or
Equity Interests if otherwise permitted under SECTION 5.12; (k) other
Indebtedness of a Company so long as the aggregate amount of such other
Indebtedness of the Companies outstanding at any time does not exceed Two
Hundred Fifty Thousand Dollars ($250,000) and (l) other Indebtedness approved in
writing by Requisite Lenders.
5.15. Liens.
------
Not, and not permit any other Company to, create or permit to
exist any Lien with respect to any property, revenue or assets now owned or
hereafter acquired, except: (a) Liens in favor of Agent, for the benefit of
itself, Issuer and Lenders; (b) without duplication, Liens referred to in
SECTION 4.9; (c) Liens in connection with the acquisition of fixed assets after
the date hereof by way of purchase money mortgage, conditional sale or other
title retention agreement, Capitalized Lease or other deferred payment contract,
and attaching only to the property being acquired, if the Indebtedness secured
thereby does not exceed one hundred percent of the fair
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market value of such property at the time of the acquisition thereof and so long
as the Companies are in compliance with Section 5.26 after the acquisition of
such property; (d) Liens on the assets of XPE GmbH to secure the Indebtedness
permitted under SECTION 5.14(c) and SECTION 5.14(d); (e) Liens on the assets of
XPE Ltda. to secure the Indebtedness permitted under SECTION 5.14(c) and SECTION
5.14(e); (f) Liens filed in connection with one or more judgments entered
against any of the Companies, but only to the extent (i) the aggregate amount of
such judgments secured by Liens does not exceed Five Hundred Thousand Dollars
($500,000), (ii) such judgments have been stayed pending appeal, and (iii) a
bond or letter of credit has been posted in the full amount of such judgments;
(g) other Liens on the property of a Company (other than the Accounts Receivable
or Inventory of Borrower) so long as the aggregate amount secured by such Liens
does not exceed Two Hundred Fifty Thousand Dollars ($250,000); and (h) Liens
consented to in writing by Requisite Lenders.
5.16. Guaranties.
-----------
Not, and not permit any other Company to, become or be a
guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for (a)
the endorsement, in the ordinary course of collection, of instruments payable to
it or its order, (b) any guaranty of the Liabilities in favor of Agent, Issuer
and Lenders, (c) guarantees of loans and advances by third parties to employees
and officers of any Company for bona fide business purposes, provided that the
aggregate amount of such guarantees outstanding at any time does not exceed
$250,000; and (d) any guaranty by a Company of any Indebtedness of any other
Company (provided, that the aggregate amount of such guarantees by Borrower
outstanding at any time does not exceed Two Million Dollars ($2,000,000).
5.17. Investments.
------------
Not, and not permit any other Company to, make or permit to
exist any Investment in any Person, except for: (a) advances to employees of
such Company for travel or other ordinary business expenses provided that the
aggregate amount outstanding at any one time for all Companies shall not exceed
Two Hundred Fifty Thousand Dollars ($250,000); (b) Investments (other than
loans) outstanding on the date hereof and listed on SCHEDULE 5.17; (c)
extensions of credit in the nature of Accounts Receivable or notes receivable
arising from the sale of goods and services in the ordinary course of business;
(d) shares of stock, obligations or other securities received in settlement of
claims arising in the ordinary course of business; (e) Investments in Cash
Equivalent Investments; (f) Investments constituting loans by Borrower to XPE
GmbH and XPE Ltda. not to exceed Five Million Dollars ($5,000,000) at any time;
(g) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (h) Investments in New
Subsidiaries permitted in connection with, and to the extent necessary to
consummate, Permitted Acquisitions; (i) Investments by Borrower or any
Subsidiary of Borrower in Persons not to exceed
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One Million Dollars ($1,000,000) in the aggregate at any one time outstanding;
and (j) other Investments consented to by Requisite Lenders in writing.
5.18. Subsidiaries.
-------------
Not, and not permit any other Company to, acquire any stock or
similar interest in any Person or create, establish or acquire any Subsidiaries
other than those existing on the date of this Agreement or in connection with a
Permitted Acquisition.
5.19. Intentionally Omitted.
----------------------
5.20. Environmental Issues.
---------------------
Provide such information and certifications as Requisite
Lenders may reasonably request from time to time at reasonable intervals
pertaining to the environmental aspects of each Company and any property owned,
operated or controlled by any Company. In order to investigate environmental
aspects of each Company and its properties, facilities and operations, Agent and
its agents shall have the right at reasonable intervals during normal business
hours and upon reasonable notice to enter upon the property of such Company,
take samples (but only if an Event of Default exists and is continuing), review
the books, records or other documents of such Company, interview officers and
employees of such Company, and conduct such other activities as Requisite
Lenders, in their reasonable discretion, deems appropriate. Borrower shall, and
shall cause each other Company to, cooperate fully in the conduct of any such
investigation. If Requisite Lenders decide to cause any such investigation to be
conducted because of (a) Requisite Lenders' considering taking possession of or
title to the property during the continuance of an Event of Default or (b) a
material change in the use of the property, which in Requisite Lenders'
reasonable opinion, materially increases the risk of noncompliance with
Environmental Laws or materially increases the risk of cost or liabilities
thereunder, then Borrower shall pay upon demand all costs and expenses
(including Attorneys' Fees) connected with such investigation. Upon at least two
(2) Banking Days' advance notice to Borrower (or during the continuance of an
Event of Default, without notice to Borrower), Agent, may, in its discretion,
provide for the payment of any amount due from Borrower under this SECTION 5.20
by making a Revolving Loan to Borrower. Nothing in this SECTION 5.20, and no
actions taken by Agent or any Lender pursuant thereto, shall give, or be
construed as controlling, or giving to Agent or any Lender the right or
obligation to direct or control, the conduct or action or inaction of any
Company with respect to any environmental matters, including but not limited to
those pertaining to compliance with any Environmental Laws.
5.21. Related Agreements.
-------------------
After the date hereof, not enter into, or permit any other
Company to enter into, any agreement containing any provision which would be
violated or breached by the performance by such Company of its obligations
hereunder or under any Related Agreement or any instrument or document delivered
or to be delivered by such Company in connection herewith.
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5.22. Unconditional Purchase Options.
-------------------------------
Not enter into or be a party to, or permit any other Company
to enter into or be a party to, any contract for the purchase of materials,
supplies or other property or services, if such contract requires that payment
be made by it regardless of whether or not delivery is ever made of such
materials, supplies or other property or services.
5.23. Use of Proceeds.
----------------
Not use or permit, or permit any other Company to use or
permit, any proceeds of the Loans or Letters of Credit to be used, either
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock, and furnish to Agent
upon request, a statement in conformity with the requirements of Federal Reserve
Form U-l referred to in Regulation U of the Board of Governors of the Federal
Reserve System.
5.24. Transactions with Related Parties.
----------------------------------
Not, and not permit any other Company to, enter into or be a
party to any other transaction or arrangement, including without limitation the
purchase, sale, lease or exchange of property or the rendering of any service,
with any Related Party, except in the ordinary course of such Company's business
and upon terms no less favorable to such Company than those that might
reasonably have been obtained in a comparable arm's-length transaction with a
Person not a Related Party. Notwithstanding the foregoing, the provisions of
this SECTION 5.24 shall not prohibit (i) reasonable fees paid to and indemnity
provided on behalf of, directors of Borrower or any of its Subsidiaries as
determined in good faith by Borrower's Board of Directors so long as the
aggregate amount of fees paid to directors in any Fiscal Year does not exceed
One Hundred Thousand Dollars ($100,000); (ii) payments permitted by SECTION
5.12; (iii) payments not to exceed Five Hundred Thousand Dollars ($500,000) in
any Fiscal Year made pursuant to the Advisory Services Agreement as of the date
hereof by and between Borrower and Kirtland Capital Corp., as in effect on the
Closing Date so long as an Event of Default is not in existence and continuing
or would be caused thereby; and (iv) payments made pursuant to and in accordance
with the Subordination Debt to the extent permitted under the Subordination
Agreement.
5.25. Amendment of Documents.
-----------------------
Not, and not permit any other Company to, amend, modify or
alter, or permit to be amended, modified or altered: (a) any of the Acquisition
Documents or Senior Note Documents if the effect of such amendment or
modification is to (i) increase the principal amount of Indebtedness evidenced
by any such documents, (ii) accelerate any date fixed for any payment of
principal or interest on the Indebtedness evidenced by any such documents, (iii)
increase the interest rate or any fees or charges, or add any fees or charges,
payable in connection with the Indebtedness evidenced by any such documents,
(iv) make any covenant, default or other provision contained therein more
restrictive on Borrower, or (v) amend or modify any provision of any such
documents in a manner adverse to Lenders; or (b) agreement, instrument or
document evidencing any of the Indebtedness listed on SCHEDULE 5.14.
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5.26. Capital Expenditures Limitation.
--------------------------------
Not permit Capital Expenditures for the three (3) month period
ending December 31, 1996 to be greater than Four Million Five Hundred Thousand
Dollars ($4,500,000), and not permit Capital Expenditures in any Fiscal Year set
forth below to be greater than the amount set forth opposite such Fiscal Year:
Fiscal Year Amount
----------- ------
1997 $9,000,000
1998 $5,000,000
1999 and each Fiscal Year thereafter $4,500,000
5.27. Minimum Fixed Charge Coverage Ratio.
------------------------------------
Not permit Fixed Charge Coverage for the twelve (12) month
period ending the last day of each calendar quarter ending during the periods
(inclusive) set forth below to be less than the ratio set forth opposite such
period:
Period Ratio
------ -----
December 31, 1996 through September 30, 1998 1.40:1.00
December 31, 1998 through September 30, 1999 1.35:1.00
December 31, 1999 through September 30, 2000 1.05:1.00
December 31, 2000 and the last day of each 1.25:1.00
calendar quarter thereafter
5.28. Minimum Net Worth.
------------------
Not permit Net Worth as of the last day of each calendar
quarter ending during the periods (inclusive) set forth below to be less than
the amount set forth opposite such period:
Period Amount
------ ------
December 31, 1996 through March 31, 1997 Base Net Worth
June 30, 1997 through September 30, Base Net Worth +
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Period Amount
------ ------
1997 $1,200,000
December 31, 1997 through March 31, 1998 Base Net Worth + $2,400,000
June 30, 1998 through September 30, 1998 Base Net Worth + $4,500,000
December 31, 1998 through March 31, 1999 Base Net Worth + $6,600,000
June 30, 1999 through September 30, 1999 Base Net Worth + $9,900,000
December 31, 1999 through March 31, 2000 Base Net Worth + $13,200,000
June 30, 2000 through September 30, 2000 Base Net Worth + $17,250,000
December 31, 2000 through March 31, 2001 Base Net Worth + $21,300,000
June 30, 2001 and the last day of each Base Net Worth + $25,600,000
calendar quarter thereafter
5.29. Maximum Leverage.
-----------------
Not permit the Leverage Ratio as of the last day of each
calendar quarter ending during the periods (inclusive) set forth below to be
more than the ratio set forth opposite such period:
Period Ratio
------ -----
December 31, 1996 through September 30, 1997 6.00:1.00
December 31, 1997 through September 30, 1998 6.00:1.00
December 31, 1998 through September 30, 1999 5.15:1.00
December 31, 1999 through September 4.45:1.00
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Period Ratio
------ -----
30, 2000
December 31, 2000 and the last day of each 3.90:1.00
calendar quarter thereafter
5.30. Minimum Interest Coverage Ratio.
--------------------------------
Not permit Interest Coverage for the twelve (12) month period
ending the last day of each calendar quarter ending during the periods
(inclusive) set forth below to be less than the ration set forth opposite such
period:
Period Ratio
------ -----
December 31, 1996 through September 30, 1998 1.50:1.00
December 31, 1998 through September 30, 1999 1.75:1.00
December 31, 1999 through September 30, 2000 2.00:1.00
December 31, 2000 and the last day of each 2.20:1.00
calendar quarter thereafter
5.31. Collateral at Sales Offices.
----------------------------
Not permit the book value of the Collateral at the sales
offices referred to on SCHEDULE 4.12 to exceed Two Hundred Thousand Dollars
($200,000) at any time.
6. DEFAULT.
6.1. Event of Default.
-----------------
Each of the following shall constitute an Event of Default
under this Agreement:
(a) NON-PAYMENT. Default in the payment, when due or declared
due, of any amount of principal of any Loan, or default in the payment, within
three (3) days after the same shall become due, of any of the other Payment
Liabilities.
(b) NON-PAYMENT OF OTHER INDEBTEDNESS. Default in the payment
when due, whether by acceleration or otherwise, after giving effect to the
expiration of any applicable grace period, if any, of any Indebtedness of, or
guaranteed by, any Company or any other Obligor with a principal balance
aggregating in excess of Four Hundred Thousand Dollars ($400,000) (other than
any Indebtedness under this Agreement and any Notes).
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(c) ACCELERATION OF OTHER INDEBTEDNESS. Any event or condition
shall occur which, after giving effect to the expiration of any applicable grace
period, if any, either (i) results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, any Company or any other Obligor with a
principal balance in aggregating excess of Four Hundred Thousand Dollars
($400,000) (other than the Indebtedness under this Agreement and any Notes), or
(ii) enables the holder or holders of such other Indebtedness or any trustee or
agent for such holders to accelerate the maturity of such other Indebtedness.
(d) OTHER OBLIGATIONS. Default in the performance or
observance of any obligation or agreement (other than default in the payment
when due of Indebtedness) of any Company or any other Obligor to or with any
other Person involving an amount in excess of Four Hundred Thousand Dollars
($400,000) unless such default is being contested by such Company or such
Obligor, as the case may be, in good faith and by appropriate proceedings and
such Company or such Obligor, as applicable, shall have set aside on its books
such reserves or other appropriate provisions therefor as may be required by
GAAP, and so long as such default is not reasonably likely to have a Material
Adverse Effect.
(e) BANKRUPTCY. Any Company or any other Obligor applies for,
consents to, or acquiesces in the appointment of a trustee, receiver or other
custodian for such Company or such other Obligor, or for a substantial part of
the property of such Company or such other Obligor, or makes a general
assignment for the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed for
such Company or such other Obligor, or for a substantial part of the property of
such Company or such other Obligor and is not discharged or dismissed within
sixty (60) days; or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by such Company or such other Obligor; or,
in the absence of application, consent or acquiescence, any bankruptcy,
reorganization, debt arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceedings, is instituted
against such Company or such Obligor and is not discharged or dismissed within
sixty (60) days; or any warrant of attachment or similar legal process is issued
against any substantial part of the property of such Company or such other
Obligor.
(f) INSOLVENCY. Any Company or any other Obligor becomes
insolvent, or generally fails to pay, or admits in writing its inability to pay,
its debts as they mature.
(g) ERISA LIABILITIES. Any of the following events shall have
occurred, if such event is reasonably likely to have a Material Adverse Effect:
(i) the existence of a Reportable Event, (ii) the withdrawal of any Company or
any ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the
occurrence of an obligation to provide affected parties with a written notice of
intent to terminate a Pension Plan in a distress termination under Section 4041
of ERISA, (iv) the institution by PBGC of proceedings to terminate any Pension
Plan, (v) any event or condition that would require the appointment of a trustee
to administer a Pension Plan, and (vi) the withdrawal of any Company or any
ERISA Affiliate from a Multiemployer Plan.
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(h) NON-COMPLIANCE WITH THIS AGREEMENT. Default in the
performance of any of the agreements set forth in SECTIONS 5.5 or 5.11 through
5.31 (and not constituting an Event of Default under any of the other
subsections of this SECTION 6.1); or default in the performance of any of the
agreements set forth in SECTION 5.1.1, 5.1.2, 5.1.3, 5.1.4, 5.2 or 5.6 (and not
constituting an Event of Default under any of the other subsections of this
SECTION 6.1), and continuance of such default for five (5) days after the
occurrence thereof; or default in the performance of any other agreements herein
set forth (and not constituting an Event of Default under any of the other
subsections of this SECTION 6.1), and continuance of such default for thirty
(30) days after the occurrence thereof.
(i) NON-COMPLIANCE WITH RELATED AGREEMENTS. Default in the
performance by any Company or any other Obligor of any of its agreements set
forth in any Related Agreement (and not constituting an Event of Default under
any of the other subsections of this SECTION 6.1), and continuance of such
default after notice from Agent and the expiration of the grace or cure period
(if any) set forth therein.
(j) NON-COMPLIANCE WITH SENIOR NOTE DOCUMENTS, SUBORDINATED
DEBT OR ACQUISITION Documents. An "Event of Default" as defined in the Senior
Note Documents shall occur or a default in the performance by any Company or any
other Obligor of any of its agreements set forth in any agreement, instrument or
document evidencing any Subordinated Debt or in any Acquisition Document (and
not constituting an Event of Default under any of the other subsections of this
SECTION 6.1), and continuance of such default after the expiration of the grace
or cure period (if any) set forth therein.
(k) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by any Company or any other Obligor herein (including without
limitation any representation or warranty contained in SECTION 3.2 or 3.3) or in
any Related Agreement is untrue or misleading in any material respect when made
or deemed made; or any schedule, statement, report, notice, certificate or other
writing furnished by any Company or any other Obligor to Agent or any Lender is
untrue or misleading in any material respect on the date as of which the facts
set forth therein are stated or certified; or any certification made or deemed
made by any Company or any other Obligor to Agent or any Lender is untrue or
misleading in any material respect on or as of the date made or deemed made.
(l) LITIGATION. There shall be entered against any of the
Companies and the other Obligors as a group one or more judgments or decrees
involving the payment of monies in excess of Five Hundred Thousand Dollars
($500,000) in the aggregate at any one time outstanding, excluding those
judgments or decrees (i) that shall have been outstanding less than thirty (30)
calendar days from the entry thereof, (ii) for and to the extent which such
Company or such Obligor, as applicable, is insured and with respect to which the
insurer has assumed responsibility in writing or for and to the extent which
such Company or such Obligor, as applicable, is indemnified under the
Recapitalization Agreement or is otherwise indemnified, if the terms of such
other indemnification are satisfactory to Requisite Lenders or (iii) which have
been stayed pending appeal and with respect to which such Company or such
Obligor has posted any
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required bond or letter of credit and in connection with which no property of
any Company or any other Obligor has been attached.
(m) TERMINATION OF OBLIGATIONS. If any Obligor shall terminate
any of its obligations to Agent or any Lender in respect of the Liabilities
(except if such obligations terminate as the result of a merger, liquidation or
consolidation of a Subsidiary with or into Borrower).
(n) VALIDITY. If the validity or enforceability of this
Agreement, any Related Agreement or any Acquisition Document shall be challenged
by any Company, any other Obligor or any other Person, which challenge shall
remain for thirty (30) days undismissed, or if this Agreement, any Related
Agreement or any Acquisition Document shall fail to remain in full force and
effect (except if a Related Agreement fails to remain in effect as a result of
the merger, consolidation or liquidation of a Subsidiary with or into Borrower);
provided, that any challenge by any Person (other than a Company or Obligor) of
the validity or enforceability of the collateral assignment of any patent or
trademark not material to business of Borrower shall not constitute an Event of
Default..
(o) CONDUCT OF BUSINESS. If any Company or any other Obligor
is enjoined, restrained or in any way prevented by court order, which has not
been dissolved or stayed within ten (10) days, from conducting all or any
material part of its business affairs.
(p) EXCESS AVAILABILITY. If Excess Availability is less than
Ten Million Dollars ($10,000,000) after giving effect to any principal payment
in respect of the Seller Subordinated Debt.
(q) MATERIAL ADVERSE CHANGE. A Material Adverse Change shall
have occurred.
(r) CHANGE OF CONTROL. Any Change of Control (as defined in
the Senior Note Documents as in effect on the Closing Date) shall have occurred.
6.2. Effect of Event of Default; Remedies.
-------------------------------------
(a) In the event that one or more Events of Default described
in SECTION 6.1(e) shall occur and be continuing, then each Lender's commitment
and the Credit extended under this Agreement shall terminate and all Liabilities
hereunder and under any Notes shall be immediately due and payable without
demand, notice or declaration of any kind whatsoever.
(b) In the event an Event of Default other than one described
in SECTION 6.1(e) shall occur and be continuing, at the option of Requisite
Lenders, each Lender's commitment shall terminate and all Liabilities hereunder
and under any Notes shall immediately be due and payable without demand or
notice of any kind whatsoever, whereupon the Credit extended under this
Agreement shall terminate. Agent shall promptly advise Borrower of any such
declaration, but failure to do so shall not impair the effect of such
declaration.
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(c) In the event of the occurrence and continuance of any
Event of Default, Agent may, and at the request of Requisite Lenders shall,
exercise any one or more or all of the following remedies, all of which are
cumulative and non-exclusive:
(i) Any remedy contained in this Agreement or in any of the
Related Agreements or any Supplemental Documentation;
(ii) Any rights and remedies available to Agent or any Lender
under the UCC, and any other applicable law;
(iii) To the extent permitted by applicable law, Agent may,
without notice, demand or legal process of any kind, take possession of
any or all of the Collateral (in addition to Collateral which it may
already have in its possession), wherever it may be found, and for that
purpose may pursue the same wherever it may be found, and may enter
into any premises where any of the Collateral may be or is supposed to
be, and search for, take possession of, remove, keep and store any of
the Collateral until the same shall be sold or otherwise disposed of,
and Agent shall have the right to store the same in any of Borrower's
premises without cost to Agent;
(iv) At Agent's request, Borrower will, at Borrower's expense,
assemble the Collateral and make it available to Agent at a place or
places to be designated by Agent which is reasonably convenient to
Agent and Borrower; and
(v) Agent at its option, and pursuant to notification given to
Borrower as provided for below, may sell any Collateral actually or
constructively in its possession at public or private sale and apply
the proceeds thereof as provided below.
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND AGENT'S RIGHTS.
7.1. Notice of Disposition of Collateral.
------------------------------------
Any notification of intended disposition of any of the
Collateral required by law shall be deemed reasonably and properly given if
given at least five (5) calendar days before such disposition.
7.2. Application of Proceeds of Collateral.
--------------------------------------
During the continuance of an Event of Default, any proceeds of
the Collateral may be applied by Agent to the payment of expenses in connection
with the taking possession of, storing, preparing for sale, and disposition of
Collateral, including Attorneys' Fees and legal
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expenses, and any balance of such proceeds may be applied by Agent toward the
payment of such of the Payment Liabilities, and in such order of application, as
Agent may from time to time elect.
7.3. Care of Collateral.
-------------------
Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if it takes such
action for that purpose as Borrower requests in writing, but failure of Agent to
comply with such request shall not, of itself, be deemed a failure to exercise
reasonable care, and no failure of Agent to preserve or protect any rights with
respect to such Collateral against prior parties, or to do any act with respect
to the preservation of such Collateral not so requested by Borrower, shall be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.
7.4. Performance of Borrower's Obligations.
--------------------------------------
During the continuance of an Event of Default, Agent shall
have the right, but shall not be obligated, to discharge any claims or Liens
against, and any Taxes at any time levied or placed upon any or all Collateral,
including without limitation those arising under statute or in favor of
landlords, taxing authorities, government, public and/or private warehousemen,
common and/or private carriers, processors, finishers, draymen, coopers, dryers,
mechanics, artisans, laborers, attorneys, courts, or others. During the
continuance of an Event of Default, Agent may also pay for maintenance and
preservation of Collateral. Agent may, but is not obligated to, perform or
fulfill any of Borrower's responsibilities under this Agreement which Borrower
has failed to perform or fulfill. Agent may advance to Borrower as a Revolving
Loan any payment made or expense incurred under this SECTION 7.4.
7.5. Agent's Rights.
---------------
None of the following shall affect the obligations of any
Company or any other Obligor to Agent or any Lender under this Agreement or
Agent's right with respect to the remaining Collateral (any or all of which
actions may be taken by Agent at any time, whether before or after an Event of
Default, at its sole and absolute discretion and without notice to Borrower):
(a) acceptance or retention by Agent or any Lender of other
property or interests in property as security for the Liabilities, or acceptance
or retention of any Obligor(s), in addition to Borrower, with respect to any of
the Liabilities;
(b) release of its Lien on, or surrender or release of, or the
substitution or exchange of or for, all or any part of the Collateral or any
other property securing any of the Liabilities (including but not limited to any
property of any Obligor other than Borrower), or any extension or renewal for
one or more periods (whether or not longer than the original period), or
release, compromise, alteration or exchange, of any obligations of any guarantor
or other Obligor with respect to any Collateral or any such property;
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(c) extension or renewal for one or more periods (whether or
not longer than the original period), or release, compromise, alteration or
exchange of any of the Liabilities, or release or compromise of any obligation
of any Obligor with respect to any of the liabilities; or
(d) failure by Agent or any Lender to resort to other security
or pursue any Person liable for any of the Liabilities before resorting to the
Collateral.
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS.
8.1. Conditions Precedent to Initial Loans and Letters of Credit.
------------------------------------------------------------
The obligation of each Lender that is a party to this
Agreement on the date hereof to make the initial Loans and for Issuer to issue
the initial Letters of Credit, if any, is subject to satisfaction of the
following conditions precedent (in addition to those provided in SECTION 8.2):
8.1.1. Audit.
------
Agent and Lenders shall have completed their due diligence
audit of the business, operations and assets of Borrower and each other Company,
the results of which shall provide Agent and Lenders with results and
information which, in their sole determination are satisfactory to permit them
to enter into the secured financing transaction described in this Agreement and
the Related Agreements.
8.1.2. Security Interest.
------------------
The security interest in the Collateral granted under this
Agreement and the Related Agreements, and all other Liens granted to Agent, for
the benefit of itself, Issuer and Lenders, to secure the Liabilities, shall be a
senior, perfected Lien except as otherwise agreed by Requisite Lenders or as
otherwise permitted herein, and all financing statements and other documents
relating to Collateral shall have been filed or recorded, as appropriate.
8.1.3. Litigation.
-----------
No material litigation shall have been instituted against
Holdings, any Company or Sellers relating to the transactions contemplated by
the Recapitalization Agreement or this Agreement.
8.1.4. Solvency.
---------
After giving effect to the initial Loans made hereunder and
the initial Letters of Credit issued hereunder, Borrower shall have sufficient
assets having a value, both at present fair salable value and at fair valuation,
greater than the amount of Borrower's liabilities (including trade debt and
Indebtedness to Lenders). Lenders shall be satisfied that all of the assets
supporting the Loans and Letters of Credit under this Agreement shall be
sufficient in value to provide Borrower
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with sufficient cash flow and working capital to enable it to profitably operate
its business and to meet its obligations as they become due.
8.1.5. Loan Availability.
------------------
Immediately after making the initial Loans (and after giving
effect to the payment of all fees and expenses incurred, or to be incurred, by
Borrower), Borrower shall, under the terms and conditions of this Agreement,
have Excess Availability of at least Twelve Million Dollars ($12,000,000).
8.1.6. Equity and Subordinated Debt Investment in Borrower.
----------------------------------------------------
Holdings shall have received contributions to capital from its
shareholders of at least Twenty-Seven Million Dollars ($27,000,000) in cash and
Holdings shall have contributed to Borrower cash of at least Seventeen Million
Dollars ($17,000,000) in exchange for Borrower's common stock and Ten Million
Dollars ($10,000,000) shall be paid by Holdings to Sellers to satisfy its
obligations with respect to the non-competition agreement executed in connection
with the Acquisition Agreement.
8.1.7. Senior Notes.
-------------
Borrower shall have issued the Senior Notes pursuant to the
Senior Note Documents, the terms of which shall be acceptable to Lenders, and
Borrower shall have received net cash proceeds of at least One Hundred Million
Dollars ($100,000,000) in exchange therefor (less any underwriting discount).
8.1.8. Effect of Law.
--------------
No law or regulation affecting Agent's or any Lender's
entering into the secured financing transaction contemplated by this Agreement
shall impose upon Agent or any Lender any material obligation, fee, liability,
loss, cost, expense or damage.
8.1.9. Exhibits; Schedules.
--------------------
All Exhibits and Schedules to this Agreement shall have been
completed and submitted to Agent and Lenders, shall be in form and substance
satisfactory to Agent and Lenders and shall contain no facts or information
which Agent and Lenders, in their sole judgment, determine to be unacceptable.
8.1.10. Environmental Audit.
--------------------
Agent and Lenders shall have received environmental assessment
reports with respect to Borrower's owned and leased real property from an
environmental engineering firm acceptable to Agent, which assessments shall not
disclose any facts or information which Agent and Lenders, in their sole
judgment, determine to be unacceptable.
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8.1.11. Acquisition.
------------
The Acquisition shall have been consummated in accordance with
the terms of the Recapitalization Agreement and any other applicable documents
and in full compliance with applicable laws.
8.1.12. Fees.
-----
Lenders shall have received the closing fee referred to in the
Fee Letter and any other fees due and payable by Borrower on the funding of the
initial Loans and issuing the initial Letters of Credit.
8.1.13. Documents.
----------
Lenders shall have received all documents as Lenders shall
determine to be necessary and desirable, including without limitation, the
following documents, each duly executed where appropriate and dated as of the
date of the initial Loan (or such other date as shall be satisfactory to Agent),
in form and substance satisfactory to Agent:
(a) BORROWER RESOLUTIONS. A copy, duly certified by the
secretary or an assistant secretary of Borrower of (1) resolutions of the Board
of Directors of Borrower authorizing (A) the borrowings by Borrower hereunder,
(B) the execution, delivery and performance by Borrower of this Agreement, the
Notes, and each other Related Agreement to which Borrower is a party or by which
it is bound, and (C) certain officers or employees of Borrower to request
borrowings by telephone and to execute Borrowing Base Certificates, (2) all
documents evidencing any other necessary corporate action with respect to this
Agreement and the Related Agreements, and (3) all approvals or consents, if any,
with respect to this Agreement and the Related Agreements;
(b) BORROWER INCUMBENCY CERTIFICATE. A certificate of the
secretary of Borrower certifying the names of the officers of Borrower
authorized to sign this Agreement, the Notes, and each other Related Agreement
to which Borrower is a party or by which it is bound, and all other documents
and certificates to be delivered by Borrower hereunder, together with the true
signatures of such officers;
(c) REAL PROPERTY. With respect to the real property located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇:
(i) A Mortgage executed by Borrower;
(ii) An ALTA Loan Title Insurance Policy acceptable to Agent
and insuring Agent's Lien in an amount and with a title insurance
company acceptable to Agent and containing such endorsements as set
forth on SCHEDULE 8.1(C). The amount of coverage, exceptions to
coverage and status of title set forth in the policy shall be
acceptable to Agent;
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(iii) Copies of all documents of record concerning the real
property as shown on the commitment for the ALTA Loan Title Insurance
Policy;
(iv) An ALTA survey, certified in favor of Agent and the title
company; and
(v) If the real property is in a flood hazard area, flood
insurance, with standard noncontributory mortgagee clauses or
endorsement in favor of Agent and Lenders. The amount, terms of
coverage and insurer shall be reasonably acceptable to Agent;
(d) BORROWER'S CERTIFICATE. The certificate of the President
or Chief Financial Officer of Borrower certifying to the fulfillment of all
conditions precedent to closing and funding the secured financing transaction
contemplated by this Agreement and to the truth and accuracy, as of such date,
of the representations and warranties of Borrower contained in this Agreement,
and each Related Agreement to which Borrower is a party or by which it is bound;
(e) BY-LAWS. A copy, duly certified by the secretary or an
assistant secretary of Borrower, of the by-laws.
(f) BORROWER'S REGISTRATION; GOOD STANDING. A copy, duly
certified by the applicable Secretary of State, of (i) a certificate of good
standing issued by the Secretary of the State of Delaware and each other state
where Borrower is qualified to do business or where, because of the nature of
its business or properties, qualification to do business is required, (ii) a
certificate of qualification, registration to do business or other documents
required to be filed by Borrower to qualify to do business in each state
referred to in clause (i), and (iii) in any state in which Borrower is doing
business under an assumed name, a certificate or other document issued by the
Secretary of State of each such state evidencing Borrower's authority to use
such name;
(g) INSURANCE. Evidence satisfactory to Agent of the existence
of insurance on the Collateral and business of Borrower in amounts and with
insurers acceptable to Agent, together with evidence establishing that Agent is
named as a loss payee and/or additional insured, as applicable, as provided in
SECTION 5.6;
(h) DISBURSEMENT LETTER. Written authorization and
instructions from Borrower, in form satisfactory to Agent, for disbursement of
the proceeds of the initial Loans;
(i) OTHER RELATED AGREEMENTS. The other Related Agreements
(including without limitation the Subordination Agreement);
(j) SELLERS' DOCUMENTS. An Opinion of Sellers' counsel,
addressed to Agent and Lenders or upon which Agent and Lenders are expressly
permitted to rely;
(k) HOLDINGS' BY-LAWS. A copy, duly certified by the secretary
or an assistant secretary of Holdings, of Holdings' by-laws;
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(l) HOLDINGS' ARTICLES. A copy, duly certified by the
Secretary of State of Delaware, of Holdings, of Holdings' Certificate of
Incorporation;
(m) HOLDINGS' REGISTRATION; GOOD STANDING. A copy, duly
certified by the applicable Secretary of State of (i) a certificate of good
standing issued by the Secretary of the State of Delaware and each other state
where Holdings is qualified to do business or where, because of the nature of
its business or properties, qualification to do business is required, (ii) a
certificate of qualification, registration to do business or other documents
required to be filed by Holdings to qualify to do business in each state
referred to in clause (i), and (iii) in any state in which Holdings is doing
business under an assumed name, a certificate or other document issued by the
Secretary of State of each such state evidencing Holdings' authority to use such
name;
(n) LEGAL OPINION. Legal opinion from counsel for Borrower in
form and substance satisfactory to Agent; and
(o) OTHER DOCUMENTS. Such other documents as Agent and Lenders
shall determine to be necessary or desirable.
8.2. Continuing Conditions Precedent to all Loans; Certification.
------------------------------------------------------------
The obligation of each Lender to make the initial Loans and
each subsequent Loan and to establish any LIBOR Rate Loans and/or for Issuer to
issue the initial Letters of Credit and each subsequent Letter of Credit, is
subject to satisfaction of the following conditions precedent in addition to
those provided in SECTION 8.1:
(a) NO CHANGE IN CONDITION. No change in the assets, condition
or operations, financial or otherwise, of any Company or any other Obligor,
shall have occurred which change, in the reasonable credit judgment of Requisite
Lenders, is reasonably likely to have a Material Adverse Effect.
(b) DEFAULT. Before and after giving effect to such Loan
and/or Letter of Credit, no Event of Default or Unmatured Event of Default shall
have occurred and be continuing.
(c) REPRESENTATIONS AND WARRANTIES. Before and after giving
effect to such Loan and/or Letter of Credit, the representations and warranties
in SECTION 4 or incorporated in this Agreement by reference pursuant to SECTION
4.26 shall be true and correct in all material respects as though made on the
date of such Loan and/or Letter of Credit.
Each request for a Loan or Letter of Credit hereunder made or deemed to have
been made by Borrower shall be deemed to be a certificate of Borrower as to the
matters set out in the foregoing provisions of this SECTION 8.2.
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9. INDEMNITY.
9.1. Environmental and Safety and Health Indemnity.
----------------------------------------------
Borrower hereby indemnifies and agrees to hold Agent and each
Lender, and the officers, directors, employees, agents and affiliates of each of
Agent and each Lender (collectively, the "Indemnitees") harmless from and
against any and all losses, liabilities, damages, injuries, costs, claims and
reasonable expenses of any and every kind whatsoever (including without
limitation court costs and Attorneys' Fees) which at any time or from time to
time may be paid, incurred or suffered by, or asserted against, any of such
Indemnitees for, with respect to, or as a direct or indirect result of the
violation by, any Company of any Environmental Law or Occupational Safety and
Health Law, or with respect to, or as a direct or indirect result of (a) the
presence on or under, or the Release from, properties utilized by such Company
in the conduct of its business into or upon any land, the atmosphere, or any
watercourse, body of water or wetland, of any Hazardous Material or the escape,
seepage, leakage, spillage, disposal, discharge, emission or release of any
other hazardous or toxic waste, substance or constituent, or other substance
(including without limitation any losses, liabilities, damages, injuries, costs,
claims or reasonable expenses asserted or arising under any Environmental Law)
or (b) the existence of any unsafe or unhealthful condition on or at any
premises utilized by such Company in the conduct of its business; provided, that
Borrower shall not have any obligation to any Indemnitee hereunder with respect
to indemnified liabilities arising from any Indemnitee's gross negligence or
willful misconduct. The provisions of and undertakings and indemnification set
out in this SECTION 9.1 shall survive satisfaction and payment of the
Liabilities and termination of this Agreement.
9.2. General Indemnity.
------------------
In addition to the payment of expenses pursuant to SECTION
11.3, whether or not the transactions contemplated hereby shall be consummated,
Borrower hereby indemnifies and agrees to hold each Indemnitee harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, and reasonable expenses of any kind or
nature whatsoever (including without limitation the reasonable fees and
disbursements of counsel, and, without duplication, the allocated cost of
in-house counsel, for any of such Indemnities in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnities shall be designated a party thereto) that
may be imposed on, incurred by, or asserted against any Indemnitee, in any
manner relating to or arising out of this Agreement or any Related Agreement,
Agent's or any Lender's agreement to make the Loans or issue the Letters of
Credit hereunder, or the use or intended use of any of the Loans or Letters of
Credit hereunder or proceeds thereof (the "indemnified liabilities"); provided,
that Borrower shall not have any obligation to an Indemnitee hereunder with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of such Indemnitee. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall contribute the
maximum portion that it is permitted to pay under applicable law to the payment
and satisfaction of all indemnified liabilities incurred by the Indemnities or
any of them.
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The provisions of the undertakings and indemnification set out
in this SECTION 9.2 shall survive satisfaction and payment of the Liabilities
and termination of this Agreement.
9.3. Capital Adequacy.
-----------------
If Agent or any Lender shall reasonably determine that the
application or adoption after the date hereof of any law, rule, regulation,
directive, interpretation, treaty or guideline regarding capital adequacy, or
any change therein or in the interpretation or administration thereof, whether
or not having the force or law (including without limitation application of
changes to Regulation H and Regulation Y of the Federal Reserve Board issued by
the Federal Reserve Board on January 19, 1989 and regulations of the Comptroller
of the Currency, Department of the Treasury, 12 CFR Part 3, Appendix A, issued
by the Comptroller of the Currency on January 27, 1989) increases the amount of
capital required or expected to be maintained by Agent or such Lender or any
Person controlling Agent or such Lender in excess of the amount required as of
the date hereof, and such increase is based upon the existence of Agent's or
such Lender's obligations hereunder and other commitments of this type, then
from time to time, within thirty (30) days after demand from Agent or such
Lender, Borrower shall pay to Agent or such Lender, as applicable, such amount
or amounts as will compensate Agent or such Lender or such controlling Person,
as the case may be, for such increased capital requirement. The determination of
any amount to be paid by Borrower under this SECTION 9.3 shall take into
consideration the policies of Agent or such Lender or any Person controlling
Agent or such Lender with respect to capital adequacy and shall be based upon
any reasonable averaging, attribution and allocation methods. A certificate of
Agent or such Lender, as applicable, setting forth the amount or amounts as
shall be necessary to compensate Agent or such Lender as specified in this
SECTION 9.3 shall be delivered to Borrower and shall be conclusive in the
absence of manifest error.
10. AGENT.
10.1. Appointment of Agent.
---------------------
Each Lender hereby irrevocably appoints and authorizes BAI to
act as its Agent under this Agreement and the Related Agreements. Each Lender
hereby irrevocably appoints and authorizes Agent to take such action on such
Lender's behalf under the provisions of this Agreement and the Related
Agreements and to exercise such powers and perform such duties under this
Agreement and the Related Agreements as are specifically delegated to Agent by
the terms hereof and thereof, together with such other powers as are reasonably
incidental hereto and thereto. Agent may perform any of its duties hereunder or
under the Related Agreements by or through its agents or employees. The
provisions of this SECTION 10 are solely for the benefit of Agent and Lenders,
and neither Borrower nor any other Obligor shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement and the Related Agreements, Agent shall act
solely as agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for
Borrower or any other Obligor.
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10.2. Nature of Duties of Agent.
--------------------------
Agent shall have no duties, obligations or responsibilities
except those expressly set forth in this Agreement and the Related Agreements.
Neither Agent nor any of its officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such hereunder or under the
Related Agreements or in connection herewith or therewith, unless caused by its
or their gross negligence or willful misconduct. The duties of Agent shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement or the Related Agreements a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or the Related Agreements, expressed or
implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement or the Related Agreements except as
expressly set forth herein or therein. No duty to act, or refrain from acting,
and no other obligation whatsoever, shall be implied on the basis of or imputed
in respect of any right, power or authority granted to Agent or shall become
effective in the event of any temporary or partial exercise of such rights,
power or authority.
10.3. Agent in its Capacity as Lender.
--------------------------------
With respect to its obligations under this Agreement and the
Related Agreements, and the Loans made by it, Agent shall have the same rights
and powers under this Agreement and the Related Agreements as any Lender and may
exercise the same as though it were not Agent, and the terms "Lender" or
"Lenders" shall, unless the context otherwise indicates, include Agent in its
capacity as a Lender hereunder. Agent, any Lender and their respective
affiliates may accept deposits from, lend money to, and generally engage in any
kind of banking or trust business with Borrower or any other Obligor, or Related
Parties of Borrower, as if it were not Agent or as if it or they were not a
Lender hereunder and without any duty to account therefor to the other parties
to this Agreement; provided, that the obligations of Borrower under such
transactions shall not be deemed to be Liabilities or secured by any Collateral
without the prior written agreement of the Requisite Lenders; provided, further,
that Lenders acknowledge and agree that the obligations of Borrower with respect
to the Letter of Credit Obligations, and to BAI or any other Lender and with
respect to any lockbox or bank account maintained by or for the benefit of
Borrower, including the Demand Deposit Accounts, the Depository Accounts and the
Assignee Deposit Accounts, shall be deemed to be Liabilities secured by the
Collateral.
10.4. Independent Credit Analysis.
----------------------------
Each Lender agrees that it has, independently and without
reliance upon Agent, any other Lender, or the directors, officers, agents,
attorneys or employees of Agent or of any other Lender, and instead in reliance
upon information supplied to it by or on behalf of Borrower and each other
Obligor, made its own independent credit analysis and decision to enter into
this Agreement and the Related Agreements to which it is a party, and that it
shall independently and without reliance upon Agent, any other Lender, or the
directors, officers, agents, attorneys or employees of Agent or of any other
Lender, continue to make its own independent credit analysis and decisions in
acting or not acting under this Agreement and the Related Agreements. Except as
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otherwise expressly provided herein, Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information concerning the affairs, financial
condition, litigation, liabilities, or business of Borrower or any other Obligor
which may at any time come into the possession of Agent (or any of its
affiliates). In the event such information is furnished to any Lender by Agent,
Agent shall have no duty to confirm or verify its accuracy or completeness and
shall have no liability whatsoever with respect thereto.
10.5. General Immunity.
-----------------
Neither Agent nor any of its directors, officers, agents,
attorneys or employees shall be liable to any Lender for any action taken or
omitted to be taken by it or them under this Agreement or the Related Agreements
or in connection herewith or therewith except for its or their own willful
misconduct or gross negligence. Without limiting the generality of the
foregoing, Agent: (i) shall not be responsible to Lenders for any recitals,
statements, warranties or representations under this Agreement or the Related
Agreements or any agreement or document relative hereto or thereto or for the
financial or other condition of any Obligor, (ii) shall not be responsible for
the authenticity, accuracy, completeness, value, validity, effectiveness, due
execution, legality, genuineness, enforceability, collectibility or sufficiency
of this Agreement or the Related Agreements or any other agreements or any
assignments, certificates, requests, financial statements, projections, notices,
schedules or opinions of counsel executed and delivered pursuant hereto or
thereto, (iii) shall not be bound to ascertain or inquire as to the performance
or observance of any of the terms, covenants or conditions of this Agreement or
the Related Agreements on the part of Obligors or of any of the terms of any
such agreement by any party hereto or thereto and shall have no duty to inspect
the property (including the books and records) of any Obligor, (iv) shall have
no obligation whatsoever to Lenders or to any other Person to assure that the
Collateral exists or is owned by Borrower or any other Obligor or is cared for,
protected or insured or that the Liens granted to Agent herein or in Related
Agreements or pursuant hereto or thereto have been properly or sufficiently or
lawfully created, perfected, protected, enforced, realized upon or are entitled
to any particular priority, and (v) shall incur no liability under or in respect
of this Agreement or the Related Agreements or any other document by acting upon
any telephone or written notice, consent, certificate or other instrument or
writing (which may be by telegram, cable, telex, telecopier or similar form of
facsimile transmission), telephone message, statement 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. Agent may consult with legal
counsel (including counsel for Borrower), independent public accountants and
other experts selected by Agent and shall not be liable for any action taken or
omitted to be taken in good faith in accordance with the advice of such counsel,
accountants or experts.
10.6. Action by Agent.
----------------
(a) ACTUAL KNOWLEDGE. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Unmatured Event of Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to Agent for the account of Lenders,
unless Agent shall have received written notice from a Lender, Borrower or
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Borrower's independent certified public accountants referring to this Agreement,
describing such Unmatured Event of Default or Event of Default and stating that
such notice is a "notice of default." Agent will notify Lenders of its receipt
of any such notice.
(b) DISCRETION TO ACT. Agent shall have the right to request
instructions from Requisite Lenders by notice to each Lender. If Agent shall
request instructions from Requisite Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or any Related
Agreement, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, and Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any Related Agreement in accordance with the
instructions of Requisite Lenders. Agent may give any notice required under
SECTION 6 hereof without the consent of any of Lenders unless otherwise directed
by Requisite Lenders in writing and will, at the direction of Requisite Lenders,
give any such notice required under SECTION 6. Except for any obligation
expressly set forth in this Agreement or the Related Agreements, Agent may, but
shall not be required to, exercise its discretion to act or not act, except that
Agent shall be required to act or not act upon the instructions of Requisite
Lenders (unless all of Lenders are required to provide such instructions as
provided in SECTION 11.6) and those instructions shall be binding upon Agent and
all Lenders; provided, that Agent shall not be required to act or not act if to
do so would, in Agent's opinion, expose Agent to liability or would be contrary
to this Agreement or any Related Agreements or to applicable law.
(c) SATISFACTION OF CONDITIONS. For purposes of determining
compliance with the conditions specified in SECTION 8.1, each Lender that has
executed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either sent by
Agent to such Lender for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Lender.
10.7. Right to Indemnity.
-------------------
Agent shall be fully justified in failing or refusing to take
any action under this Agreement or the Related Agreements or in relation hereto
or thereto unless it shall first be indemnified (upon requesting such
indemnification) to its satisfaction by Lenders against any and all liability
and expense which it may incur by reason of taking or continuing to take any
such action. Lenders further agree to indemnify Agent ratably in accordance with
their Pro Rata Shares for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this Agreement or the
other Related Agreements or the transactions contemplated hereby or thereby, or
the enforcement of any of the terms hereof or thereof or of any other documents;
provided no such liability, obligation, loss, damage, penalty, action, judgment,
suit, cost, expense or disbursement results from Agent's gross negligence or
willful misconduct. Each Lender agrees to reimburse Agent in the amount of its
Pro Rata Share of any out-of-pocket expenses for which Agent is entitled to
receive, but has not
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received, reimbursement pursuant to this Agreement. The agreements in this
SECTION 10.7 shall survive the payment and fulfillment of the Liabilities and
termination of this Agreement.
10.8. Rights and Remedies to be Exercised by Agent Only.
--------------------------------------------------
In the event any remedy may be exercised with respect to this
Agreement or the Related Agreements or the Collateral, Agent shall pursue
remedies designated by Requisite Lenders subject to the proviso set forth in
SECTION 10.6(b). Each Lender agrees that no Lender shall have any right
individually (a) to realize upon the security created by this Agreement or the
Related Agreements, (b) enforce any provision of this Agreement or the Related
Agreements, or (c) make demand under this Agreement or the Related Agreements;
provided, that any Lender that is an Issuer may make demand upon Borrower as
Issuer pursuant to SECTION 2.2, BAI may make demand upon Borrower pursuant to
SECTION 11.4.
10.9. Agent's Resignation.
--------------------
Agent may, and at the request of Requisite Lenders shall,
resign as Agent upon thirty (30) days notice to Lenders. If Agent resigns under
this Agreement, Requisite Lenders shall appoint from among Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, with the consent of
Borrower, which consent will not be unreasonably withheld or delayed, and after
consulting with Lenders, a successor agent from among Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 10 and
SECTIONS 11.3 and 11.4 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is thirty
(30) days following a retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become effective and Lenders
shall perform all of the duties of Agent hereunder until such time, if any, as
Requisite Lenders appoint a successor agent as provided for above.
10.10. Disbursement of Proceeds of Loans and Other Advances.
-----------------------------------------------------
Agent may (and is hereby irrevocably authorized by Lenders),
but shall have no duty to make such other disbursements and advances as
Revolving Loans on behalf of Lenders, including without limitation the making of
advances for the expenditures described in SECTION 7.4 of this Agreement, which
Agent, in its sole discretion, deems necessary or desirable to preserve or
protect the Collateral, or any portion thereof. Agent's use of its own checks
upon its funds or Agent's transfer of its own funds, by wire or otherwise, to an
account of Borrower or any other Obligor shall be deemed to be disbursements
made by each Lender under this Agreement and pursuant to the Related Agreements.
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10.11. Release of Collateral.
----------------------
Each Lender hereby irrevocably authorizes Agent, at its option
and in its discretion, to release any and all guaranties of the Liabilities and
any Lien granted to or held by Agent upon any Collateral (i) upon termination of
Lenders' obligations to make Loans and payment and satisfaction of all Loans,
Letter of Credit Obligations and all other Payment Liabilities and which Agent
has been notified in writing are then due and payable under this Agreement; (ii)
constituting Collateral being sold or disposed of if Borrower certifies to Agent
that the sale or disposition is made in compliance with the terms of this
Agreement (and, absent any actual knowledge of Agent to the contrary, Agent may
rely conclusively on any such certificate, without further inquiry); (iii)
constituting property in which neither Borrower nor any Obligor has any interest
at the time the Lien was granted and at all times thereafter; or (iv) if
approved, authorized or ratified in writing by Agent at the direction of
Requisite Lenders. Upon request by Agent at any time, each Lender will confirm
in writing Agent's authority to release particular types or items of Collateral
pursuant to this SECTION 10.11.
10.12. Agreement to Cooperate.
-----------------------
Each Lender agrees to cooperate to the end that the terms and
provisions of this Agreement may be promptly and fully carried out. Lenders also
agree, from time to time, at the request of Agent, to execute and deliver any
and all other agreements, documents or instruments and to take such other
actions, all as may be reasonably necessary or desirable to effectuate the
terms, provisions and intent of this Agreement and the Related Agreements.
10.13. Sharing of Collateral.
----------------------
If any Lender shall obtain any payment (whether voluntary,
involuntary, through exercise of any right of set off, or otherwise) on account
of the Liabilities in excess of the amount to which it is entitled pursuant to
this Agreement, such Lender shall forthwith purchase from the other Lenders such
participations in such other Lenders' claims against Borrower as shall be
necessary to cause such purchasing Lender to share the excess payment with the
other Lenders in accordance with the provisions of this Agreement; provided,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such other Lender shall be rescinded
and such other Lenders shall repay to the purchasing Lender the purchase price
to the extent of their portion of such recovery together with an amount equal to
the share (according to the proportion of (i) the amount of such other Lenders'
required repayment, to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by purchasing Lender in
respect of the total amount recovered.
10.14. Lenders to Act as Agents.
-------------------------
If any Collateral or proceeds thereof at any time comes into
the possession or under the control of any Lender, such Lender shall hold such
Collateral or proceeds thereof as agent for the joint benefit of Lenders, and
will, upon receipt therefor, deliver such Collateral or proceeds thereof to
Agent.
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11. GENERAL.
11.1. Borrower's Waiver.
------------------
Except as otherwise provided for in this Agreement, to the
extent permitted by applicable law, Borrower waives (a) presentment, demand and
protest and notice of presentment, protest, default, non-payment, maturity,
release, compromise, settlement, one or more extensions or renewals of any or
all commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent or any Lender on which Borrower
may in any way be liable and hereby ratifies and confirms whatever Agent or any
Lender may do in this regard; and (b) all rights to notice and a hearing prior
to Agent's or any Lender's taking possession or control of, or Agent's or any
Lender's replevy, attachment or levy on or of, the Collateral or any bond or
security which might be required by any court prior to allowing Agent or any
Lender to exercise any of Agent's or any Lender's remedies.
11.2. Power of Attorney.
------------------
Borrower appoints Agent, or any Person whom Agent may from
time to time designate, as Borrower's attorney and agent-in-fact with power
(which appointment and power, being coupled with an interest, is irrevocable
until all Payment Liabilities under this Agreement are paid and performed in
full and this Agreement is terminated), without notice to Borrower, to:
(a) At such time or times hereafter as Agent or said agent, in
its sole and absolute discretion, may determine in Borrower's or Agent's name
(i) after the occurrence and during the continuance of an Event of Default, to
endorse Borrower's name on any checks, notes, drafts or any other items of
payment relating to and/or proceeds of the Collateral which come into the
possession of Agent or under Agent's control and apply such payment or proceeds
to the Liabilities; (ii) after the occurrence and during the continuance of an
Event of Default, to endorse Borrower's name on any chattel paper, document,
instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or
agreement in Agent's possession relating to Accounts Receivable, Inventory or
any other Collateral; (iii) after the occurrence and during the continuance of
an Event of Default, use the information recorded on or contained in any data
processing equipment and computer hardware and software to which Borrower has
access relating to Accounts Receivable, Inventory and/or other Collateral; and
(iv) if not done by Borrower, do all acts and things determined by Agent to be
reasonably necessary, to fulfill Borrower's obligations under this Agreement;
and
(b) At such time or times after the occurrence and during the
continuance of an Event of Default, as Agent or said agent, in its sole and
absolute discretion, may determine, in Borrower's or Agent's name: (i) demand
payment of the Accounts Receivable; (ii) enforce payment of the Accounts
Receivable, by legal proceedings or otherwise; (iii) exercise all Borrower's
rights and remedies with respect to the collection of the Accounts Receivable
and other Collateral; (iv) settle, adjust, compromise, extend or renew the
Accounts Receivable; (v) settle, adjust or compromise any legal proceedings
brought to collect the Accounts Receivable; (vi) if permitted by applicable law,
sell or assign the Accounts Receivable and/or other Collateral upon such terms
for such amounts and at such time or times as Agent may deem advisable; (vii)
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discharge and release the Accounts Receivable and/or other Collateral; (viii)
prepare, file and sign Borrower's name on any proof of claim in bankruptcy or
similar document against any Account Debtor; (ix) prepare, file and sign
Borrower's name on any notice of lien, assignment or satisfaction of lien or
similar document in connection with the Accounts Receivable and/or other
Collateral; and (x) do all acts and things necessary, in Agent's sole and
absolute discretion, to obtain repayment of the Payment Liabilities and to
fulfill Borrower's other obligations under this Agreement.
11.3. Expenses and Attorneys' Fees.
-----------------------------
Borrower agrees, whether or not any Loan is made or Letter of
Credit is issued, to pay within fifteen (15) days of demand therefor, all
Attorneys' Fees and out-of-pocket expenses of Agent in connection with the
transactions contemplated hereby. For purposes of this Agreement, "Attorneys'
Fees" means the reasonable value of the services (and costs, charges and
expenses related thereto) of the attorneys (and all paralegals and any outside
consultants employed by such attorneys) employed by Agent or, if an Event of
Default is then in existence, any Lender (including but not limited to attorneys
and paralegals who are employees of Agent or any Lender) from time to time (a)
in connection with the negotiation, preparation, execution, delivery,
administration and enforcement of this Agreement, any Related Agreement, any
Supplemental Documentation and all other documents or instruments provided for
herein or in any thereof or delivered or to be delivered hereunder or under any
thereof or in connection herewith or with any thereof, (b) to prepare
documentation related to the Loans made and other Liabilities incurred
hereunder, (c) to prepare any amendment to or waiver under this Agreement or any
Related Agreement and any documents or instruments related thereto, (d) to
represent Agent or any Lender in any litigation, contest, dispute, suit or
proceeding or to commence, defend or intervene in any litigation, contest,
dispute, suit or proceeding or to file a petition, complaint, answer, motion or
other pleading, or to take any other action in or with respect to, any
litigation, contest, dispute, suit or proceeding (whether instituted by Agent or
any Lender, Borrower or any other Person and whether in bankruptcy or otherwise)
in any way or respect relating to the Collateral, this Agreement or any Related
Agreement, or any Company's or any other Obligor's affairs, (e) to protect,
collect, lease, sell, take possession of, or liquidate any of the Collateral,
(f) to perfect or attempt to enforce any security interest in any of the
Collateral or to give any advice with respect to such enforcement and (g) to
enforce any of Agent's or any Lender's rights to collect any of the Liabilities.
Agent may advance all such amounts to Borrower as a Revolving Loan. Borrower
also agrees, (y) to indemnify and hold Agent and each Lender harmless from any
loss or expense which may arise or be created by the acceptance of telephonic or
other instructions for making Loans or issuing Letters of Credit except for any
such loss or expense arising from Agent or such Lender's gross negligence or
willful misconduct, and (z) to pay, and save Agent and each Lender harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement, or any Related Agreement or
Supplemental Documentation, or the issuance of any Note or of any other
instruments or documents provided for herein or to be delivered hereunder or in
connection herewith. [NOTWITHSTANDING THE FOREGOING, BORROWER SHALL NOT BE
LIABLE FOR THE FEES CHARGED BY GOLDBERG, KOHN, BELL, BLACK, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
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LTD. TO AGENT THROUGH THE CLOSING DATE IN EXCESS OF SEVENTY-FIVE THOUSAND
DOLLARS ($75,000).]
11.4. BAI's Fees and Charges.
-----------------------
To the extent not already covered by SECTION 11.3, Borrower
agrees to pay BAI on demand by BAI the customary fees and charges of BAI for
maintenance of accounts with BAI or for providing other services to Borrower and
if not so paid, each Lender shall, without regard to any other provision of this
Agreement or any other Related Agreement or any defense that Borrower may have
to its obligation to pay BAI in connection with such fees and charges, pay BAI
for such Lender's Pro Rata Share of such fees and charges, and any payments so
made by Lenders to BAI shall be deemed to be Revolving Loans. Each Lender (other
than BAI) acknowledges and agrees that it shall not be entitled to any of the
fees and charges of BAI as provided in the immediately preceding sentence. Upon
at least two (2) Banking Days' advance notice to Borrower (or during the
continuance of an Event of Default, without notice to Borrower), Agent may, in
its sole and absolute discretion, provide for such payment by advancing the
amount thereof to Borrower as a Revolving Loan.
11.5. Lawful Interest.
----------------
In no contingency or event whatsoever shall the interest rate
charged pursuant to the terms of this Agreement exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that any Lender has received interest hereunder in excess of the
highest applicable rate, such Lender shall promptly refund its Pro Rata Share of
such excess interest to Borrower.
11.6. No Waiver by Agent or any Lender; Amendments.
---------------------------------------------
No failure or delay on the part of Agent or any Lender in the
exercise of any power or right, and no course of dealing between Borrower and
Agent or any Lender shall operate as a waiver of such power or right, nor shall
any single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right. The remedies
provided for herein are cumulative and not exclusive of any remedies which may
be available to Agent or any Lender at law or in equity. No notice to or demand
on Borrower not required hereunder shall in any event entitle Borrower to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Agent or any Lender to any other or further
action in any circumstances without notice or demand. No amendment, modification
or waiver of, or consent with respect to, any provision of this Agreement or any
Related Agreement shall in any event be effective unless the same shall be in
writing and signed and delivered by Requisite Lenders, and with respect to any
amendment or modification, also by Borrower. Notwithstanding the foregoing, (a)
any amendment, modification, termination, waiver or consent with respect to any
of the following provisions of this Agreement shall be effective only by a
written agreement, signed by each Lender affected thereby: (i) increase in the
amount of the Maximum Loan Amount or Maximum Revolving Loan Amount of such
Lender, (ii) reduction of
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the principal of, rate or amount of interest on the Loans or any fees or charges
payable to such Lender (other than by the payment or prepayment thereof), (iii)
postponement of the date fixed for any payment of principal of, or interest on,
the Loans or any fees or charges) or other amounts payable to such Lender, (iv)
change in the aggregate Pro Rata Share of Lenders which shall be required for
Lenders or any of them to take action hereunder or amend the definition of
"REQUISITE LENDERS," or (v) amendment of this SECTION 11.6 and (b) any
amendment, modification, termination, waiver or consent affecting Agent or
Issuer shall be effective only by a written agreement signed by Agent or Issuer,
as applicable. Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver of any provision of this
Agreement, and any consent to any departure by Borrower from the terms of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which given.
11.7. Termination of Credit.
----------------------
Borrower may terminate the Credit at any time upon notice to
Agent and payment in full of the outstanding principal balance of the Loans and
all other Payment Liabilities under this Agreement and the Related Agreements.
All of Agent's and each Lender's rights and remedies, the Liens of Agent on the
Collateral, for the benefit of itself, Issuer and Lenders, and all of Borrower's
duties and obligations under this Agreement shall survive termination of the
Credit extended to Borrower hereunder until all of the Payment Liabilities
hereunder have been finally paid and performed in full. The termination or
cancellation of the Credit shall not affect or impair the liabilities and
obligations of Borrower or any one or more of the Obligors to Agent and Lenders
or Agent's and each Lender's rights with respect to any Loans and advances made
and other Liabilities incurred prior to such termination or with respect to the
Collateral.
11.8. Notices.
--------
Except as otherwise expressly provided herein, any notice
hereunder to Borrower, Agent or any Lender shall be in writing (including
facsimile communication) and shall be given to Borrower, Agent or such Lender at
its address or facsimile number set forth on the signature pages hereof or at
such other address or facsimile number as Borrower, Agent or such Lender may, by
written notice, designate as its address or facsimile number for purposes of
notices hereunder. All such notices shall be deemed to be given: (a) if
delivered by facsimile, when transmitted, (b) if delivered by courier, when
delivered by such courier, (c) if delivered in person, when delivered, and (d)
if delivered by mail, three (3) Banking Days following deposit in the United
States mails, properly addressed as herein provided, with proper postage
prepaid; provided, however, that notice to Agent of Borrower's intent to
terminate the Credit shall not be effective until actually received by Agent.
11.9. Assignments and Participations; Information.
--------------------------------------------
(a) This Agreement may not be assigned by Borrower without the
prior written consent of Agent and Lenders. Whenever in this Agreement reference
is made to any of the parties hereto, such reference shall be deemed to include,
wherever applicable, a reference to the
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successors and permitted assigns of Borrower and the successors and assigns of
Agent and each Lender.
(b) Borrower and each Lender hereby agree that on or after the
date hereof, each Lender may, in its discretion, without any other Lender's
consent, but with the prior consent of Agent and Borrower, which consents will
not be unreasonably withheld, sell one or more assignments of portions of its
interest in the Credit to any Person; provided, that (i) any Lender may sell an
assignment of any or all of its interest in the Credit to any Related Party of
such Lender without the consent of any Person and (ii) the percentage of the
Term Loan assigned by a Lender to a Person shall equal the percentage of the
Maximum Revolving Loan Amount assigned by such Lender to such Person. Each
assignment shall be at no cost to Borrower and of a constant, and not a varying,
ratable percentage of all of the assigning Lender's rights and obligations under
this Agreement, and the Maximum Loan Amount assigned shall be in a minimum
amount of Five Million Dollars ($5,000,000) and after giving effect to such
assignment no Lender's Maximum Loan Amount shall be less than Ten Million
Dollars ($10,000,000) (unless such Lender sells all of its interest in the
Credit).
(c) The parties to each assignment of an interest in the
Credit as permitted pursuant to clause (b) above shall execute and deliver to
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance Agreement, with a copy to Borrower. Upon such execution, delivery,
acceptance and recording in the Register, from and after the effective date
specified in each Assignment and Acceptance Agreement and agreed to by Agent,
(i) the assignee thereunder shall, in addition to any rights and obligations
hereunder held by it immediately prior to such effective date, if any, have the
rights and obligations hereunder that have been assigned to it pursuant to such
Assignment and Acceptance Agreement and shall, to the fullest extent permitted
by law, have the same rights and benefits hereunder as if it were an original
Lender hereunder and (ii) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance Agreement, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance Agreement covering all or the remaining portion of such assigning
Lender's rights and obligations under this Agreement, the assigning Lender shall
cease to be a party hereto).
(d) Agent shall maintain a copy of each Assignment and
Acceptance Agreement delivered to and accepted by it and a register (the
"Register") for the recordation of the names and addresses of Lenders and the
Maximum Loan Amount and the Maximum Revolving Loan Amount and principal amount
of the Loans owing to each Lender from time to time. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
Borrower, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance Agreement
executed by the assigning Lender and the assignee and a processing and
recordation fee of Two Thousand Five
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Hundred Dollars ($2,500) (payable by the assigning Lender or the assignee, as
shall be agreed between them), Agent shall, if such Assignment and Acceptance
Agreement has been completed and is in compliance with this Agreement and in
substantially the form of EXHIBIT C and Borrower and Agent have consented to the
assignment evidenced thereby, (i) accept such Assignment and Acceptance
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to Borrower.
(f) Each Lender may, with the consent of Agent, which may not
be unreasonably withheld, sell participations to one or more other financial
institutions in or to all or a portion of its rights and obligations under and
in respect of any and all facilities under this Agreement; provided, that any
Lender may sell a participation in any or all of its interest in the Credit to
any Related Party of such Lender without the consent of any Person; provided,
further, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) Borrower, Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(iv) such participant's rights to agree or to restrict such Lender's ability to
agree to the modification, waiver or release of any of the terms of this
Agreement or the Related Agreements or to the release of any Collateral covered
by this Agreement or the Related Agreements, to consent to any action or failure
to act by any party to this Agreement or any of the Related Agreements, or to
exercise or refrain from exercising any powers or rights which any Lender may
have under or in respect of this Agreement or the Related Agreements or any
Collateral, shall be limited to the right to consent to (A) an increase in the
Maximum Loan Amount of the Lender from whom such participant purchased a
participation, (B) reduction of the principal of, or rate or amount of interest
on the Loans subject to such participation (other than by the payment or
prepayment thereof) or (C) postponement of any date fixed for any payment of
principal of, or interest on, the Loans subject to such participation. Each
Lender agrees to promptly notify Agent and Borrower of each sale of a
participation hereunder.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this SECTION
11.9, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any Company or any other Obligor
furnished to such Lender; provided, that prior to any such disclosure, such
assignee or participant, or proposed assignee or participant, shall agree to
preserve the confidentiality of any confidential information described therein
and such Lender shall notify Borrower of the assignee or participant, or
proposed assignee or participant.
(h) Anything in this Agreement to the contrary
notwithstanding, in the case of any participation, all amounts payable by
Borrower under this Agreement or the Related Agreements shall be calculated and
made in the manner and to the parties required hereby as if no such
participation had been sold.
(i) Agent agrees to promptly notify Borrower of each sale of a
permitted participation or permitted assignment hereunder. Borrower agrees to
use its reasonable efforts to
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assist Lenders in their efforts to sell assignments and participations
hereunder. In addition, Borrower agrees to execute new Notes in favor of each of
the selling and purchasing Lender, upon each sale of an assignment hereunder,
provided that the existing Notes in favor of the selling Lender are
simultaneously therewith returned to Borrower.
11.10. Borrower's Documentation; Confidentiality.
------------------------------------------
Borrower hereby acknowledges and agrees that Agent and Lenders
shall be under no obligation to return any due diligence reports, schedules,
financial statements or any other disclosure documents furnished to Agent or any
Lender by Borrower, any Company or any third party in connection with the Loans.
The Agent and each Lender hereby (a) acknowledges that each
Company has financial, marketing, environmental and other data and information
the confidentiality of which is important to its business and (b) agrees to keep
confidential any financial, marketing, environmental and other data and
information of each Company to the extent designated by it as confidential,
PROVIDED that this section shall not preclude Agent or any Lender from
furnishing any such data or information (A) as may be required by order of any
court of competent jurisdiction or requested by any governmental agency having
any regulatory authority over that holder or its securities, (B) to any other
party to this Agreement, (C) to any actual or prospective transferee (so long as
such prospective transferee is a financial institution) of all or part of
Agent's or that Lender's rights arising out of or in connection with this
Agreement so long as such prospective transferee to whom disclosure is made
agrees to be bound by the provisions of this SECTION 11.10, (D) to anyone if it
shall have been already publicly disclosed (other than by Agent or that Lender
in contravention of this SECTION 11.10), (E) to the extent reasonably required
in connection with the exercise of any right or remedy under this Agreement and
(F) to Agent's or that Lender's legal counsel, auditors and accountants. The
obligations of Agent and Lenders under this section shall survive termination of
this Agreement.
11.11. Severability.
-------------
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.12. Successors.
-----------
This Agreement shall be binding upon Borrower, Agent and each
Lender and their respective successors and permitted assigns, and shall inure to
the benefit of Borrower, Agent and each Lender and their respective successors
and permitted assigns.
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11.13. Construction.
-------------
This Agreement and the Related Agreements and Supplemental
Documents shall, unless otherwise expressly provided therein, be deemed to have
been negotiated and entered into in, and shall be governed and controlled by the
laws of, the State of Illinois as to interpretation, enforcement, validity,
construction, effect, choice of law, and in all other respects, including but
not limited to the legality of the interest rate and other charges, but
excluding perfection of security interests and liens which shall be governed and
controlled by the laws of the relevant jurisdiction.
11.14. Consent to Jurisdiction.
------------------------
Agent, each Lender and Borrower each irrevocably agrees that,
subject to Agent's sole and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE
RELATED AGREEMENTS, OR THE SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
AGENT, EACH LENDER AND BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION
OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE AND
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND AGREES THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO IT AT THE ADDRESS
STATED ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT THEREOF.
11.15. Waiver of Jury Trial.
---------------------
BORROWER, AGENT AND EACH LENDER EACH WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a)
UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
11.16. Judgment.
---------
If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder or under any other Related Agreement in
one currency into another currency, the rate of exchange used shall be that at
which in accordance with normal banking procedures the Agent, could purchase the
first currency with such other currency on the Banking Day preceding that on
which final judgment is given. The obligation of Borrower in respect of any such
sum due from it to the Agent or any Lender hereunder or under the other Related
Agreements shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than that in which
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such sum is denominated in accordance with the applicable provisions of this
Agreement or the other Related Agreements (the "Agreement Currency"), be
discharged only to the extent that on the Banking Day following receipt by the
Agent or such Lender of any sum adjudged to be so due in the Judgment Currency,
the Agent or such Lender may in accordance with normal banking procedures
purchase the Agreement Currency with the Judgment Currency. If the amount of the
Agreement Currency so purchased is less than the sum originally due to the Agent
or such Lender in such currency, Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Agent, Lender or the Person
to whom such obligation was owing against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the
Agent or any Lender in such currency, the Agent or such Lender agrees to return
the amount of any excess to Borrower (or to any other Person who may be entitled
thereto under applicable law).
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
UNIFRAX CORPORATION, as Borrower
By________________________________________
Its_______________________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Kirtland Capital Partners II L.P.
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
BANK OF AMERICA ILLINOIS, as Agent
By________________________________________
Its_______________________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
8th Floor - Mail Drop 0830
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (312) 084-9102
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Agency Management Services
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BANK OF AMERICA ILLINOIS, as a Lender
By_________________________________________
Its________________________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Middle Market II
Maximum Loan Amount: $22,500,000
Maximum Revolving Loan Amount: $10,000,000
Maximum Term Loan Amount: $12,500,000
NATIONAL CITY BANK, as a Lender
By_________________________________________
Its________________________________________
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Metro/Ohio
Maximum Loan Amount: $22,500,000
Maximum Revolving Loan Amount: $10,000,000
Maximum Term Loan Amount: $12,500,000
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LIST OF EXHIBITS AND SCHEDULES
Exhibits:
---------
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Assignment and Acceptance Agreement
Exhibit D EBITDA for the First Three Calendar Quarters of Fiscal Year 1996
Schedules:
----------
Schedule 4.1 Schedule of Tradenames, State of Incorporation and Qualification
Schedule 4.6 Schedule of Certain Events
Schedule 4.7 Schedule of Insurance
Schedule 4.8 Schedule of Litigation and Contingent Liabilities
Schedule 4.9 Schedule of Liens
Schedule 4.10 Schedule of Subsidiaries
Schedule 4.11 Schedule of Partnerships and Joint Ventures
Schedule 4.12 Schedule of Business and Collateral Locations
Schedule 4.13 Schedule of Real Property Descriptions and Owners
Schedule 4.15 Schedule of Leases
Schedule 4.16 Schedule of Patents, Trademarks and Copyrights
Schedule 4.18 Schedule of Labor Matters
Schedule 4.19 Schedule of Contingent Employee Benefit Plan Liabilities
Schedule 4.21 Schedule of Noncompliance
Schedule 4.22 Schedule of Tax Audits
Schedule 4.25 Schedule of Environmental Matters
Schedule 5.8 Schedule of Tax Sharing Arrangements
Schedule 5.14 Schedule of Indebtedness
Schedule 5.17 Schedule of Investments
Schedule 8.1(c) Schedule of Title Endorsements
