EXHIBIT 10.0
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CREDIT AGREEMENT
DATED AS OF DECEMBER 20, 2001
AMONG
CHECK TECHNOLOGY CANADA LTD.,
THE LENDERS FROM TIME TO TIME PARTIES HERETO,
THE PARENT AND THE GUARANTORS FROM TIME TO TIME PARTIES HERETO,
AND
XXXXXX TRUST AND SAVINGS BANK,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
SECTION 1. THE CREDIT FACILITIES..................................................................1
Section 1.1. Term Loan Commitments..................................................................1
Section 1.2. Revolving Credit Commitments...........................................................1
Section 1.3. Letters of Credit......................................................................2
Section 1.4. Applicable Interest Rates..............................................................4
Section 1.5. Minimum Borrowing Amounts; Maximum Eurodollar Loans....................................6
Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest Rates....................6
Section 1.7. Interest Periods.......................................................................9
Section 1.8. Maturity of Loans.....................................................................10
Section 1.9. Prepayments...........................................................................10
Section 1.10. Default Rate..........................................................................13
Section 1.11. The Notes.............................................................................13
Section 1.12. Funding Indemnity.....................................................................14
Section 1.13. Commitment Terminations...............................................................15
Section 1.14. Substitution of Lenders...............................................................15
SECTION 2. FEES..................................................................................16
Section 2.1. Fees..................................................................................16
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.....................................................17
Section 3.1. Place and Application of Payments.....................................................17
SECTION 4. THE COLLATERAL AND GUARANTIES.........................................................18
Section 4.1. Collateral............................................................................18
Section 4.2. Guaranties............................................................................19
Section 4.3. Further Assurances....................................................................19
SECTION 5. DEFINITIONS; INTERPRETATION...........................................................20
Section 5.1. Definitions...........................................................................20
Section 5.2. Interpretation........................................................................34
Section 5.3. Change in Accounting Principles.......................................................34
SECTION 6. REPRESENTATIONS AND WARRANTIES........................................................34
Section 6.1. Organization and Qualification........................................................34
Section 6.2. Subsidiaries..........................................................................35
Section 6.3. Authority and Validity of Obligations.................................................35
Section 6.4. Use of Proceeds; Margin Stock.........................................................36
Section 6.5. Financial Reports.....................................................................36
Section 6.6. No Material Adverse Change............................................................36
Section 6.7. Full Disclosure.......................................................................36
Section 6.8. Trademarks, Franchises, and Licenses..................................................37
Section 6.9. Governmental Authority and Licensing..................................................37
Section 6.10. Good Title............................................................................37
Section 6.11. Litigation and Other Controversies....................................................37
Section 6.12. Taxes.................................................................................37
Section 6.13. Approvals.............................................................................38
Section 6.14. Affiliate Transactions................................................................38
Section 6.15. Investment Company; Public Utility Holding Company....................................38
Section 6.16. ERISA; Canadian Benefit Plan Obligations..............................................38
Section 6.17. Compliance with Laws..................................................................38
Section 6.18. Other Agreements......................................................................39
Section 6.19. Solvency..............................................................................39
Section 6.20. No Default............................................................................39
Section 6.21. Delphax Asset Purchase Agreement......................................................39
SECTION 7. CONDITIONS PRECEDENT..................................................................40
Section 7.1. All Credit Events.....................................................................40
Section 7.2. Initial Credit Event..................................................................40
SECTION 8. COVENANTS.............................................................................43
Section 8.1. Maintenance of Existence..............................................................43
Section 8.2. Maintenance of Properties and Business................................................43
Section 8.3. Taxes and Assessments.................................................................43
Section 8.4. Insurance.............................................................................44
Section 8.5. Financial Reports.....................................................................44
Section 8.6. Inspection............................................................................46
Section 8.7. Borrowings and Guaranties.............................................................47
Section 8.8. Liens.................................................................................47
Section 8.9. Investments, Acquisitions, Loans and Advances.........................................48
Section 8.10. Mergers, Consolidations and Sales.....................................................49
Section 8.11. Maintenance of Subsidiaries...........................................................50
Section 8.12. Dividends and Certain Other Restricted Payments.......................................50
Section 8.13. ERISA; Canadian Benefit Plan Obligations..............................................51
Section 8.14. Compliance with Laws..................................................................51
Section 8.15. Burdensome Contracts with Affiliates..................................................52
Section 8.16. No Changes in Fiscal Year.............................................................52
Section 8.17. Formation of Subsidiaries.............................................................52
Section 8.18. Change in the Nature of Business......................................................52
Section 8.19. Use of Loan Proceeds..................................................................53
Section 8.20. No Restrictions.......................................................................53
Section 8.21. Total Funded Debt to EBITDA Ratio.....................................................53
Section 8.22. Net Worth.............................................................................53
Section 8.23. Fixed Charge Coverage Ratio...........................................................53
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Section 8.24. Operating Leases......................................................................54
Section 8.25. Interest Rate Protection..............................................................54
SECTION 9. EVENTS OF DEFAULT AND REMEDIES........................................................54
Section 9.1. Events of Default.....................................................................54
Section 9.2. Non-Bankruptcy Defaults...............................................................57
Section 9.3. Bankruptcy Defaults...................................................................57
Section 9.4. Collateral for Undrawn Letters of Credit..............................................57
Section 9.5. Notice of Default.....................................................................58
Section 9.6. Expenses..............................................................................58
SECTION 10. CHANGE IN CIRCUMSTANCES...............................................................58
Section 10.1. Change of Law.........................................................................58
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of,
LIBOR.............................................................................59
Section 10.3. Increased Cost and Reduced Return.....................................................59
Section 10.4. Lending Offices.......................................................................60
Section 10.5. Discretion of Lender as to Manner of Funding..........................................61
SECTION 11. THE ADMINISTRATIVE AGENT..............................................................61
Section 11.1. Appointment and Authorization of Administrative Agent.................................61
Section 11.2. Administrative Agent and Its Affiliates...............................................61
Section 11.3. Action by Administrative Agent........................................................61
Section 11.4. Consultation with Experts.............................................................62
Section 11.5. Liability of Administrative Agent; Credit Decision....................................62
Section 11.6. Indemnity.............................................................................63
Section 11.7. Resignation of Administrative Agent and Successor Administrative Agent................63
Section 11.8. L/C Issuer............................................................................63
Section 11.9. Hedging Liability and ACH and Overdraft Liability Arrangements........................64
Section 11.10. Designation of Additional Agents......................................................64
SECTION 12. THE GUARANTEES........................................................................64
Section 12.1. The Guarantees........................................................................64
Section 12.2. Guarantee Unconditional...............................................................65
Section 12.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances.....................................................................66
Section 12.4. Subrogation...........................................................................66
Section 12.5. Waivers...............................................................................66
Section 12.6. Limit on Recovery.....................................................................66
Section 12.7. Stay of Acceleration..................................................................66
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SECTION 13. MISCELLANEOUS.........................................................................67
Section 13.1. Withholding Taxes.....................................................................67
Section 13.2. No Waiver, Cumulative Remedies........................................................68
Section 13.3. Non-Business Days.....................................................................68
Section 13.4. Documentary Taxes.....................................................................68
Section 13.5. Survival of Representations...........................................................69
Section 13.6. Survival of Indemnities...............................................................69
Section 13.7. Sharing of Set-Off....................................................................69
Section 13.8. Notices...............................................................................69
Section 13.9. Counterparts..........................................................................70
Section 13.10. Successors and Assigns................................................................70
Section 13.11. Participants..........................................................................70
Section 13.12. Assignments...........................................................................71
Section 13.13. Amendments............................................................................72
Section 13.14. Headings..............................................................................72
Section 13.15. Costs and Expenses; Indemnification...................................................72
Section 13.16. Set-off...............................................................................73
Section 13.17. Entire Agreement......................................................................74
Section 13.18. Governing Law.........................................................................74
Section 13.19. Severability of Provisions............................................................74
Section 13.20. Excess Interest.......................................................................74
Section 13.21. Construction..........................................................................75
Section 13.22. Lender's Obligations Several..........................................................75
Section 13.23. Submission to Jurisdiction; Waiver of Jury Trial......................................75
Section 13.24. Judgment Currency.....................................................................75
Signature Page...................................................................................................76
EXHIBIT A -- Notice of Payment Request
EXHIBIT B -- Notice of Borrowing
EXHIBIT C -- Notice of Continuation/Conversion
EXHIBIT D-1 -- Term Note
EXHIBIT D-2 -- Revolving Note
EXHIBIT E -- Borrowing Base Certificate
EXHIBIT F -- Compliance Certificate
EXHIBIT G -- Assignment and Acceptance
EXHIBIT H -- Additional Guarantor Supplement
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CREDIT AGREEMENT
This Credit Agreement (this "Agreement") is entered into as of December
20, 2001 by and among Check Technology Canada Ltd., an Ontario corporation (the
"Borrower"), the Parent (as defined below) and each of the Subsidiaries of the
Borrower or subsidiaries of the Parent from time to time becoming party hereto,
as Guarantors, the several financial institutions from time to time party to
this Agreement, as Lenders, and Xxxxxx Trust and Savings Bank, as Administrative
Agent as provided herein. All capitalized terms used herein without definition
shall have the same meanings herein as such terms are defined in Section 5.1
hereof.
PRELIMINARY STATEMENT
The Borrower has requested, and the Lenders have agreed to extend,
certain credit facilities on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. THE CREDIT FACILITIES.
Section 1.1. Term Loan Commitments. Subject to the terms and conditions
hereof, each Lender, by its acceptance hereof, severally agrees to make a loan
(individually a "Term Loan" and collectively for all the Lenders the "Term
Loans") in U.S. Dollars to the Borrower in the amount of such Lender's Term Loan
Commitment. The Term Loans shall be advanced in a single Borrowing on the
Closing Date and shall be made ratably by the Lenders in proportion to their
respective Term Loan Percentages. As provided in Section 1.6(a) hereof, the
Borrower may elect that of the Term Loans be outstanding as Base Rate Loans or
Eurodollar Loans. No amount repaid or prepaid on any Term Loan may be borrowed
again.
Section 1.2. Revolving Credit Commitments. Subject to the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
make a loan or loans (individually a "Revolving Loan" and collectively the
"Revolving Loans") in U.S. Dollars to the Borrower from time to time on a
revolving basis up to the amount of such Lender's Revolving Credit Commitment,
subject to any reductions thereof pursuant to the terms hereof, before the
Revolving Credit Termination Date. The sum of the aggregate principal amount of
Revolving Loans and L/C Obligations at any time outstanding shall not exceed the
lesser of (i) the Revolving Credit Commitments in effect at such time and (ii)
the Borrowing Base as then determined and computed. Each Borrowing of Revolving
Loans shall be made ratably by the Lenders in proportion to their respective
Revolver Percentages. As provided in Section 1.6(a) hereof, the Borrower may
elect that each Borrowing of Revolving Loans be either Base Rate Loans or
Eurodollar Loans, provided that, as more fully described in Section 1.6 hereof,
a certain portion of the principal amount of the Revolving Loans will remain
outstanding at a fixed rate.
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Revolving Loans may be repaid and the principal amount thereof reborrowed before
the Revolving Credit Termination Date, subject to the terms and conditions
hereof.
Section 1.3. Letters of Credit.
(a) General Terms. Subject to the terms and conditions hereof, as part
of the Revolving Credit, the L/C Issuer shall issue standby and commercial
letters of credit (each a "Letter of Credit") for the Borrower's account or for
the account of the Borrower and one or more of the Subsidiaries in an aggregate
undrawn face amount up to the L/C Sublimit, provided that the aggregate L/C
Obligations at any time outstanding shall not exceed the difference between the
Revolving Credit Commitments in effect at such time and the aggregate principal
amount of Revolving Loans then outstanding. Each Letter of Credit shall be
issued by the L/C Issuer, but each Lender shall be obligated to reimburse the
L/C Issuer for such Lender's Revolver Percentage of the amount of each drawing
thereunder and, accordingly, each Letter of Credit shall constitute usage of the
Revolving Credit Commitment of each Lender pro rata in an amount equal to its
Revolver Percentage of the L/C Obligations then outstanding.
(b) Applications. At any time before the Revolving Credit Termination
Date, the L/C Issuer shall, at the request of the Borrower, issue one or more
Letters of Credit in U.S. Dollars, in a form satisfactory to the L/C Issuer,
with expiration dates no later than the earlier of 12 months from the date of
issuance (or which are cancelable not later than 12 months from the date of
issuance and each renewal) or the Revolving Credit Termination Date, in an
aggregate face amount as set forth above, upon the receipt of an application
duly executed by the Borrower and, if such Letter of Credit is for the account
of one if the Subsidiaries, such Subsidiary for the relevant Letter of Credit in
the form then customarily prescribed by the L/C Issuer for the Letter of Credit
requested (each an "Application"). Notwithstanding anything contained in any
Application to the contrary: (i) the Borrower shall pay fees in connection with
each Letter of Credit as set forth in Section 2.1 hereof, (ii) except as
otherwise provided in Section 1.9 hereof, before the occurrence of a Default or
an Event of Default, the L/C Issuer will not call for the funding by the
Borrower of any amount under a Letter of Credit before being presented with a
drawing thereunder, and (iii) if the L/C Issuer is not timely reimbursed for the
amount of any drawing under a Letter of Credit on the date such drawing is paid,
the Borrower's obligation to reimburse the L/C Issuer for the amount of such
drawing shall bear interest (which the Borrower hereby promises to pay) from and
after the date such drawing is paid at a rate equal to the sum of 2.0% per annum
plus the Base Rate from time to time in effect (computed on the basis of a year
of 360 days, and the actual number of days elapsed). If the L/C Issuer issues
any Letter of Credit with an expiration date that is automatically extended
unless the L/C Issuer gives notice that the expiration date will not so extend
beyond its then scheduled expiration date, unless the Required Lenders instruct
the L/C Issuer otherwise, the L/C Issuer will give such notice of non-renewal
before the time necessary to prevent such automatic extension if before such
required notice date: (i) the expiration date of such Letter of Credit if so
extended would be after the Revolving Credit Termination Date, (ii) the
Revolving Credit Commitments have been terminated, or (iii) a Default or an
Event of Default exists and the Administrative Agent, at the request or with the
consent of the Required Lenders, has given the L/C Issuer instructions not to so
permit the extension of the expiration date of such Letter of Credit. The L/C
Issuer agrees to issue amendments to the Letter(s) of Credit increasing the
amount, or extending the expiration date,
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thereof at the request of the Borrower subject to the conditions of Section 7
hereof and the other terms of this Section 1.3.
(c) The Reimbursement Obligations. Subject to Section 1.3(b) hereof,
the obligation of the Borrower to reimburse the L/C Issuer for all drawings
under a Letter of Credit (a "Reimbursement Obligation") shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
to be paid if the Borrower has been informed of such drawing by the L/C Issuer
on or before 11:30 a.m. (Chicago time) on the date when such drawing is to be
paid or, if notice of such drawing is given to the Borrower after 11:30 a.m.
(Chicago time) on the date when such drawing is to be paid, by the end of such
day, in immediately available funds at the Administrative Agent's principal
office in Chicago, Illinois or such other office as the Administrative Agent may
designate in writing to the Borrower (who shall thereafter cause to be
distributed to the L/C Issuer such amount(s) in like funds). If the Borrower
does not make any such reimbursement payment on the date due and the
Participating Lenders fund their participations therein in the manner set forth
in Section 1.3(d) below, then all payments thereafter received by the
Administrative Agent in discharge of any of the relevant Reimbursement
Obligations shall be distributed in accordance with Section 1.3(d) below.
(d) The Participating Interests. Each Lender (other than the Lender
acting as L/C Issuer in issuing the relevant Letter of Credit), by its
acceptance hereof, severally agrees to purchase from the L/C Issuer, and the L/C
Issuer hereby agrees to sell to each such Lender (a "Participating Lender"), an
undivided percentage participating interest (a "Participating Interest"), to the
extent of its Revolver Percentage, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the L/C Issuer. Upon any failure by the
Borrower to pay any Reimbursement Obligation at the time required on the date
the related drawing is to be paid, as set forth in Section 1.3(c) above, or if
the L/C Issuer is required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian or other Person any portion of any
payment of any Reimbursement Obligation, each Participating Lender shall, not
later than the Business Day it receives a certificate in the form of Exhibit A
hereto from the L/C Issuer (with a copy to the Administrative Agent) to such
effect, if such certificate is received before 1:00 p.m. (Chicago time), or not
later than 1:00 p.m. (Chicago time) the following Business Day, if such
certificate is received after such time, pay to the Administrative Agent for the
account of the L/C Issuer an amount equal to such Participating Lender's
Revolver Percentage of such unpaid or recaptured Reimbursement Obligation
together with interest on such amount accrued from the date the related payment
was made by the L/C Issuer to the date of such payment by such Participating
Lender at a rate per annum equal to: (i) from the date the related payment was
made by the L/C Issuer to the date 2 Business Days after payment by such
Participating Lender is due hereunder, the Federal Funds Rate for each such day
and (ii) from the date 2 Business Days after the date such payment is due from
such Participating Lender to the date such payment is made by such Participating
Lender, the Base Rate in effect for each such day. Each such Participating
Lender shall thereafter be entitled to receive its Revolver Percentage of each
payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the L/C Issuer retaining its Revolver Percentage
thereof as a Lender hereunder.
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The several obligations of the Participating Lenders to the L/C Issuer
under this Section 1.3 shall be absolute, irrevocable and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Lender may have or
have had against the Borrower, the L/C Issuer, the Administrative Agent, any
Lender or any other Person whatsoever. Without limiting the generality of the
foregoing, such obligations shall not be affected by any Default or Event of
Default or by any reduction or termination of any Commitment of any Lender, and
each payment by a Participating Lender under this Section 1.3 shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) Indemnification. The Participating Lenders shall, to the extent of
their respective Revolver Percentages, indemnify the L/C Issuer (to the extent
not reimbursed by the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the L/C Issuer's gross negligence or willful
misconduct) that the L/C Issuer may suffer or incur in connection with any
Letter of Credit issued by it. The obligations of the Participating Lenders
under this Section 1.3(e) and all other parts of this Section 1.3 shall survive
termination of this Agreement and of all Applications, Letters of Credit, and
all drafts and other documents presented in connection with drawings thereunder.
Section 1.4. Applicable Interest Rates.
(a) Base Rate Loans. Each Base Rate Loan made or maintained by a Lender
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days, and the actual days elapsed) on the unpaid
principal amount thereof from the date such Loan is advanced, continued or
created by conversion from a Eurodollar Loan until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the Base Rate from time
to time in effect, payable on the last day of its Interest Period and at
maturity (whether by acceleration or otherwise).
"Base Rate" means for any day the greater of: (i) the rate of interest
announced or otherwise established by the Administrative Agent from time to time
as its prime commercial rate, as in effect on such day, with any change in the
Base Rate resulting from a change in said prime commercial rate to be effective
as of the date of the relevant change in said prime commercial rate (it being
acknowledged and agreed that such rate may not be the Administrative Agent's
best or lowest rate) and (ii) the sum of (x) the rate determined by the
Administrative Agent to be the average (rounded upward, if necessary, to the
next higher 1/100 of 1%) of the rates per annum quoted to the Administrative
Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is
practicable) on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds brokers
selected by the Administrative Agent for sale to the Administrative Agent at
face value of Federal funds in the secondary market in an amount equal or
comparable to the principal amount owed to the Administrative Agent for which
such rate is being determined, plus (y) 1/2 of 1%.
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a
Lender shall, subject to the provisions of Section 1.4(d) hereof, bear interest
during each Interest Period it is outstanding (computed on the basis of a year
of 360 days and actual days elapsed) on the unpaid
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principal amount thereof from the date such Loan is advanced, continued or
created by conversion from a Base Rate Loan until maturity (whether by
acceleration or otherwise) at a rate per annum equal to the sum of 3.0% per
annum plus the Adjusted LIBOR applicable for such Interest Period, payable on
the last day of the Interest Period and at maturity (whether by acceleration or
otherwise), and, if the applicable Interest Period is longer than three months,
on each day occurring every three months after the commencement of such Interest
Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate
per annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
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1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal, and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities", as defined in such Board's Regulation
D (or in respect of any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined or any
category of extensions of credit or other assets that include loans by
non-United States offices of any Lender to United States residents), subject to
any amendments of such reserve requirement by such Board or its successor,
taking into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be "eurocurrency
liabilities" as defined in Regulation D without benefit or credit for any
prorations, exemptions or offsets under Regulation D.
"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar
Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately
available funds are offered to the Administrative Agent at 11:00 a.m. (London,
England time) 2 Business Days before the beginning of such Interest Period by 3
or more major banks in the interbank eurodollar market selected by the
Administrative Agent for delivery on the first day of and for a period equal to
such Interest Period and in an amount equal or comparable to the principal
amount of the Eurodollar Loan scheduled to be made by the Administrative Agent
as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day 2 Business Days before the commencement of
such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as
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may be nominated by the British Bankers' Association as the information vendor
for the purpose of displaying British Bankers' Association Interest Settlement
Rates for U.S. Dollar deposits).
(c) Fixed Rate Loan. The Fixed Rate Loan shall bear interest as
described in Section 1.6(f) hereof, payable on the last day of each calendar
quarter and on the Revolving Credit Termination Date.
(d) Deemed LIBOR. Notwithstanding the provisions of Section 1.4(b)
above, the Lenders agree that, as long as the Borrower maintains at least
$5,000,000 in principal amount of Eurodollar Loans outstanding under the
Revolving Credit with an Interest Period of three months and no Event of Default
exists, LIBOR as a component of the interest rate applicable to such $5,000,000
outstanding principal amount shall be deemed, for the purpose of the calculation
of such interest rate, to be the lesser of (x) LIBOR as otherwise calculated
pursuant to Section 1.4(b) hereof and (y) 5.00% per annum. The provisions of
this Section 1.4(d) shall not be understood to prevent the Lenders from charging
the rates of interest set forth in Section 1.10 hereof at any time when such
rates would otherwise be applicable to the principal amount of the Revolving
Loans described in the preceding sentence.
(e) Rate Determinations. The Administrative Agent shall determine each
interest rate applicable to the Loans and the Reimbursement Obligations
hereunder, and its determination thereof shall be conclusive and binding except
in the case of manifest error.
Section 1.5. Minimum Borrowing Amounts; Maximum Eurodollar Loans. Each
Borrowing of Base Rate Loans advanced under a Credit shall be in an amount not
less than $100,000 with increments of $100,000 in excess thereof. Each Borrowing
of Eurodollar Loans advanced, continued or converted under a Credit shall be in
an amount equal to $500,000 or such greater amount which is an integral multiple
of $100,000. Without the Administrative Agent's consent, there shall not be more
than five Borrowings of Eurodollar Loans outstanding under a Credit at any one
time.
Section 1.6. Manner of Borrowing Loans and Designating Applicable
Interest Rates.
(a) Notice to the Administrative Agent. The Borrower shall give notice
to the Administrative Agent by no later than 12:00 noon (Chicago time): (i) at
least 3 Business Days before the date on which the Borrower requests the Lenders
to advance a Borrowing of Eurodollar Loans and (ii) on the date the Borrower
requests the Lenders to advance a Borrowing of Base Rate Loans. The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified in such notice of a new Borrowing. Thereafter, the Borrower may from
time to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to Section 1.5's minimum amount requirement for each
outstanding Borrowing, a portion thereof, as follows: (i) if such Borrowing is
of Eurodollar Loans, on the last day of the Interest Period applicable thereto,
the Borrower may continue part or all of such Borrowing as Eurodollar Loans or
convert part or all of such Borrowing into Base Rate Loans or (ii) if such
Borrowing is of Base Rate Loans, on any Business Day, the Borrower may convert
all or part of such Borrowing into Eurodollar Loans for an Interest Period or
Interest Periods specified by the Borrower. The Borrower shall give all such
notices requesting the advance, continuation or
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conversion of a Borrowing to the Administrative Agent by telephone or telecopy
(which notice shall be irrevocable once given and, if by telephone, shall be
promptly confirmed in writing), substantially in the form attached hereto as
Exhibit B (Notice of Borrowing) or Exhibit C (Notice of
Continuation/Conversion), as applicable, or in such other form acceptable to the
Administrative Agent. Notice of the continuation of a Borrowing of Eurodollar
Loans for an additional Interest Period or of the conversion of part or all of a
Borrowing of Base Rate Loans into Eurodollar Loans must be given by no later
than 12:00 noon (Chicago time) at least 3 Business Days before the date of the
requested continuation or conversion. All such notices concerning the advance,
continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the
Interest Period applicable thereto. The Borrower agrees that the Administrative
Agent may rely on any such telephonic or telecopy notice given by any person the
Administrative Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation and in the event any such
notice by telephone conflicts with any written confirmation, such telephonic
notice shall govern if the Administrative Agent has acted in reliance thereon.
(b) Notice to the Lenders. The Administrative Agent shall give prompt
telephonic or telecopy notice to each Lender of any notice from the Borrower
received pursuant to Section 1.6(a) above and, if such notice requests the
Lenders to make Eurodollar Loans, the Administrative Agent shall give notice to
the Borrower and each Lender by like means of the interest rate applicable
thereto promptly after the Administrative Agent has made such determination.
(c) Borrower's Failure to Notify; Automatic Continuations and
Conversions. Any outstanding Borrowing of Base Rate Loans shall automatically be
continued for an additional Interest Period on the last day of its then current
Interest Period unless the Borrower has notified the Administrative Agent within
the period required by Section 1.6(a) that the Borrower intends to convert such
Borrowing, subject to Section 7.1 hereof, into a Borrowing of Eurodollar Loans
or such Borrowing is prepaid in accordance with Section 1.9(a). If the Borrower
fails to give notice pursuant to Section 1.6(a) above of the continuation or
conversion of any outstanding principal amount of a Borrowing of Eurodollar
Loans before the last day of its then current Interest Period within the period
required by Section 1.6(a) or, whether or not such notice has been given, one or
more of the conditions set forth in Section 7.1 for the continuation or
conversion of a Borrowing of Eurodollar Loans would not be satisfied, and such
Borrowing is not prepaid in accordance with Section 1.9(a), such Borrowing shall
automatically be converted into a Borrowing of Base Rate Loans. In the event the
Borrower fails to give notice pursuant to Section 1.6(a) above of a Borrowing
equal to the amount of a Reimbursement Obligation and has not notified the
Administrative Agent by 1:00 p.m. (Chicago time) on the day such Reimbursement
Obligation becomes due that it intends to repay such Reimbursement Obligation
through funds not borrowed under this Agreement, the Borrower shall be deemed to
have requested a Borrowing of Base Rate Loans under the Revolving Credit on such
day in the amount of the Reimbursement Obligation then due, which Borrowing
shall be applied to pay the Reimbursement Obligation then due.
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(d) Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on
the date of any requested advance of a new Borrowing, subject to Section 7
hereof, each Lender shall make available its Loan comprising part of such
Borrowing in funds immediately available at the principal office of the
Administrative Agent in Chicago, Illinois. The Administrative Agent shall make
the proceeds of each new Borrowing available to the Borrower at the
Administrative Agent's principal office in Chicago, Illinois.
(e) Administrative Agent Reliance on Lender Funding. Unless the
Administrative Agent shall have been notified by a Lender prior to (or, in the
case of a Borrowing of Base Rate Loans, by 1:00 p.m. (Chicago time) on) the date
on which such Lender is scheduled to make payment to the Administrative Agent of
the proceeds of a Loan (which notice shall be effective upon receipt) that such
Lender does not intend to make such payment, the Administrative Agent may assume
that such Lender has made such payment when due and the Administrative Agent may
in reliance upon such assumption (but shall not be required to) make available
to the Borrower the proceeds of the Loan to be made by such Lender and, if any
Lender has not in fact made such payment to the Administrative Agent, such
Lender shall, on demand, pay to the Administrative Agent the amount made
available to the Borrower attributable to such Lender together with interest
thereon in respect of each day during the period commencing on the date such
amount was made available to the Borrower and ending on (but excluding) the date
such Lender pays such amount to the Administrative Agent at a rate per annum
equal to: (i) from the date the related advance was made by the Administrative
Agent to the date 2 Business Days after payment by such Lender is due hereunder,
the Federal Funds Rate for each such day and (ii) from the date 2 Business Days
after the date such payment is due from such Lender to the date such payment is
made by such Lender, the Base Rate in effect for each such day. If such amount
is not received from such Lender by the Administrative Agent immediately upon
demand, the Borrower will, on demand, repay to the Administrative Agent the
proceeds of the Loan attributable to such Lender with interest thereon at a rate
per annum equal to the interest rate applicable to the relevant Loan, but
without such payment being considered a payment or prepayment of a Loan under
Section 1.12 hereof so that the Borrower will have no liability under such
Section with respect to such payment.
(f) Notwithstanding any other provisions of this Section 1.6 or any
other Section of this Agreement, $3,000,000 in principal amount of the Revolving
Loans (hereinafter, such portion of the Revolving Loans the "Fixed Rate Loan")
will bear interest during the term of this Agreement at a fixed rate equal to
7.35% per annum, provided that if the Fixed Rate Loan or any part thereof is not
paid when due (whether by lapse of time, acceleration or otherwise) the
principal balance thereof shall bear interest, whether before or after judgment,
until payment in full thereof of all amounts then due at the rate per annum
determined by adding 2% per annum to the interest rate that would otherwise be
applicable thereto. The entire principal amount of the Fixed Rate Loan will
remain outstanding until the Revolving Credit Termination Date; any prepayment
by the Borrower of any portion thereof (including, without limitation, any
mandatory prepayment whether due to acceleration or otherwise) will subject the
Borrower to payment of the funding indemnity amount set forth in Section 1.12(b)
hereof.
Section 1.7. Interest Periods. As provided in Section 1.6(a) hereof, at
the time of each request to advance, continue or create by conversion a
Borrowing of Eurodollar Loans, the
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Borrower shall select an Interest Period applicable to such Loans from among the
available options. The term "Interest Period" means the period commencing on the
date a Borrowing of Loans is advanced, continued or created by conversion and
ending: (a) in the case of Base Rate Loans, on the last day of the calendar
quarter (i.e., the last day of March, June, September or December, as
applicable) in which such Borrowing is advanced, continued or created by
conversion (or on the last day of the following calendar quarter if such Loan is
advanced, continued or created by conversion on the last day of a calendar
quarter) and (b) in the case of a Eurodollar Loan, 1, 2, 3 or 6 months
thereafter; provided, however, that:
(a) any Interest Period for a Borrowing of Revolving Loans
consisting of Base Rate Loans that otherwise would end after the
Revolving Credit Termination Date shall end on the Revolving Credit
Termination Date, and any Interest Period for a Borrowing of Term Loans
consisting of Base Rate Loans that otherwise would end after the final
maturity date of the Term Loans shall end on the final maturity date of
the Term Loans;
(b) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Credit Termination
Date, no Interest Period with respect to any portion of the Term Loans
shall extend beyond the final maturity date of the Term Loans;
(c) no Interest Period with respect to any portion of the
Term Loans consisting of Eurodollar Loans shall extend beyond a date on
which the Borrower is required to make a scheduled payment of principal
on the Term Loans, unless the sum of (a) the aggregate principal amount
of Term Loans that are Base Rate Loans plus (b) the aggregate principal
amount of Term Loans that are Eurodollar Loans with Interest Periods
expiring on or before such date equals or exceeds the principal amount
to be paid on the Term Loans on such payment date;
(d) whenever the last day of any Interest Period would
otherwise be a day that is not a Business Day, the last day of such
Interest Period shall be extended to the next succeeding Business Day,
provided that, if such extension would cause the last day of an
Interest Period for a Borrowing of Eurodollar Loans to occur in the
following calendar month, the last day of such Interest Period shall be
the immediately preceding Business Day; and
(e) for purposes of determining an Interest Period for a
Borrowing of Eurodollar Loans, a month means a period starting on one
day in a calendar month and ending on the numerically corresponding day
in the next calendar month; provided, however, that if there is no
numerically corresponding day in the month in which such an Interest
Period is to end or if such an Interest Period begins on the last
Business Day of a calendar month, then such Interest Period shall end
on the last Business Day of the calendar month in which such Interest
Period is to end.
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Section 1.8. Maturity of Loans
(a) Scheduled Payments of Term Loans. The Borrower shall make principal
payments on the Term Loans in installments on the last day of each March, June,
September, and December in each year, commencing with the calendar quarter
ending June 30, 2002, with the amount of each such principal installment to
equal the amount set forth in Column B below shown opposite of the relevant due
date as set forth in Column A below:
COLUMN A COLUMN B
SCHEDULED PRINCIPAL
PAYMENT DATE PAYMENT ON TERM LOANS
06/30/02 $250,000
09/30/02 $250,000
12/31/02 $250,000
03/31/03 $250,000
06/30/03 $250,000
09/30/03 $250,000
12/31/03 $250,000
03/31/04 $250,000
06/30/04 $250,000
09/30/04 $250,000
, it being agreed that the final payment of both principal and interest not
sooner paid on the Term Loans shall be due and payable on December 19, 2004 the
final maturity thereof. Each such principal payment shall be applied to the
Lenders holding the Term Loans pro rata based upon their Term Loan Percentages.
(b) Revolving Loans. Each Revolving Loan, both for principal and
interest, shall mature and become due and payable by the Borrower on the
Revolving Credit Termination Date.
Section 1.9. Prepayments.
(a) Optional. The Borrower shall have the privilege of prepaying
without premium or penalty (except as set forth in Section 1.12 below) and in
whole or in part (but, if in part, then: (i) if such Borrowing is of Base Rate
Loans, in an amount not less than $100,000, (ii) if such Borrowing is of
Eurodollar Loans or of the Fixed Rate Loan, in an amount not less than $500,000,
and (iii) in each case, in an amount such that the minimum amount required for a
Borrowing pursuant to Section 1.5 hereof remains outstanding) any Borrowing of
Eurodollar Loans or the Fixed Rate Loan at any time upon 3 Business Days prior
notice by the Borrower to the Administrative Agent or, in the case of a
Borrowing of Base Rate Loans, notice delivered by the Borrower to the
Administrative Agent no later than 10:00 a.m. (Chicago time) on the date of
prepayment, such prepayment to be made by the payment of the principal amount to
be prepaid and, in the case of any Term Loans, the Fixed Rate Loan or Eurodollar
Loans, accrued interest
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thereon to the date fixed for prepayment plus, in the case of any Eurodollar
Loans or the Fixed Rate Loan, any amounts due the Lenders under Section 1.12
hereof.
(b) Mandatory. (i) If the Parent, the Borrower or any Subsidiary shall
at any time or from time to time make or agree to make a Disposition or shall
suffer an Event of Loss resulting in Net Cash Proceeds in excess of $1,000,000
(or the equivalent thereof in another currency) individually or on a cumulative
basis in any fiscal year of the Parent, then (x) the Borrower shall promptly
notify the Administrative Agent of such proposed Disposition or Event of Loss
(including the amount of the estimated Net Cash Proceeds to be received by the
Parent, the Borrower or such Subsidiary in respect thereof) and (y) promptly
upon receipt by the Parent, the Borrower or the Subsidiary of the Net Cash
Proceeds of such Disposition or Event of Loss, the Borrower shall prepay the
Term Loans in an aggregate amount equal to 100% of the amount of all such Net
Cash Proceeds (or to all outstanding Loans and L/C Obligations if an Event of
Default exists); provided that in the case of each Disposition and Event of
Loss, if the Parent or the Borrower states in its notice of such event that the
Parent, the Borrower or the applicable Subsidiary intends to reinvest, within 90
days of the applicable Disposition or receipt of Net Cash Proceeds from an Event
of Loss, the Net Cash Proceeds thereof in assets similar to the assets which
were subject to such Disposition or Event of Loss, then so long as no Default or
Event of Default then exists, the Borrower shall not be required to make a
mandatory prepayment under this Section in respect of such Net Cash Proceeds to
the extent such Net Cash Proceeds are actually reinvested in such similar assets
with such 90-day period. Promptly after the end of such 90-day period, the
Borrower shall notify the Administrative Agent whether the Parent, the Borrower
or such Subsidiary has reinvested such Net Cash Proceeds in such similar assets,
and to the extent such Net Cash Proceeds have not been so reinvested, the
Borrower shall promptly prepay the Term Loans in the amount of such Net Cash
Proceeds not so reinvested (or to all outstanding Loans and L/C Obligations if
an Event of Default exists). The amount of each such prepayment shall be applied
on a ratable basis among the relevant outstanding Obligations of the several
Lenders based on the principal amounts thereof. If a Default or Event of Default
exists, all proceeds of such Disposition or Event of Loss shall be deposited
with the Administrative Agent and held by it in the Collateral Account. So long
as no Default or Event of Default exists, the Administrative Agent is authorized
to disburse amounts representing such proceeds from the Collateral Account to or
at the Borrower's direction for application to or reimbursement for the costs of
replacing, rebuilding or restoring such Property.
(ii) If after the Closing Date the Parent, the Borrower or any
Subsidiary shall issue new equity securities (whether common or preferred stock
or otherwise), other than equity securities issued in connection with the
exercise of employee stock options, the Borrower shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Parent, the Borrower or such Subsidiary in
respect thereof. Promptly upon receipt by the Parent, the Borrower or such
Subsidiary of Net Cash Proceeds of such issuance, the Borrower shall prepay the
Term Loans (or to all outstanding Loans and L/C Obligations if an Event of
Default exists) in an aggregate amount equal to 100% of the amount of such Net
Cash Proceeds. The amount of each such prepayment shall be applied on a ratable
basis among the relevant outstanding Obligations of the several Lenders based on
the principal amounts thereof. The Borrower acknowledges that its performance
hereunder shall not
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limit the rights and remedies of the Lenders for any breach of Section 8.11
hereof or any other terms of this Agreement.
(iii) If after the Closing Date the Parent, the Borrower or any
Subsidiary shall issue any Indebtedness for Borrowed Money, other than
Indebtedness for Borrowed Money permitted by Section 8.7(a), (b), (c), (d), (e)
or (g) hereof, the Borrower shall promptly notify the Administrative Agent of
the estimated Net Cash Proceeds of such issuance to be received by or for the
account of the Parent, the Borrower or such Subsidiary in respect thereof.
Promptly upon receipt by the Parent, the Borrower or such Subsidiary of Net Cash
Proceeds of such issuance, the Borrower shall prepay the Term Loans (or to all
outstanding Loans and L/C Obligations if an Event of Default exists) in an
aggregate amount equal to 100% of the amount of such Net Cash Proceeds. The
amount of each such prepayment shall be applied on a ratable basis among the
relevant outstanding Obligations of the several Lenders based on the principal
amounts thereof. The Borrower acknowledges that its performance hereunder shall
not limit the rights and remedies of the Lenders for any breach of Section 8.7
hereof or any other terms of this Agreement.
(iv) The Borrower shall, on each date the Revolving Credit Commitments
are reduced pursuant to Section 1.13 hereof, prepay the Revolving Loans and, if
necessary, prefund the L/C Obligations by the amount, if any, necessary to
reduce the sum of the aggregate principal amount of Revolving Loans and L/C
Obligations then outstanding to the amount to which the Revolving Credit
Commitments have been so reduced.
(v) If at any time the sum of the unpaid principal balance of the
Revolving Loans and the L/C Obligations then outstanding shall be in excess of
the Borrowing Base as then determined and computed, the Borrower shall
immediately and without notice or demand pay over the amount of the excess to
the Administrative Agent for the account of the Lenders as and for a mandatory
prepayment on such Obligations, with each such prepayment first to be applied to
the Revolving Loans until payment in full thereof with any remaining balance to
be held by the Administrative Agent in the Collateral Account as security for
the Obligations owing with respect to the Letters of Credit.
(vi) Unless the Borrower otherwise directs, prepayments of Loans under
this Section 1.9(b) shall be applied first to Borrowings of Base Rate Loans
until payment in full thereof, then to Borrowings of Eurodollar Loans in the
order in which their Interest Periods expire, then to the Fixed Rate Loan. Each
prepayment of Loans under this Section 1.9(b) shall be made by the payment of
the principal amount to be prepaid and, in the case of any Term Loans, the Fixed
Rate Loan or Eurodollar Loans, accrued interest thereon to the date of
prepayment together with, in the case of any Eurodollar Loans or the Fixed Rate
Loan, any amounts due the Lenders under Section 1.12 hereof. Each prefunding of
L/C Obligations shall be made in accordance with Section 9.4 hereof.
(c) The Administrative Agent will promptly advise each Lender of any
notice of prepayment it receives from or for the account of the Borrower. Any
amount of Revolving Loans paid or prepaid before the Revolving Credit
Termination Date may, subject to the terms and conditions of this Agreement, be
borrowed, repaid and borrowed again, provided that any portion
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of the Revolving Loans which is part of the Fixed Rate Loan will, if repaid and
reborrowed, be reborrowed as a Eurodollar Loan or a Base Rate Loan and not at a
fixed rate. No amount of the Term Loans paid or prepaid may be reborrowed, and,
in the case of any partial prepayment of Term Loans, such prepayment shall be
applied to the relevant remaining amortization payments thereon in the reverse
order of maturity.
Section 1.10. Default Rate. Notwithstanding anything to the contrary
contained in Section 1.4 hereof, while any Event of Default exists or after
acceleration, the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
Loans owing by it at a rate per annum equal to:
(a) for any Base Rate Loan, the sum of 2.0% per annum plus the
Base Rate from time to time in effect;
(b) for any Eurodollar Loan, the sum of 2.0% per annum plus
the rate of interest in effect thereon at the time of such default
until the end of the Interest Period applicable thereto and,
thereafter, at a rate per annum equal to the sum of 2.0% per annum plus
the Base Rate from time to time in effect; and
(c) for the Fixed Rate Loan, the sum of 2.0% per annum plus
the rate of interest otherwise applicable thereto.
provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section shall be made at the election of the Administrative Agent,
acting at the request or with the consent of the Required Lenders, with written
notice to the Borrower. While any Event of Default exists or after acceleration,
interest shall be paid on demand of the Administrative Agent at the request or
with the consent of the Required Lenders.
Section 1.11. The Notes. (a) The Term Loan made to the Borrower by a
Lender shall be evidenced by a single promissory note of the Borrower issued to
such Lender in the form of Exhibit D-1 hereto. Each such promissory note is
hereinafter referred to as a "Term Note" and collectively such promissory notes
are referred to as the "Term Notes."
(b) The Revolving Loans, including without limitation the Fixed Rate
Loan, made to the Borrower by a Lender shall be evidenced by a single promissory
note of the Borrower issued to such Lender in the form of Exhibit D-2 hereto.
Each such promissory note is hereinafter referred to as a "Revolving Note" and
collectively such promissory notes are referred to as the "Revolving Notes."
(c) Each Lender shall record on its books and records or on a schedule
to its appropriate Note the amount of each Loan advanced, continued or converted
by it, all payments of principal and interest and the principal balance from
time to time outstanding thereon, the type of such Loan, and, for any Eurodollar
Loan, the Interest Period and the interest rate applicable thereto. The record
thereof, whether shown on such books and records of a Lender or on a schedule to
the relevant Note, shall be prima facie evidence as to all such matters;
provided, however, that the failure of any Lender to record any of the foregoing
or any error in any such record shall not limit
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or otherwise affect the obligation of the Borrower to repay all Loans made to it
hereunder together with accrued interest thereon. At the request of any Lender
and upon such Lender tendering to the Borrower the appropriate Note to be
replaced, the Borrower shall furnish a new Note to such Lender to replace any
outstanding Note, and at such time the first notation appearing on a schedule on
the reverse side of, or attached to, such Note shall set forth the aggregate
unpaid principal amount of all Loans, if any, then outstanding thereon.
Section 1.12. Funding Indemnity.
(a) Eurodollar Loans. If any Lender shall incur any loss, cost or
expense (including, without limitation, any loss of profit, and any loss, cost
or expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such Lender to fund or maintain any Eurodollar Loan or
the relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender) as a result of:
(i) any payment, prepayment or conversion of a Eurodollar Loan
on a date other than the last day of its Interest Period,
(ii) any failure (because of a failure to meet the conditions
of Section 7 or otherwise) by the Borrower to borrow or continue a
Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan,
on the date specified in a notice given pursuant to Section 1.6(a)
hereof,
(iii) any failure by the Borrower to make any payment of
principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or
(iv) any acceleration of the maturity of a Eurodollar Loan as
a result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Administrative Agent, a certificate setting forth the amount
of such loss, cost or expense in reasonable detail (including an explanation of
the basis for and the computation of such loss, cost or expense) and the amounts
shown on such certificate shall be conclusive if reasonably determined.
(b) Fixed Rate Loan. If the Borrower prepays any principal amount of
the Fixed Rate Loan before its scheduled due date (whether as the result of an
acceleration, mandatory or voluntary prepayment, or otherwise), the Borrower
shall pay to the Administrative Agent for the benefit of the Lenders a funding
indemnity equal to the cost to the Administrative Agent of then acquiring an
interest rate swap agreement (or an equivalent instrument or instruments) with
another interest rate swap dealer of the highest credit standing in a notional
principal amount equal to the amount of such prepayment (including any scheduled
amortization of such amount) to the scheduled due date of such prepaid amount
under which the Administrative Agent would pay quarterly a floating rate of
interest based upon three-month LIBOR and such other dealer
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would pay to the Administrative Agent on the regularly scheduled payment dates
for the Fixed Rate Loan a fixed rate of interest equal to the interest rate on
the Fixed Rate Loan.
(c) Minimum Revolving Credit Commitments. If at any time the Revolving
Credit Commitments of the Lenders are reduced to an amount less than $8,000,000
in the aggregate (whether due to a termination of such Revolving Credit
Commitments following an Event of Default or otherwise), the Borrower shall
prepay a portion of the LIBOR Determination Fee equal to the Agreed Fee Payment
Amount. As used herein, "Agreed Fee Prepayment Amount" is an amount equal to the
unpaid portion of the entire $310,000 LIBOR Determination Fee at the time of
determination, multiplied by a fraction where the numerator of such fraction is
the excess of $8,000,000 over the amount to which the aggregate Revolving Credit
Commitments of the Lenders have been reduced, and the denominator of such
fraction is $5,000,000.
Section 1.13. Commitment Terminations.
(a) Optional Revolving Credit Terminations. The Borrower shall have the
right at any time and from time to time, upon 5 Business Days' prior written
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments without premium or penalty and in whole or in part, any partial
termination to be (i) in an amount not less than $500,000 and multiples thereof,
and (ii) allocated ratably among the Lenders in proportion to their respective
Revolver Percentages, provided that the Revolving Credit Commitments may not be
reduced to an amount less than the sum of the aggregate principal amount of
Revolving Loans and of L/C Obligations then outstanding. Any termination of the
Revolving Credit Commitments below the L/C Sublimit then in effect shall reduce
the L/C Sublimit by a like amount. The Administrative Agent shall give prompt
notice to each Lender of any such termination of the Revolving Credit
Commitments.
(b) Mandatory Revolving Credit Terminations.
(i) Net Cash Proceeds. If at any time Net Cash Proceeds
remain after the prepayment of the Term Loans in full pursuant to
Section 1.9(b) hereof, the Revolving Credit Commitments shall ratably
terminate by an amount equal to 100% of such excess proceeds.
(ii) Scheduled. The aggregate Revolving Credit Commitments of
the Lenders shall be permanently reduced by the amount of $250,000 on
the last day of each calendar quarter during the term of this
Agreement, commencing on June 30, 2002.
(c) Any termination of the Revolving Credit Commitments
pursuant to this Section 1.13 may not be reinstated.
Section 1.14. Substitution of Lenders. Upon the receipt by the Borrower
of (a) a claim from any Lender for compensation under Section 10.3 or 13.1
hereof, (b) notice by any Lender to the Borrower of any illegality pursuant to
Section 10.1 hereof or (c) in the event any Lender is in default in any material
respect with respect to its obligations under the Loan Documents (any such
Lender referred to in clause (a), (b) or (c) above being hereinafter referred to
as an "Affected
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Lender"), the Borrower may, in addition to any other rights the Borrower may
have hereunder or under applicable law, require, at its expense, any such
Affected Lender to assign, at par plus accrued interest and fees, without
recourse, all of its interest, rights, and obligations hereunder (including all
of its Commitments and the Loans and participation interests in Letters of
Credit and other amounts at any time owing to it hereunder and the other Loan
Documents) to a bank or other institutional lender specified by the Borrower,
provided that (i) such assignment shall not conflict with or violate any law,
rule or regulation or order of any court or other governmental authority, (ii)
the Borrower shall have received the written consent of the Administrative
Agent, which consent shall not be unreasonably withheld, to such assignment,
(iii) the Borrower shall have paid to the Affected Lender all monies (together
with amounts due such Affected Lender under Section 1.12 hereof as if the Loans
owing to it were prepaid rather than assigned) other than such principal,
interest, and fees accrued and owing to it hereunder, and (iv) the assignment is
entered into in accordance with the other requirements of Section 13.12 hereof.
SECTION 2. FEES.
Section 2.1. Fees.
(a) Revolving Credit Commitment Fee. The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Revolver Percentages a commitment fee at the rate of 0.50% per annum
(computed on the basis of a year of 360 days and the actual number of days
elapsed) on the average daily Unused Revolving Credit Commitments. Such
commitment fee shall be payable quarterly in arrears on the last day of each
March, June, September, and December in each year (commencing on the first such
date occurring after the date hereof) and on the Revolving Credit Termination
Date, unless the Revolving Credit Commitments are terminated in whole on an
earlier date, in which event the commitment fee for the period to the date of
such termination in whole shall be paid on the date of such termination.
(b) Letter of Credit Fees. On the date of issuance or extension, or
increase in the amount, of any Standby Letter of Credit pursuant to Section 1.3
hereof, the Borrower shall pay to the L/C Issuer for its own account an issuance
fee equal to 0.125% of the face amount of (or of the increase in the face amount
of) such Letter of Credit. Quarterly in arrears, on the last day of each March,
June, September, and December, commencing on the first such date occurring after
the date hereof, the Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders in accordance with their Revolver Percentages, a
letter of credit fee at the rate of 3.0% per annum (computed on the basis of a
year of 360 days and the actual number of days elapsed) in effect during each
day of such quarter applied to the daily average face amount of Letters of
Credit outstanding during such quarter. In addition, the Borrower shall pay to
the L/C Issuer for its own account the L/C Issuer's standard issuance fees for
commercial letters of credit and standard drawing, negotiation, amendment, and
other administrative fees for each Letter of Credit. Such standard fees referred
to in the preceding sentence may be established by the L/C Issuer from time to
time.
(c) Administrative Agent Fees. The Borrower shall pay to the
Administrative Agent, for its own use and benefit, the fees agreed to between
the Administrative Agent and the
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Borrower in a fee letter and related summary of terms dated November 29, 2001,
or as otherwise agreed to in writing between them.
(d) Audit Fees. The Borrower shall pay to the Administrative Agent for
its own use and benefit charges for audits of the Collateral performed by the
Administrative Agent or its agents or representatives in such amounts as the
Administrative Agent may from time to time request (the Administrative Agent
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits); provided, however, that in the absence of any
Default and Event of Default, the Borrower shall not be required to pay the
Administrative Agent for more than two such audits per calendar year.
(e) LIBOR Determination Fee. In consideration of Lenders' agreement
pursuant to Section 1.4(d) hereof with respect to the determination of LIBOR on
the principal amount of the Revolving Credit Loans described therein, the
Borrower agrees to pay to the Administrative Agent for the benefit of the
Lenders a fee (the "LIBOR Determination Fee") in the aggregate amount of
$310,000, of which (x) $15,500 will be due and payable on the Closing Date, (y)
$15,500 will be due and payable on April 1, 2002 and on the first day of each
calendar quarter commencing thereafter, and (z) the remaining unpaid balance
will be due and payable on the Revolving Credit Termination Date or such later
date as is agreed upon by the Borrower and the Lenders. Payment of the LIBOR
Determination Fee may be accelerated pursuant to the provisions of Section
1.12(c) hereof.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
Section 3.1. Place and Application of Payments. All payments of
principal of and interest on the Loans and the Reimbursement Obligations, and of
all other Obligations payable by the Borrower under this Agreement and the other
Loan Documents, shall be made by the Borrower to the Administrative Agent by no
later than 12:00 Noon (Chicago time) on the due date thereof at the office of
the Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower) for the benefit of the
Lender or Lenders entitled thereto. Any payments received after such time shall
be deemed to have been received by the Administrative Agent on the next Business
Day. All such payments shall be made in U.S. Dollars, in immediately available
funds at the place of payment, in each case without set-off or counterclaim. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest on Loans and on Reimbursement
Obligations in which the Lenders have purchased Participating Interests ratably
to the Lenders and like funds relating to the payment of any other amount
payable to any Lender to such Lender, in each case to be applied in accordance
with the terms of this Agreement.
Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Administrative Agent or any of the
Lenders after the occurrence and during the continuation of an Event of Default
shall be remitted to the Administrative Agent and distributed as follows:
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(a) first, to the payment of any outstanding costs and
expenses incurred by the Administrative Agent, and any security trustee
therefor, in monitoring, verifying, protecting, preserving or enforcing
the Liens on the Collateral, in protecting, preserving or enforcing
rights under the Loan Documents, and in any event all costs and
expenses of a character which the Borrower has agreed to pay the
Administrative Agent under Section 13.15 hereof (such funds to be
retained by the Administrative Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders,
in which event such amounts shall be remitted to the Lenders to
reimburse them for payments theretofore made to the Administrative
Agent);
(b) second, to the payment of any outstanding interest and
fees due under the Loan Documents to be allocated pro rata in
accordance with the aggregate unpaid amounts owing to each holder
thereof;
(c) third, to the payment of principal on the Notes, unpaid
Reimbursement Obligations, together with amounts to be held by the
Administrative Agent as collateral security for any outstanding L/C
Obligations pursuant to Section 9.4 hereof (until the Administrative
Agent is holding an amount of cash equal to the then outstanding amount
of all such L/C Obligations), and Hedging Liability, the aggregate
amount paid to, or held as collateral security for, the Lenders and, in
the case of Hedging Liability, their Affiliates to be allocated pro
rata in accordance with the aggregate unpaid amounts owing to each;
(d) fourth, to the payment of all other unpaid Obligations
and all other indebtedness, obligations, and liabilities of the
Borrower and the Subsidiaries secured by the Collateral Documents
(including, without limitation, ACH and Overdraft Liability) to be
allocated pro rata in accordance with the aggregate unpaid amounts
owing to each holder thereof; and
(e) fifth, to the Borrower or whoever else may be lawfully
entitled thereto.
SECTION 4. THE COLLATERAL AND GUARANTIES.
Section 4.1. Collateral. The Obligations shall be secured by (a) valid,
perfected and enforceable Liens on all right, title, and interest of the Parent,
the Borrower and each Subsidiary in all capital stock and other equity interests
held by such Person in each of its subsidiaries, whether now owned or hereafter
formed or acquired, and all proceeds thereof, and (b) valid, perfected, and
enforceable Liens on all right, title, and interest of the Parent, the Borrower
and each Domestic Subsidiary in all personal property and fixtures whether now
owned or hereafter acquired or arising, and all proceeds thereof; provided,
however, that: (i) the Lien of the Administrative Agent on Property subject to a
Capital Lease or conditional sale agreement or subject to a purchase money lien,
in each instance to the extent permitted hereby, shall be subject to the rights
of the lessor or lender thereunder, (ii) until a Default or Event of Default has
occurred and is continuing and thereafter until otherwise required by the
Administrative Agent or the Required Lenders, Liens on local xxxxx cash deposit
accounts maintained by the Parent, the Borrower and the Subsidiaries in
proximity to their operations need not be perfected provided that the total
amount on deposit at any one time not so perfected shall not exceed $500,000 (or
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the equivalent thereof in another currency) in the aggregate and Liens on
payroll accounts maintained by the Parent, the Borrower and the Subsidiaries
need not be perfected provided the total amount on deposit at any time does not
exceed the current amount of their payroll obligations, (iii) until a Default or
Event of Default has occurred and is continuing and thereafter until otherwise
required by the Administrative Agent or the Required Lenders, Liens on notes and
notes receivable and Liens on vehicles which are subject to a certificate of
title law need not be perfected provided that the total value of such property
at any one time not so perfected shall not exceed $250,000 (or the equivalent
thereof in another currency) in the aggregate, and (iv) unless otherwise
required by the Administrative Agent or the Required Lenders during the
existence of any Event of Default, Liens on the capital stock or other equity
interests of a Foreign Subsidiary (other than the Borrower) which, if granted,
would cause a material adverse effect on the Parent's federal income tax
liability shall be limited to 66% of the total outstanding Voting Stock of such
Foreign Subsidiary. Each of the Parent and the Borrower acknowledges and agrees
that the Liens on the Collateral shall be granted to the Administrative Agent
for the benefit of the holders of the Obligations, the Hedging Liability, and
the ACH and Overdraft Liability and shall be valid and perfected first priority
Liens subject, however, to the proviso appearing at the end of the immediately
preceding sentence, in each case pursuant to one or more Collateral Documents
from such Persons, each in form and substance satisfactory to the Administrative
Agent.
Section 4.2. Guaranties. The payment and performance of the Obligations,
Hedging Obligations, and ACH and Overdraft Liability shall at all times be
guaranteed by the Parent and each direct and indirect Subsidiary of the Parent
pursuant to Section 12 of this Agreement, as the same may be amended, modified
or supplemented from time to time (individually a "Guaranty" and collectively
the "Guaranties"); provided, however, that unless otherwise required by the
Administrative Agent or the Required Lenders during the existence of any Event
of Default, Foreign Subsidiaries shall not be required to be guarantors
hereunder if providing such Guaranty would cause a material adverse effect on
the Parent's federal income tax liability.
Section 4.3. Further Assurances. Each of the Parent and the Borrower
agrees that it shall, and shall cause each Subsidiary to, from time to time at
the request of the Administrative Agent or the Required Lenders, execute and
deliver such documents and do such acts and things as the Administrative Agent
or the Required Lenders may reasonably request in order to provide for or
perfect or protect such Liens on the Collateral. In the event the Parent, the
Borrower or any Subsidiary forms or acquires any other Subsidiary after the date
hereof, the Parent or the Borrower shall promptly upon such formation or
acquisition cause such newly formed or acquired Subsidiary to execute a Guaranty
and such Collateral Documents as the Administrative Agent may then require, and
the Parent or the Borrower shall also deliver to the Administrative Agent, or
cause such Subsidiary to deliver to the Administrative Agent, at the Parent's or
the Borrower's cost and expense, such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith.
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SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall
have the following meanings:
"ACH and Overdraft Liability" means the liability of the Parent, the
Borrower or any of the Subsidiaries owing to any of the Lenders, or any
Affiliates of such Lenders, arising out of the processing of incoming and
outgoing transfers of funds by automatic clearing house transfer, wire transfer,
or otherwise pursuant to agreement or arising from overdrafts or other related
deposit and cash management services afforded to the Parent, the Borrower or any
such Subsidiary by any such financial institution.
"Adjusted LIBOR" is defined in Section 1.4(b) hereof.
"Administrative Agent" means Xxxxxx Trust and Savings Bank and any
successor pursuant to Section 11.7 hereof.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, any Person that owns, directly or indirectly, 5% or
more of the securities having the ordinary voting power for the election of
directors or governing body of a corporation or 5% or more of the partnership or
other ownership interest of any other Person (other than as a limited partner of
such other Person) will be deemed to control such corporation or other Person.
"Agreement" means this Credit Agreement, as the same may be amended,
modified, or supplemented from time to time pursuant to the terms hereof.
"Application" is defined in Section 1.3(b) hereof.
"Asset Purchase Agreement" means that certain Asset Purchase Agreement
dated November 30, 2001 by and among the Borrower and the Sellers pursuant to
which the Borrower has agreed to purchase certain assets comprising the Sellers'
high-speed electron beam imaging digital printing system business.
"Authorized Representative" means those persons shown on the list of
officers provided by the Borrower pursuant to Section 7.2 hereof or on any
update of any such list provided by the Borrower to the Administrative Agent, or
any further or different officers of the Borrower so named by any Authorized
Representative of the Borrower in a written notice to the Administrative Agent.
"Base Rate" is defined in Section 1.4(a) hereof.
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"Base Rate Loan" means a Loan bearing interest at a rate specified in
Section 1.4(a) hereof.
"Borrower" is defined in the introductory paragraph of this Agreement.
"Borrowing" means the total of Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Lenders under a Credit on a single date and, in the case
of Eurodollar Loans, for a single Interest Period. Borrowings of Loans are made
and maintained ratably from each of the Lenders under a Credit according to
their Percentages of such Credit. A Borrowing is "advanced" on the day Lenders
advance funds comprising such Borrowing to the Borrower, is "continued" on the
date a new Interest Period for the same type of Loans commences for such
Borrowing, and is "converted" when such Borrowing is changed from one type of
Loans to the other, all as requested by the Borrower pursuant to Section 1.6(a)
hereof.
"Borrowing Base" means, as of any time it is to be determined, the sum
of:
(a) 85% of the then outstanding unpaid amount of Eligible
Receivables; plus
(b) the lesser of (x) $7,000,000 and (y) 50% of the value
(computed at the lower of market or cost using the first-in/first-out
method of inventory valuation applied in accordance with GAAP) of
Eligible Inventory;
provided that (i) the Borrowing Base shall be computed only as against and on so
much of the Collateral as is included on the Borrowing Base Certificates
furnished from time to time by the Borrower pursuant to the terms hereof and, if
required by the Administrative Agent or the Required Lenders pursuant to any of
the terms hereof or any Collateral Document, as verified by such other evidence
reasonably required to be furnished to the Administrative Agent or the Lenders
pursuant hereto or pursuant to any such Collateral Document, and (ii) the
Administrative Agent shall have the right to reduce the advance rates against
and to establish appropriate reserves with respect to Eligible Receivables or
Eligible Inventory and to reduce the dollar cap on Eligible Inventory in the
reasonable exercise of its discretion based on the results of any field audit of
any Collateral which reasonably supports any such reduction or establishment.
"Borrowing Base Certificate" means the certificate in the form of
Exhibit E hereto, or in such other form acceptable to the Administrative Agent,
to be delivered to the Administrative Agent and the Lenders pursuant to Sections
7.2 and 8.5 hereof.
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England, and Nassau,
Bahamas.
"Canadian Benefit Plan" means all plans, arrangements, programs,
policies, practices or undertakings, whether oral or written, formal or
informal, funded or unfunded, insured or
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uninsured, registered or unregistered which the Borrower is a party to or bound
by or under which the Borrower has, or will have, any liability or contingent
liability, relating to pension plans (including any and all benefits relating to
retirement or retirement savings including, without limitation, pension plans,
pensions or supplemental pensions, registered retirement savings plans,
"registered pension plans" as defined in the Income Tax Act (Canada) and
"retirement compensation arrangements" as defined in the Income Tax Act
(Canada)), insurance plans (including any and all benefits relating to
disability or wage continuation during periods of absence from work,
hospitalization, health, medical or dental treatments or expenses, life
insurance, death or survivor's benefits and supplementary employment insurance),
or compensation plans (including any and all benefits relating to bonus,
incentive pay or compensation, performance compensation, deferred compensation,
profit sharing or deferred profit sharing, share purchase, share option, stock
appreciation, phantom stock, vacation or vacation pay, sick pay, severance or
termination pay, employee loans or separation from service benefits, or any
other type of arrangement providing for compensation or benefits additional to
base pay or salary), with respect to any of its employees or former employees,
or any dependents or beneficiaries of any such employees or former employees,
individuals working on contract with the Borrower or other individuals providing
services to it of a kind normally provided by employees or eligible dependents
of such person.
"Capital Expenditures" means, with respect to any Person for any
period, the aggregate amount of all expenditures (whether paid in cash or
accrued as a liability) by such Person during that period for the acquisition or
leasing (pursuant to a Capital Lease) of fixed or capital assets or additions to
property, plant, or equipment (including replacements, capitalized repairs, and
improvements) which should be capitalized on the balance sheet of such Person in
accordance with GAAP.
"Capital Lease" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended and in effect from time to time.
"Change of Control" means any of (a) the acquisition by any "person" or
"group" (as such terms are used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) at any time of beneficial ownership of 20% or
more of the outstanding capital stock or other equity interests of the Parent on
a fully diluted basis, (b) the failure of individuals who are members of the
board of directors (or similar governing body) of the Parent on the Closing Date
(together with any new or replacement directors whose initial nomination for
election was approved by a majority of the directors who were either directors
on the Closing Date or previously so approved) to constitute a majority of the
board of directors (or similar governing body) of the Parent, or (c) any "Change
of Control" (or words of like import), as defined in any agreement or indenture
relating to any issue of Indebtedness for Borrowed Money, shall occur.
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"Closing Date" means the date of this Agreement or such later Business
Day upon which each condition described in Section 7.2 shall be satisfied or
waived in a manner acceptable to the Administrative Agent in its discretion.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests, and privileges
from time to time subject to the Liens granted to the Administrative Agent, or
any security trustee therefor, by the Collateral Documents.
"Collateral Account" is defined in Section 9.4 hereof.
"Collateral Documents" means the Pledge Agreement, the Security
Agreements, and all other mortgages, deeds of trust, security agreements, pledge
agreements, assignments, financing statements and other documents as shall from
time to time secure or relate to the Obligations, the Hedging Liability, and the
ACH and Overdraft Liability or any part thereof.
"Commitments" means the Revolving Credit Commitments and the Term Loan
Commitments.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Parent, are treated as a single employer
under Section 414 of the Code.
"Credit" means either of the Revolving Credit or the Term Credit.
"Credit Event" means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.
"Damages" means all damages including, without limitation, punitive
damages, liabilities, costs, expenses, losses, diminutions in value, fines,
penalties, demands, claims, cost recovery actions, lawsuits, administrative
proceedings, orders, response action, removal and remedial costs, compliance
costs, investigation expenses, consultant fees, attorneys' and paralegals' fees
and litigation expenses.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Delphax Acquisition" means the acquisition by the Borrower from the
Sellers of certain assets of the Sellers pursuant to the terms of the Asset
Purchase Agreement.
"Delphax Assets" means the assets being conveyed by the Sellers to the
Borrower in the Delphax Acquisition.
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"Disposition" means the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 8.10(a), (b) or (c) hereof.
"Dollars" or "$" shall mean U.S. Dollars.
"Domestic Subsidiary" means a Subsidiary which is not a Foreign
Subsidiary.
"EBITDA" means, with reference to any period, Net Income for such
period plus the sum of all amounts deducted in arriving at such Net Income
amount in respect of (a) Interest Expense for such period, (b) federal, state,
provincial and local income taxes for such period, and (c) depreciation of fixed
assets and amortization of intangible assets for such period, all with respect
to the Parent and the Subsidiaries on a consolidated basis.
"Eligible Inventory" means Inventory of the Parent, the Borrower or any
Subsidiary in which the Administrative Agent has a perfected first priority
security interest and which complies with each of the following requirements:
(a) it consists of Inventory which is readily usable or
marketable by the Parent, the Borrower or such Subsidiary in the
ordinary course of its business;
(b) it substantially conforms to such Person's advertised or
represented specifications, applicable government standards and
regulations and other quality standards and has not been determined by
the Administrative Agent to be unacceptable due to age, type, variety,
quality, quantity or location;
(c) it is not covered by a warehouse receipt or similar
document;
(d) all warranties of the Parent, the Borrower or such
Subsidiary in the Loan Documents are true and correct with respect
thereto;
(e) it has been identified to the Administrative Agent in the
manner required by the Administrative Agent pursuant to the Security
Agreement;
(f) it is located at a location disclosed to and approved by
the Administrative Agent, and if requested by the Administrative Agent,
any Person (other than the Parent, the Borrower or such Subsidiary)
owning or controlling such location shall have waived all right, title,
and interest in and to such Inventory in a manner satisfactory to the
Administrative Agent; and
(g) it is free and clear of all Liens other than Liens granted
in favor of the Administrative Agent.
"Eligible Line of Business" means any business engaged in as of the
date of this Agreement by the Parent, the Borrower or any of the Subsidiaries.
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"Eligible Receivables" means any Receivable of the Parent, the Borrower
or any Subsidiary in which the Administrative Agent has a first priority
perfected security interest and which complies with each of the following
requirements:
(a) it arises out of a bona fide sale of Inventory which has
been delivered to, or out of the rendition of services fully performed
for, the account debtor on said Receivable in the ordinary course of
business on ordinary trade terms;
(b) all warranties of the Parent, the Borrower or such
Subsidiary in the Loan Documents are true and correct with respect
thereto;
(c) it has been identified to the Administrative Agent in the
manner required by the Administrative Agent pursuant to the Security
Agreement;
(d) it is evidenced by an invoice to the account debtor
thereunder dated not more than 5 Business Days subsequent to the
shipment date of the relevant Inventory or completion of performance of
the relevant services;
(e) it has not remained unpaid in whole or in part more than
90 days from and after its due date;
(f) it has not remained unpaid in whole or in part more than
120 days from and after its invoice date;
(g) it is net of any credit or allowance given by the Parent,
the Borrower or such Subsidiary to such account debtor;
(h) it is not owing by an account debtor who (i) has become
insolvent, (ii) is the subject of any bankruptcy, arrangement,
reorganization proceedings or other proceedings for relief of debtors,
(iii) has admitted its inability to pay its debt generally or has
stopped paying its debts generally or (iv) is an Affiliate of the
Parent, the Borrower or such Subsidiary;
(i) the account debtor is principally located in Canada
(excluding Quebec) or the continental United States unless such
Receivable is secured by an irrevocable letter of credit issued by a
commercial bank located in the United States and which is on terms and
conditions acceptable to the Administrative Agent;
(j) it is not owing by the United States of America or any
other country, or any state or political subdivision thereof, or any
department, agency or instrumentality thereof (including, without
limitation, the Commodity Credit Corporation) unless the Administrative
Agent shall have received evidence satisfactory to the Administrative
Agent of compliance with the Assignment of Claims Act or any similar
statute relevant to such account debtor;
-25-
(k) it is not owing by an account debtor who shall have failed
to pay 25% or more of all Receivables owed by such account debtor
within the periods set forth in subsections (e) and (f) above;
(l) it is the valid and legally binding obligation of the
account debtor thereof, and it is not subject to any counterclaim or
defense asserted by the account debtor thereunder or subject to any
offset or contra account payable to the account debtor (unless the
amount of such Receivable is net of such counterclaim, defense, offset
or contra account established to the satisfaction of the Administrative
Agent);
(m) it is not evidenced by an instrument or chattel paper
unless the same has been endorsed and delivered to the Administrative
Agent;
(n) it does not arise from a sale to an account debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or other repurchase or return basis; and
(o) it is free and clear of all Liens other than Liens granted
in favor of the Administrative Agent.
"Environmental Claim" means any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding or claim (whether administrative, judicial or
private in nature) arising (a) pursuant to, or in connection with an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Material, (c) from any abatement, removal, remedial, corrective or
response action in connection with a Hazardous Material, Environmental Law or
order of a governmental authority or (d) from any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.
"Environmental Law" means any current or future Legal Requirement
pertaining to (a) the protection of health, safety and the indoor or outdoor
environment, (b) the conservation, management or use of natural resources and
wildlife, (c) the protection or use of surface water or groundwater, (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, Release, threatened Release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Material or (e)
pollution (including any Release to air, land, surface water or groundwater),
and any amendment, rule, regulation, order or directive issued thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Eurodollar Loan" means a Loan bearing interest at the rate specified
in Section 1.4(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.4(b) hereof.
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"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Event of Loss" means, with respect to any Property, any of the
follows: (a) any loss, destruction or damage of such Property or (b) any
condemnation, seizure, or taking, by exercise of the power of eminent domain or
otherwise, of such Property, or confiscation of such Property or the requisition
of the use of such Property.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate appearing in
Section 1.4(a) hereof.
"Fixed Charges" means, with reference to any period, the sum of (a) all
payments of principal due within four calendar quarters on and after the last
day of such period with respect to Indebtedness for Borrowed Money of the
Parent, the Borrower and the Subsidiaries, plus (b) cash Interest Expense for
such period.
"Fixed Rate Loan" is defined in Section 1.6(f) hereof.
"Foreign Subsidiary" means each Subsidiary which (a) is organized under
the laws of a jurisdiction other than the United States of America or any state
thereof, (b) conducts substantially all of its business outside of the United
States of America, and (c) has substantially all of its assets outside of the
United States of America.
"GAAP" means generally accepted accounting principles in the United
States as set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination.
"Guaranty" and "Guaranties" each is defined in Section 4.2 hereof.
"Hazardous Material" means any substance, chemical, compound, product,
solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which
is hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any material classified or regulated as "hazardous" or "toxic"
or words of like import pursuant to an Environmental Law.
"Hazardous Material Activity" means any activity, event or occurrence
involving a Hazardous Material, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
of or corrective or response action to any Hazardous Material.
"Hedging Agreements" means the agreements entered into from time to
time by the Parent, the Borrower or any Subsidiary evidencing Hedging Liability
or otherwise setting forth the terms and conditions applicable thereto.
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"Hedging Liability" means the liability of the Parent, the Borrower or
any Subsidiary to any of the Lenders, or any Affiliates of such Lenders, in
respect of any interest rate swap agreements, interest rate cap agreements,
interest rate collar agreements, interest rate floor agreements, interest rate
exchange agreements, foreign currency contracts, currency swap contracts, or
other similar interest rate or currency hedging arrangements as the Parent, the
Borrower or such Subsidiary, as the case may be, may from time to time enter
into with any one or more of the Lenders party to this Agreement or their
Affiliates.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (a) all indebtedness of such Person for borrowed money, whether
current or funded, or secured or unsecured, (b) all indebtedness for the
deferred purchase price of Property or services, (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of a default are
limited to repossession or sale of such Property), (d) all indebtedness secured
by a purchase money mortgage or other Lien to secure all or part of the purchase
price of Property subject to such mortgage or Lien, (e) all obligations under
leases which shall have been or must be, in accordance with GAAP or Canadian
generally accepted accounting principles, recorded as Capital Leases in respect
of which such Person is liable as lessee, (f) any liability in respect of
banker's acceptances or letters of credit, and (g) any indebtedness, whether or
not assumed, secured by Liens on Property acquired by such Person at the time of
acquisition thereof, it being understood that the term "Indebtedness for
Borrowed Money" shall not include trade payables arising in the ordinary course
of business.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to Capitalized
Lease Obligations and all amortization of debt discount and expense) of the
Parent, the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
"Interest Period" is defined in Section 1.7 hereof.
"Inventory" means all finished goods and raw materials (other than
packaging, crating, and supplies inventory) held for sale in which the Parent,
the Borrower or the relevant Subsidiary now has or hereafter acquires title to.
"L/C Issuer" means Xxxxxx Trust and Savings Bank.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"L/C Sublimit" means $1,000,000, as reduced pursuant to the terms
hereof.
"Legal Requirement" means any treaty, convention, statute, law,
regulation, ordinance, license, permit, governmental approval, injunction,
judgment, order, consent decree or other requirement of any governmental
authority, whether federal, state, provincial, or local.
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"Lenders" means and includes Xxxxxx Trust and Savings Bank and the
other financial institutions from time to time party to this Agreement,
including each assignee Lender pursuant to Section 13.12 hereof.
"Lending Office" is defined in Section 10.4 hereof.
"Letter of Credit" is defined in Section 1.3(a) hereof.
"LIBOR" is defined in Section 1.4(b) hereof.
"LIBOR Determination Fee" is defined in Section 2.1(e) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan" means any Revolving Loan or Term Loan whether outstanding as a
Base Rate Loan, Eurodollar Loan, Fixed Rate Loan or otherwise, each of which is
a "type" of Loan hereunder.
"Loan Documents" means this Agreement, the Notes, the Applications, the
Collateral Documents, and each other instrument or document to be delivered
hereunder or thereunder or otherwise in connection therewith.
"Material Adverse Effect" means (a) a material adverse change in, or
material adverse effect upon, the operations, business, Property, condition
(financial or otherwise) or prospects of the Parent and the Borrower on a
combined basis or of the Parent, the Borrower and the Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Parent, the Borrower or
any Subsidiary to perform its obligations under any Loan Document or (c) a
material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Parent, the Borrower or any Subsidiary of any Loan
Document or the rights and remedies of the Administrative Agent and the Lenders
thereunder or (ii) the perfection or priority of any Lien granted under any
Collateral Document.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Cash Proceeds" means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or for
such Person's account, net of (i) reasonable direct costs relating to such
Disposition and (ii) sale, use or other transactional taxes paid or payable by
such Person as a direct result of such Disposition, (b) with respect to any
Event of Loss of a Person, cash and cash equivalent proceeds received by or for
such Person's account (whether as a result of payments made under any applicable
insurance policy therefor or in connection with condemnation proceedings or
otherwise), net of reasonable direct costs incurred in connection with the
collection of such proceeds, awards or other payments, and (c) with respect to
any offering of equity securities of a Person or the issuance of any
Indebtedness for Borrowed Money by a Person, cash and cash equivalent proceeds
received by
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or for such Person's account, net of reasonable legal, underwriting, and other
fees and expenses incurred as a direct result thereof.
"Net Income" means, with reference to any period, the net income (or
net loss) of the Parent, the Borrower and the Subsidiaries for such period
computed on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from Net Income (a) the net income (or net loss) of any Person
accrued prior to the date it becomes a Subsidiary of, or has merged into or
consolidated with, the Parent, the Borrower or another Subsidiary, and (b) the
net income (or net loss) of any Person (other than a Subsidiary) in which the
Parent, the Borrower or any of the Subsidiaries has a equity interest in, except
to the extent of the amount of dividends or other distributions actually paid to
the Parent, the Borrower or any of the Subsidiaries during such period.
"Net Worth" means, for any Person and at any time the same is to be
determined, total shareholder's equity (including capital stock, additional
paid-in capital, and retained earnings after deducting treasury stock) which
would appear on the balance sheet of such Person in accordance with GAAP.
"Notes" means and includes the Revolving Notes and the Term Notes.
"Obligations" means all obligations of the Borrower to pay principal
and interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Parent, the Borrower or any of the Subsidiaries arising under
or in relation to any Loan Document, in each case whether now existing or
hereafter arising, due or to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired.
"Parent" means Check Technology Corporation, a Minnesota corporation.
"Participating Interest" is defined in Section 1.3(d) hereof.
"Participating Lender" is defined in Section 1.3(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means for any Lender its Revolver Percentage or Term Loan
Percentage, as applicable.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (a) is maintained by a member of the Controlled
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Group for employees of a member of the Controlled Group or (b) is maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions.
"Pledge Agreement" means that certain Pledge Agreement dated the date
of this Agreement among the Parent, certain of the Subsidiaries and the
Administrative Agent, as the same may be amended, modified, supplemented or
restated from time to time.
"PPSA" means the Personal Property Security Act (Ontario).
"Premises" means the real property owned or leased by the Parent, the
Borrower or any Subsidiary.
"Property" means, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and the subsidiaries
under GAAP or Canadian generally accepted accounting principles, if applicable.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended and in effect from time to time.
"Receivables" means all accounts, instruments, chattel paper, and
general intangibles in which the Parent, the Borrower or any of the Subsidiaries
now has or hereafter acquires title to.
"Reimbursement Obligation" is defined in Section 1.3(c) hereof.
"Required Lenders" means, as of the date of determination thereof,
Lenders whose outstanding Loans and interests in Letters of Credit and Unused
Revolving Credit Commitments constitute more than 66-2/3% of the sum of the
total outstanding Loans, interests in Letters of Credit, and Unused Revolving
Credit Commitments of the Lenders.
"Revolver Percentage" means, for each Lender, the percentage of the
Revolving Credit Commitments represented by such Lender's Revolving Credit
Commitment or, if the Revolving Credit Commitments have been terminated, the
percentage held by such Lender (including through participation interests in
Reimbursement Obligations) of the aggregate principal amount of all Revolving
Loans and L/C Obligations then outstanding.
"Revolving Credit" means the credit facility for making Revolving Loans
and issuing Letters of Credit described in Sections 1.2 and 1.3 hereof.
"Revolving Credit Commitment" means, as to any Lender, the obligation
of such Lender to make Revolving Loans and to participate in Letters of Credit
issued for the account of the Borrower hereunder in an aggregate principal or
face amount at any one time outstanding not to exceed the amount set forth
opposite such Lender's name on its signature page hereto and made a part hereof,
as the same may be reduced or modified at any time or from time to time pursuant
to
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the terms hereof. The Borrower and the Lenders acknowledge and agree that the
Revolving Credit Commitments of the Lenders aggregate $15,000,000 on the date
hereof.
"Revolving Credit Termination Date" means December 19, 2004, or such
earlier date on which the Revolving Credit Commitments are terminated in whole
pursuant to Section 1.13, 9.2 or 9.3 hereof.
"Revolving Loan" is defined in Section 1.2 hereof and, as so defined,
includes a Base Rate Loan, a Eurodollar Loan and the Fixed Rate Loan, each of
which is a "type" of Revolving Loan hereunder.
"Revolving Note" is defined in Section 1.11 hereof.
"S&P" means Standard & Poor's Ratings Services Group, a division of The
XxXxxx-Xxxx Companies, Inc.
"Security Agreements" means, collectively, (i) that certain Security
Agreement dated the date of this Agreement among the Borrower and certain of the
Subsidiaries and the Administrative Agent, (ii) that certain Security Agreement
dated the date of this Agreement among the Parent and certain of the
Subsidiaries and the Administrative Agent, and (iii) any security agreements
relating specifically to patents, trademarks or other intellectual property
among the Parent, the Borrower or one or more Subsidiaries and the
Administrative Agent, as each of the same may be amended, modified, supplemented
or restated from time to time, each of which may be referred to individually
from time to time as a "Security Agreement."
"Sellers" means, collectively, Delphax Systems, Inc. and Delphax
Systems, a Massachusetts general partnership.
"Subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
Unless otherwise expressly noted herein, the term "Subsidiary" means a
subsidiary of the Borrower or of the Parent or of any of their direct or
indirect Subsidiaries, and unless otherwise expressly indicated, the term
"Subsidiary" shall include the Borrower.
"Term Credit" means the credit facility for the Term Loans described in
Section 1.1(a) hereof.
"Term Loan" is defined in Section 1.1(a) hereof and, as so defined,
includes a Base Rate Loan or a Eurodollar Loan, each of which is a "type" of
Term Loan hereunder.
"Term Loan Commitment" means, as to any Lender, the obligation of such
Lender to make its Term Loan on the Closing Date in the principal amount not to
exceed the amount set forth opposite such Lender's name on its signature page
hereto and made a part hereof. The
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Borrower and the Lenders acknowledge and agree that the Term Loan Commitments of
the Lenders aggregate $4,000,000 on the date hereof.
"Term Loan Percentage" means, for each Lender, the percentage of the
Term Loan Commitments represented by such Lender's Term Loan Commitment or, if
the Term Loan Commitments have been terminated or have expired, the percentage
held by such Lender of the aggregate principal amount of all Term Loans then
outstanding.
"Term Note" is defined in Section 1.11 hereof.
"Total Funded Debt" means, at any time the same is to be determined,
the aggregate of all Indebtedness for Borrowed Money of the Parent, the Borrower
and the Subsidiaries at such time, including all Indebtedness for Borrowed Money
of any other Person which is directly or indirectly guaranteed by the Parent,
the Borrower or any of the Subsidiaries or which the Parent, the Borrower or any
of the Subsidiaries has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which the Parent, the Borrower or any of the
Subsidiaries has otherwise assured a creditor against loss.
"Total Funded Debt to EBITDA Ratio" means the ratio of (a) Total Funded
Debt outstanding at such time to (b) EBITDA for the four fiscal quarters of the
Parent then ended, provided that, for the purposes of calculating EBITDA for the
five fiscal quarters of the Parent ending on September 30, 2001, December 31,
2001, March 31, 2002, June 30, 2002 and September 30, 2002, EBITDA attributable
to the Delphax Assets for the fiscal quarters ending on December 31, 2000, March
31, 2001, June 30, 2001, September 30, 2001 and December 31, 2001 is deemed by
the parties hereto to be $1,400,000 per fiscal quarter.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Unused Revolving Credit Commitments" means, at any time, the
difference between the Revolving Credit Commitments then in effect and the
aggregate outstanding principal amount of Revolving Loans and L/C Obligations.
"U.S. Dollars" and "$" each means the lawful currency of the United
States of America.
"Voting Stock" of any Person means capital stock or other equity
interests of any class or classes (however designated) having ordinary power for
the election of directors or other similar governing body of such Person, other
than stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
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"Wholly-owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying shares
as required by law) or other equity interests are owned by the Parent, the
Borrower and/or one or more Wholly-owned Subsidiaries within the meaning of this
definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois, time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
Section 5.3. Change in Accounting Principles. If, after the date of
this Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower or the Required Lenders may by notice to the Lenders and the Borrower,
respectively, require that the Lenders and the Borrower negotiate in good faith
to amend such covenants, standards, and term so as equitably to reflect such
change in accounting principles, with the desired result being that the criteria
for evaluating the financial condition of the Parent, the Borrower and the
Subsidiaries shall be the same as if such change had not been made. No delay by
the Borrower or the Required Lenders in requiring such negotiation shall limit
their right to so require such a negotiation at any time after such a change in
accounting principles. Until any such covenant, standard, or term is amended in
accordance with this Section 5.3, financial covenants shall be computed and
determined in accordance with GAAP in effect prior to such change in accounting
principles. Without limiting the generality of the foregoing, (i) the Parent and
the Borrower shall neither be deemed to be in compliance with any financial
covenant hereunder nor out of compliance with any financial covenant hereunder
if such state of compliance or noncompliance, as the case may be, would not
exist but for the occurrence of a change in accounting principles after the date
hereof, and (ii) the parties acknowledge that FASB 142 relating to impairment of
goodwill is effective for fiscal years ending after December 15, 2001 and will
be taken into account in determining covenant compliance under the terms of this
Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Each of the Parent and the Borrower represents and warrants to the
Administrative Agent and the Lenders as follows:
Section 6.1. Organization and Qualification. Each of the Parent and the
Borrower is duly organized, validly existing and in good standing as a
corporation under the laws of its jurisdiction of incorporation, has full and
adequate power to own its Property and conduct its business as now conducted,
and is duly licensed or qualified and in good standing in each
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jurisdiction in which the nature of the business conducted by it or the nature
of the Property owned or leased by it requires such licensing or qualifying,
except where the failure to do so would not have a Material Adverse Effect.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect. Schedule 6.2 hereto identifies each
Subsidiary, the jurisdiction of its incorporation or organization, as the case
may be, the percentage of issued and outstanding shares of each class of its
capital stock or other equity interests owned by the Parent, the Borrower and
the other Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and other equity interests and the number of shares of
each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned by the Parent, the Borrower
or another Subsidiary are owned, beneficially and of record, by the Parent, the
Borrower or such Subsidiary free and clear of all Liens other than the Liens
granted in favor of the Administrative Agent pursuant to the Collateral
Documents. There are no outstanding commitments or other obligations of the
Borrower or any Subsidiary to issue, and no options, warrants or other rights of
any Person to acquire, any shares of any class of capital stock or other equity
interests of the Borrower or any Subsidiary.
Section 6.3. Authority and Validity of Obligations. The Borrower has
full right and authority to enter into this Agreement and the other Loan
Documents executed by it, to make the borrowings herein provided for, to issue
its Notes in evidence thereof, to grant to the Administrative Agent the Liens
described in the Collateral Documents executed by the Borrower, and to perform
all of its obligations hereunder and under the other Loan Documents executed by
it. Each of the Parent and each Subsidiary has full right and authority to enter
into the Loan Documents executed by it, to guarantee the Obligations, Hedging
Liability, and ACH and Overdraft Liability to grant to the Administrative Agent
the Liens described in the Collateral Documents executed by such Person, and to
perform all of its obligations under the Loan Documents executed by it. The Loan
Documents delivered by the Parent, the Borrower and by each Subsidiary have been
duly authorized, executed, and delivered by such Person and constitute valid and
binding obligations of such Person enforceable against it in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law); and this
Agreement and the other Loan Documents do not, nor does the performance or
observance by the Parent, the Borrower or any Subsidiary of any of the matters
and things herein or therein provided for, (a) contravene or constitute a
default under any provision of law or any judgment, injunction, order or decree
binding upon the Parent, the Borrower or any Subsidiary or any provision of the
charter, articles of incorporation or by-laws, articles of
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association or operating agreement, partnership agreement, or other
organizational document of the Parent, the Borrower or any Subsidiary, (b)
contravene or constitute a default under any covenant, indenture or agreement of
or affecting the Parent, the Borrower or any Subsidiary or any of its Property,
in each case where such contravention or default, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or (c)
result in the creation or imposition of any Lien on any Property of the Parent,
the Borrower or any Subsidiary other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents.
Section 6.4. Use of Proceeds; Margin Stock. The Borrower shall use the
proceeds of the Term Loans and approximately $10,500,000 of the proceeds of the
Revolving Credit to pay the purchase price for the Delphax Acquisition, to
refinance existing indebtedness in an amount not to exceed $500,000; and the
Borrower shall use the balance of the proceeds of the Revolving Credit for
capital expenditures, for its general working capital purposes and for such
other legal and proper purposes as are consistent with all applicable laws.
Neither the Parent, the Borrower nor any Subsidiary is engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan or any other extension
of credit made hereunder will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock. Margin stock (as hereinabove defined) constitutes less than 25% of
the assets of the Parent, the Borrower and the Subsidiaries which are subject to
any limitation on sale, pledge or other restriction hereunder.
Section 6.5. Financial Reports. The consolidated balance sheet of the
Parent and the Subsidiaries as at September 30, 2001, and the related
consolidated statements of income, retained earnings and cash flows of the
Parent, the Borrower and the Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, which financial statements are accompanied by the
audit report of Ernst & Young, independent public accountants, heretofore
furnished to the Administrative Agent and the Lenders, fairly present the
consolidated financial condition of the Parent, the Borrower and the
Subsidiaries as at said date and the consolidated results of their operations
and cash flows for the period then ended in conformity with GAAP applied on a
consistent basis. Neither the Parent, the Borrower nor any other Subsidiary has
contingent liabilities which are material to it other than as indicated on such
financial statements or, with respect to future periods, on the financial
statements furnished pursuant to Section 8.5 hereof.
Section 6.6. No Material Adverse Change. Since September 30, 2001,
there has been no change in the condition (financial or otherwise) or business
prospects of the Parent, the Borrower or any Subsidiary except those occurring
in the ordinary course of business, none of which individually or in the
aggregate have been materially adverse.
Section 6.7. Full Disclosure. The statements and information furnished
to the Administrative Agent and the Lenders in connection with the negotiation
of this Agreement and the other Loan Documents and the commitments by the
Lenders to provide all or part of the financing contemplated hereby do not
contain any untrue statements of a material fact or omit a material fact
necessary to make the material statements contained herein or therein not
misleading, the Administrative Agent and the Lenders acknowledging that as to
any projections
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furnished to the Administrative Agent and the Lenders, the Parent and the
Borrower only represent that the same were prepared on the basis of information
and estimates the Parent and the Borrower believed to be reasonable.
Section 6.8. Trademarks, Franchises, and Licenses. The Parent, the
Borrower and the Subsidiaries own, possess, or have the right to use all
necessary patents, licenses, franchises, trademarks, trade names, trade styles,
copyrights, trade secrets, know how, and confidential commercial and proprietary
information to conduct their businesses as now conducted, without known conflict
with any patent, license, franchise, trademark, trade name, trade style,
copyright or other proprietary right of any other Person.
Section 6.9. Governmental Authority and Licensing. The Parent, the
Borrower and the Subsidiaries have received all licenses, permits, and approvals
of all federal, state, or provincial, as applicable, and local governmental
authorities (including, without limitation, any approval of the Competition
Bureau in connection with the Delphax Acquisition), if any, necessary to conduct
their businesses, in each case where the failure to obtain or maintain the same
could reasonably be expected to have a Material Adverse Effect. No investigation
or proceeding which, if adversely determined, could reasonably be expected to
result in revocation or denial of any material license, permit or approval is
pending or, to the knowledge of the Parent or the Borrower, threatened.
Section 6.10. Good Title. The Parent, the Borrower and the Subsidiaries
have good and defensible title (or valid leasehold interests) to their assets as
reflected on the most recent consolidated balance sheet of the Parent, the
Borrower and the Subsidiaries furnished to the Administrative Agent and the
Lenders (except for sales of assets in the ordinary course of business), subject
to no Liens other than such thereof as are permitted by Section 8.8 hereof.
Section 6.11. Litigation and Other Controversies. Except as set forth on
Schedule 6.11 hereto, there is no litigation or governmental proceeding or labor
controversy pending, nor to the knowledge of the Parent or the Borrower
threatened, against the Parent, the Borrower or any Subsidiary which if
adversely determined, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
Section 6.12. Taxes. All tax returns required to be filed by the
Parent, the Borrower or any Subsidiary in any jurisdiction have, in fact, been
filed, and all taxes, assessments, fees, and other governmental charges upon the
Parent, the Borrower or any Subsidiary or upon any of its Property, income or
franchises, which are shown to be due and payable in such returns, have been
paid, except such taxes, assessments, fees and governmental charges, if any, as
are being contested in good faith and by appropriate proceedings which prevent
enforcement of the matter under contest and as to which adequate reserves
established in accordance with GAAP or Canadian generally accepted accounting
principles, as applicable, have been provided. Neither the Parent nor the
Borrower knows of any proposed additional tax assessment against it or any
Subsidiaries for which adequate provisions in accordance with GAAP or Canadian
generally accepted accounting principles, as applicable, have not been made on
their accounts. Adequate provisions in accordance with GAAP or Canadian
generally accepted accounting principles, as
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applicable, for taxes on the books of the Borrower and each Subsidiary have been
made for all open years, and for its current fiscal period.
Section 6.13. Approvals. No authorization, consent, license or
exemption from, or filing or registration with, any court or governmental
department, agency or instrumentality, nor any approval or consent of any other
Person, is or will be necessary to the valid execution, delivery or performance
by the Parent, the Borrower or any Subsidiary of any Loan Document, except for
such approvals which have been obtained prior to the date of this Agreement and
remain in full force and effect.
Section 6.14. Affiliate Transactions. Neither the Parent, the Borrower
nor any Subsidiary is a party to any contracts or agreements with any of its
Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions
which are less favorable to the Parent, the Borrower or such Subsidiary than
would be usual and customary in similar contracts or agreements between Persons
not affiliated with each other.
Section 6.15. Investment Company; Public Utility Holding Company.
Neither the Parent, the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "public utility holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 6.16. ERISA; Canadian Benefit Plan Obligations. The Parent and
each other member of its Controlled Group has fulfilled its obligations under
the minimum funding standards of and is in compliance in all material respects
with ERISA and the Code to the extent applicable to it and has not incurred any
liability to the PBGC or a Plan under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA. All employer or employee
payments, contributions and premiums required to be remitted, paid to or in
respect of each Canadian Benefit Plan have been paid or remitted in a timely
fashion in accordance with the terms thereof and all applicable laws, and no
taxes, penalties or fees are owing or exigible under the Canadian Benefit Plan.
Neither the Parent, the Borrower nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title I
of ERISA. None of the Canadian Benefit Plans, other than those which are
"registered pension plans" as defined under the Income Tax Act (Canada), provide
benefits beyond retirement or other termination of service to employees or
former employees of the Borrower or to the beneficiaries or dependents of such
employees.
Section 6.17. Compliance with Laws. The Parent, the Borrower and the
Subsidiaries are in compliance with the requirements of all United States and
Canadian federal, state, provincial and local laws, rules and regulations
applicable to or pertaining to their Property or business operations (including,
without limitation, the Occupational Safety and Health Act of 1970, the
Americans with Disabilities Act of 1990, the Workplace Safety and Insurance Act
(Ontario) and Occupational Health and Safety Act (Ontario), and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), where any such non-compliance,
individually or in the aggregate, could reasonably be expected to have
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a Material Adverse Effect. Neither the Parent, the Borrower nor any Subsidiary
has received notice to the effect that its operations are not in compliance with
any of the requirements of applicable federal, state, provincial or local
environmental, health, and safety statutes and regulations or is the subject of
any governmental investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance into the
environment, where any such non-compliance or remedial action, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
Section 6.18. Other Agreements. Neither the Parent, the Borrower nor
any Subsidiary is in default under the terms of any covenant, indenture or
agreement of or affecting such Person or any of its Property, which default if
uncured could reasonably be expected to have a Material Adverse Effect.
Section 6.19. Solvency. The Parent, the Borrower and the Subsidiaries
are, individually and collectively, solvent, able to pay their debts as they
become due, and have sufficient capital to carry on their business and all
businesses in which they are about to engage.
Section 6.20. No Default. No Default or Event of Default has occurred
and is continuing.
Section 6.21. Delphax Asset Purchase Agreement. The Borrower has
heretofore delivered to the Administrative Agent a true and correct copy of the
Asset Purchase Agreement. The Borrower and, to the best of the Borrower's
knowledge, the Sellers have all necessary right, power, and authority to
consummate the transactions contemplated by the Asset Purchase Agreement and to
perform all of their obligations thereunder. The Asset Purchase Agreement
constitutes the valid and binding obligation of the Borrower and, to the best of
the Borrower's knowledge, the Sellers, enforceable against each of them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law); and the Asset Purchase Agreement will not, nor will the
observance or performance by the Borrower or, to the best of the Borrower's
knowledge, the Sellers of any of the matters and things therein provided for,
contravene or constitute a default under any provision of law or any judgment,
injunction, order, or decree binding upon such Person or any provision of the
charter, articles of incorporation, or by-laws of such Person or any covenant,
indenture, or agreement of or affecting such Person or any of its Property, or
result in the creation or imposition of any Lien on any such Person's Property.
Except for an Advance Ruling Certificate from the Competition Bureau of Canada,
which has already been received and does not oppose the Delphax Acquisition, no
authorization, consent, license, or exemption from, or filing or registration
with, any court or governmental department, agency, or instrumentality, nor any
approval or consent of any other Person, is or will be necessary to the valid
execution, delivery, or performance by the Borrower or, to the best of the
Borrower's knowledge, the Sellers of the Asset Purchase Agreement or of any
other instrument or document executed and delivered in connection therewith,
except for such thereof that have heretofore been obtained and remain in full
force and effect. No broker's or finder's fees or commission will be payable
with respect to the Asset Purchase Agreement or any of the transactions
contemplated thereby.
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SECTION 7. CONDITIONS PRECEDENT.
The obligation of each Lender to advance, continue or convert any Loan
(other than the continuation of, or conversion into, a Base Rate Loan) or of the
L/C Issuer to issue, extend the expiration date (including by not giving notice
of non-renewal) of or increase the amount of any Letter of Credit under this
Agreement, shall be subject to the following conditions precedent:
Section 7.1. All Credit Events. At the time of each Credit Event
hereunder:
(a) each of the representations and warranties set forth
herein and in the other Loan Documents shall be and remain true and
correct as of said time, except to the extent the same expressly relate
to an earlier date;
(b) the Parent, the Borrower and each Subsidiary shall be in
compliance with all of the terms and conditions hereof and of the other
Loan Documents, and no Default or Event of Default shall have occurred
and be continuing or would occur as a result of such Credit Event;
(c) in the case of a Borrowing the Administrative Agent shall
have received the notice required by Section 1.6 hereof, in the case of
the issuance of any Letter of Credit the L/C Issuer shall have received
a duly completed Application for such Letter of Credit together with
any fees called for by Section 2.1 hereof, and, in the case of an
extension or increase in the amount of a Letter of Credit, a written
request therefor in a form acceptable to the L/C Issuer together with
fees called for by Section 2.1 hereof; and
(d) such Credit Event shall not violate any order, judgment
or decree of any court or other authority or any provision of law or
regulation applicable to the Administrative Agent or any Lender
(including, without limitation, Regulation U of the Board of Governors
of the Federal Reserve System) as then in effect.
Each request for a Borrowing hereunder and each request for the
issuance of, increase in the amount of, or extension of the expiration date of,
a Letter of Credit shall be deemed to be a representation and warranty by the
Borrower on the date on such Credit Event as to the facts specified in
subsections (a) and (b) of this Section.
Section 7.2. Initial Credit Event. Before or concurrently with the
initial Credit Event:
(a) the Administrative Agent shall have received for each
Lender this Agreement duly executed by the Parent, the Borrower, the
Guarantors and the Lenders;
(b) the Administrative Agent shall have received for each
Lender such Lender's duly executed Notes of the Borrower dated the date
hereof and otherwise in compliance with the provisions of Section 1.11
hereof;
(c) the Administrative Agent shall have received the Security
Agreements and the Pledge Agreement duly executed by the respective
parties thereto, together with
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(i) original stock certificates or other similar instruments or
securities representing all of the issued and outstanding shares of
capital stock or other equity interests in the Borrower and each
Subsidiary whose stock is being pledged thereunder as of the Closing
Date, (ii) stock powers for the Collateral consisting of the stock or
other equity interest in each of the Borrower and each Subsidiary whose
stock is being pledged thereunder executed in blank and undated, and
(iii) UCC financing statements, PPSA financing statements, or the
equivalent thereof under any applicable law, to be filed against the
Parent, the Borrower and each Subsidiary, as debtor, in favor of the
Administrative Agent, as secured party, and provided further that the
Parent and the Borrower will take such actions on or after the Closing
Date as may be necessary to ensure that (x) the Administrative Agent's
security interest in the intellectual property owned by the Parent, the
Borrower, and each Subsidiary is properly registered in the appropriate
governmental offices of any applicable jurisdiction, and (y) the
Administrative Agent's security interest in the Parent's stock in Check
Technology France S.A. has been perfected;
(d) the Administrative Agent shall have received evidence of
insurance required to be maintained under the Loan Documents, naming
the Administrative Agent as loss payee;
(e) the Administrative Agent shall have received for each
Lender copies of the Parent's, the Borrower's and each Subsidiary's
articles of incorporation and bylaws (or comparable organization
documents) and any amendments thereto, certified in each instance by
its Secretary or Assistant Secretary;
(f) the Administrative Agent shall have received for each
Lender copies of resolutions of the Parent's, the Borrower's and each
Subsidiary's Board of Directors (or similar governing body) authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, together with specimen
signatures of the persons authorized to execute such documents on the
Parent's, the Borrower's and each Subsidiary's behalf, all certified in
each instance by its Secretary or Assistant Secretary;
(g) the Administrative Agent shall have received for each
Lender copies of the certificate of good standing or certificate of
status, as applicable, for the Parent, the Borrower and each Subsidiary
(dated no earlier than 30 days prior to the date hereof) from the
office of the secretary of the state of its incorporation or
organization and of each state in which it is qualified to do business
as a foreign corporation or organization and from the Ministry of
Consumer and Business Services (Ontario) and all other Canadian
provinces where the Borrower is extra-provincially registered to carry
on business;
(h) the Administrative Agent shall have received for each
Lender a list of the Borrower's Authorized Representatives;
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(i) the Administrative Agent shall have received for itself
and for the Lenders the initial fees called for by Section 2.1 hereof;
(j) the terms and conditions of the Asset Purchase Agreement
shall be satisfactory to the Administrative Agent in its sole
discretion, and the purchase price for the Delphax Acquisition shall
not be greater than U.S. $15,000,000, subject to adjustments which, in
the sole determination of the Administrative Agent, are not material;
(k) the Delphax Acquisition shall have been, or shall,
contemporaneously with the initial Credit Event, be consummated in
accordance with the terms and conditions of the Asset Purchase
Agreement and without waiver by the Parent or the Borrower of any
conditions thereunder, and all legal, tax and regulatory matters
relating to the Delphax Acquisition and the Parent and the Borrower,
after giving effect thereto, shall be satisfactory to the Lenders;
(l) all director, shareholder (if any) and regulatory
approvals necessary for the consummation of the Delphax Acquisition
shall have been given or made, and no litigation or regulatory
proceeding challenging or affecting the Delphax Acquisition shall exist
or be in effect;
(m) the Administrative Agent shall be satisfied, in its sole
discretion, with the terms of the Xxxx X. Xxxxxxx Company contracts;
(n) each Lender shall have received such evaluations and
certifications as it may reasonably require (including a Borrowing Base
Certificate and compliance certificate in the forms attached hereto as
Exhibits E and F containing calculations of the Borrowing Base and
compliance calculations of the financial covenants as of November 30,
2001 in the case of the Borrowing Base Certificate and September 30,
2001 in the case of the compliance certificate after giving effect (on
a pro forma basis) to the Delphax Acquisition) in order to satisfy
itself as to the value of the Collateral (including, without
limitation, the Delphax Assets), the financial condition of the Parent,
the Borrower and the Subsidiaries both before and after giving effect
to the Delphax Acquisition, and the lack of material contingent
liabilities of the Parent, the Borrower and the Subsidiaries both
before and after giving effect to the Delphax Acquisition, including
without limitation pro forma financial statements of the Parent, the
Borrower and the Subsidiaries on a consolidated basis after giving
effect to the Delphax Acquisition which are satisfactory in form and
substance to the Lenders and do not reflect a financial condition any
worse than that reflected in projections previously delivered to the
Administrative Agent;
(o) the Administrative Agent shall have received financing
statement, tax, and judgment lien search results against the Property
of the Parent, the Borrower and each Subsidiary and the Delphax Assets
evidencing the absence of Liens on such Property except as permitted by
Section 8.8 hereof;
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(p) the Administrative Agent shall have received pay-off and
lien release letters from secured creditors of the Parent, the Borrower
and each Subsidiary (and, if necessary, the Sellers) setting forth,
among other things, the total amount of indebtedness outstanding and
owing to them (or outstanding letters of credit issued for the account
of the Parent, the Borrower or any Subsidiary) and containing an
undertaking to cause to be delivered to the Administrative Agent UCC
termination statements or PPSA discharge statements and any other lien
release instruments necessary to release their Liens on the assets of
the Parent, the Borrower and each Subsidiary and the Delphax Assets,
which pay-off and lien release letters shall be in form and substance
acceptable to the Administrative Agent;
(q) the Administrative Agent shall have received for each
Lender the favorable written opinion of Canadian and United States
counsel to the Parent, the Borrower and each Subsidiary, in form and
substance satisfactory to the Administrative Agent; and
(r) the Administrative Agent shall have received for the
account of the Lenders such other agreements, instruments, documents,
certificates, and opinions as the Administrative Agent may reasonably
request.
SECTION 8. COVENANTS.
The Parent and the Borrower agree that, so long as any credit is
available to or in use by the Borrower hereunder, except to the extent
compliance in any case or cases is waived in writing pursuant to the terms of
Section 13.13 hereof:
Section 8.1. Maintenance of Existence. Each of the Parent and the
Borrower shall, and shall cause each Subsidiary to, preserve and maintain its
existence, except as otherwise provided in Section 8.10(c) hereof.
Section 8.2. Maintenance of Properties and Business. Each of the Parent
and the Borrower shall, and shall cause each Subsidiary to, maintain, preserve,
and keep its property, plant, and equipment in good repair, working order and
condition (ordinary wear and tear excepted), and shall from time to time make
all needful and proper repairs, renewals, replacements, additions, and
betterments thereto so that at all times the efficiency thereof shall be fully
preserved and maintained, except to the extent that, in the reasonable business
judgment of such Person, any such Property is no longer necessary for the proper
conduct of the business of such Person. The Parent and the Borrower shall, and
shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits, franchises, approvals, patents, trademarks, trade names,
trade styles, copyrights, and other proprietary rights necessary to the proper
conduct of its business where the failure to do so could reasonably be expected
to have a Material Adverse Effect.
Section 8.3. Taxes and Assessments. Each of the Parent and the Borrower
shall duly pay and discharge, and shall cause each Subsidiary to duly pay and
discharge, all taxes, rates, assessments, fees, and governmental charges upon or
against it or its Property, in each case
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before the same become delinquent and before penalties accrue thereon, unless
and to the extent that the same are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and adequate reserves are provided therefor.
Section 8.4. Insurance. Each of the Parent and the Borrower shall
insure and keep insured, and shall cause each Subsidiary to insure and keep
insured, with good and responsible insurance companies, all insurable Property
owned by it which is of a character usually insured by Persons similarly
situated and operating like Properties against loss or damage from such hazards
and risks, and in such amounts, as are insured by Persons similarly situated and
operating like Properties; and each of the Parent and the Borrower shall insure,
and shall cause each Subsidiary to insure, such other hazards and risks
(including, without limitation, employers' and public liability risks) with good
and responsible insurance companies, as and to the extent usually insured by
Persons similarly situated and conducting similar businesses. Each of the Parent
and the Borrower shall in any event maintain, and cause each Subsidiary to
maintain, insurance on the Collateral to the extent required by the Collateral
Documents. The Parent shall, upon the request of the Administrative Agent,
furnish to the Administrative Agent and the Lenders a certificate setting forth
in summary form the nature and extent of the insurance maintained pursuant to
this Section.
Section 8.5. Financial Reports. Each of the Parent and the Borrower
shall, and shall cause each Subsidiary to, maintain a standard system of
accounting in accordance with GAAP (or, with respect to statements for the
Borrower only, both GAAP (for the purposes of consolidating with the Parent) and
Canadian generally accepted accounting principles) and shall furnish to the
Administrative Agent, each Lender and each of their duly authorized
representatives such information respecting the business and financial condition
of the Parent, the Borrower and each Subsidiary as the Administrative Agent or
such Lender may reasonably request; and without any request, shall furnish to
the Administrative Agent and the Lenders:
(a) as soon as available, and in any event within 30 days
after the last day of each calendar month, a Borrowing Base Certificate
showing the computation of the Borrowing Base in reasonable detail as
of the close of business on the last day of such month, prepared by the
Parent and certified to by its chief financial officer or another
officer of the Parent acceptable to the Administrative Agent;
(b) as soon as available, and in any event within 45 days
after the last day of each calendar month, a copy of the consolidated
and consolidating balance sheet of the Parent, the Borrower and the
Subsidiaries as of the last day of such month and the consolidated and
consolidating statements of income, retained earnings, and cash flows
of the Parent, the Borrower and the Subsidiaries for the month and for
the fiscal year-to-date period then ended, each in reasonable detail
showing in comparative form the figures for the corresponding date and
period in the previous fiscal year, prepared by the Parent in
accordance with GAAP (subject to the absence of footnote disclosures
and year-end audit adjustments) and certified to by its chief financial
officer or another officer of the Parent acceptable to the
Administrative Agent;
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(c) as soon as available, and in any event within 45 days
after the close of each fiscal quarter of each fiscal year of the
Parent, a copy of the consolidated and consolidating balance sheet of
the Parent, the Borrower and the Subsidiaries as of the last day of
such fiscal quarter and the consolidated and consolidating statements
of income, retained earnings, and cash flows of the Parent, the
Borrower and the Subsidiaries for the fiscal quarter and for the fiscal
year-to-date period then ended, each in reasonable detail showing in
comparative form the figures for the corresponding date and period in
the previous fiscal year, prepared by the Parent in accordance with
GAAP (subject to the absence of footnote disclosures and year-end audit
adjustments) and certified to by its chief financial officer or another
officer of the Parent acceptable to the Administrative Agent;
(d) as soon as available, and in any event within 90 days
after the close of each fiscal year of the Parent, a copy of the
consolidated and consolidating balance sheet of the Parent, the
Borrower and the Subsidiaries as of the last day of the fiscal year
then ended and the consolidated and consolidating statements of income,
retained earnings, and cash flows of the Parent, the Borrower and the
Subsidiaries for the fiscal year then ended, and accompanying notes
thereto, each in reasonable detail showing in comparative form the
figures for the previous fiscal year, accompanied in the case of the
consolidated financial statements by an unqualified opinion of Ernst &
Young or another firm of independent public accountants of recognized
standing, selected by the Parent and reasonably satisfactory to the
Administrative Agent and the Required Lenders, to the effect that the
consolidated financial statements have been prepared in accordance with
GAAP and present fairly in accordance with GAAP the consolidated
financial condition of the Parent, the Borrower and the Subsidiaries as
of the close of such fiscal year and the results of their operations
and cash flows for the fiscal year then ended and that an examination
of such accounts in connection with such financial statements has been
made in accordance with generally accepted auditing standards and,
accordingly, such examination included such tests of the accounting
records and such other auditing procedures as were considered necessary
in the circumstances;
(e) within the period provided in subsection (d) above, the
written statement of the accountants who certified the audit report
thereby required that in the course of their audit they have obtained
no knowledge of any Default or Event of Default, or, if such
accountants have obtained knowledge of any such Default or Event of
Default, they shall disclose in such statement the nature and period of
the existence thereof;
(f) promptly after receipt thereof, any additional written
reports, management letters or other detailed information contained in
writing concerning significant aspects of the Parent's, the Borrower's
or any Subsidiary's operations and financial affairs given to it by its
independent public accountants;
(g) promptly after the sending or filing thereof, copies of
each financial statement, report, notice or proxy statement sent by the
Parent, the Borrower or any Subsidiary to its stockholders or other
equity holders, and copies of each regular, periodic or special report,
registration statement or prospectus (including all Form 10-K, Form
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10-Q and Form 8-K reports) filed by the Parent, the Borrower or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or equivalent Canadian governmental agency or any successor
agency;
(h) promptly after receipt thereof, a copy of each audit made
by any regulatory agency of the books and records of the Parent, the
Borrower or any Subsidiary or of notice of any material noncompliance
with any applicable law, regulation or guideline relating to the
Parent, the Borrower or any Subsidiary, or its business;
(i) as soon as available, and in any event prior to the end of
each fiscal year of the Parent, a copy of the Parent's consolidated and
consolidating operating budget for the following fiscal year, such
operating budget to show the Parent's projected consolidated and
consolidating revenues, expenses and balance sheet on
quarter-by-quarter basis, such operating budget to be in reasonable
detail prepared by the Parent and in form satisfactory to the
Administrative Agent (which shall include a summary of all assumptions
made in preparing such operating budget);
(j) notice of any Change in Control;
(k) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Parent or the Borrower,
written notice of any threatened or pending litigation or governmental
proceeding or labor controversy against the Parent, the Borrower or any
Subsidiary which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect or of the occurrence of any Default
or Event of Default hereunder; and
(l) with each of the financial statements furnished to the
Lenders pursuant to subsections (c) and (d) above, a written
certificate in the form attached hereto as Exhibit F signed by the
chief financial officer of the Parent, or another officer of the Parent
acceptable to the Administrative Agent, to the effect that to the best
of such officer's knowledge and belief no Default or Event of Default
has occurred during the period covered by such statements or, if any
such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Parent, the Borrower or any
Subsidiary to remedy the same. Such certificate shall also set forth
the calculations supporting such statements in respect of Sections
8.21, 8.22, 8.23 and 8.24 of this Agreement.
Section 8.6. Inspection. Each of the Parent and the Borrower shall, and
shall cause each Subsidiary to, permit the Administrative Agent, each Lender,
and each of their duly authorized representatives and agents to visit and
inspect any of its Property, corporate books, and financial records, to examine
and make copies of its books of accounts and other financial records, and to
discuss its affairs, finances, and accounts with, and to be advised as to the
same by, its officers, employees and independent public accountants (and by this
provision the Parent hereby authorizes such accountants to discuss with the
Administrative Agent and such Lenders the finances and affairs of the Parent,
the Borrower and the Subsidiaries) at such reasonable times
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and intervals as the Administrative Agent or any such Lender may designate and,
so long as no Default or Event of Default exists, with reasonable prior notice
to the Parent.
Section 8.7. Borrowings and Guaranties. The Parent shall not, nor shall
it permit the Borrower or any other Subsidiary to, issue, incur, assume, create
or have outstanding any Indebtedness for Borrowed Money, or be or become liable
as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other Person, or otherwise agree to provide funds for payment
of the obligations of another, or supply funds thereto or invest therein or
otherwise assure a creditor of another against loss, or apply for or become
liable to the issuer of a letter of credit which supports an obligation of
another, or subordinate any claim or demand it may have to the claim or demand
of any other Person; provided, however, that the foregoing shall not restrict
nor operate to prevent:
(a) the Obligations, Hedging Liability, and ACH and Overdraft
Liability of the Parent, the Borrower and the Subsidiaries owing to the
Administrative Agent and the Lenders (and their Affiliates);
(b) purchase money indebtedness and Capitalized Lease
Obligations of the Parent, the Borrower and the Subsidiaries in an
amount not to exceed $500,000 (or the equivalent thereof in another
currency) in the aggregate at any one time outstanding;
(c) obligations of the Parent or the Borrower arising out of
interest rate and foreign currency hedging agreements entered into with
financial institutions in the ordinary course of business;
(d) endorsement of items for deposit or collection of
commercial paper received in the ordinary course of business;
(e) indebtedness from time to time owing by the Borrower or
any Domestic Subsidiary to the Parent, or from the Parent to the
Borrower, or from any Domestic Subsidiary to any other Domestic
Subsidiary;
(f) indebtedness existing on the date hereof and set forth on
Schedule 8.7 hereto; and
(g) unsecured indebtedness of the Parent, the Borrower and the
Subsidiaries not otherwise permitted by this Section in an amount not
to exceed $500,000 (or the equivalent thereof in another currency) in
the aggregate at any one time outstanding.
Section 8.8. Liens. The Parent shall not, nor shall it permit the
Borrower or any other Subsidiary to, create, incur or permit to exist any Lien
of any kind on any Property owned by any such Person; provided, however, that
the foregoing shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges (other then Liens arising under ERISA),
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good faith cash deposits in connection with tenders, contracts or
leases to which the Parent, the Borrower or any Subsidiary is a party
or other cash deposits required to be made in the ordinary course of
business, provided in each case that the obligation is not for borrowed
money and that the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves have been
established therefor;
(b) mechanics', workmen's, materialmen's, landlords',
carriers' or other similar Liens arising in the ordinary course of
business with respect to obligations which are not due or which are
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an
appeal, stay or discharge in the course of any legal proceeding,
provided that the aggregate amount of liabilities of the Parent, the
Borrower and the Subsidiaries secured by a pledge of assets permitted
under this subsection, including interest and penalties thereon, if
any, shall not be in excess of $10,000 (or the equivalent thereof in
another currency) at any one time outstanding;
(d) Liens on property of the Parent, the Borrower or any
Subsidiary created solely for the purpose of securing indebtedness
permitted by Section 8.7(b) hereof, representing or incurred to finance
the purchase price of Property, provided that no such Lien shall extend
to or cover other Property of the Parent, the Borrower or such
Subsidiary other than the respective Property so acquired, and the
principal amount of indebtedness secured by any such Lien shall at no
time exceed the purchase price of such Property, as reduced by
repayments of principal thereon;
(e) any interest or title of a lessor under any operating
lease;
(f) easements, rights-of-way, restrictions, and other similar
encumbrances against real property incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and
which do not materially detract from the value of the Property subject
thereto or materially interfere with the ordinary conduct of the
business of the Parent, the Borrower or any Subsidiary; and
(g) the Liens granted in favor of the Administrative Agent
pursuant to the Collateral Documents.
Section 8.9. Investments, Acquisitions, Loans and Advances. The Parent
shall not, nor shall it permit the Borrower or any other Subsidiary to, directly
or indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets or business
of any other Person or division thereof; provided, however, that the foregoing
shall not apply to nor operate to prevent:
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(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one
year of the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by
Xxxxx'x and at least A-1 by S&P maturing within one year of the date of
issuance thereof;
(c) investments in certificates of deposit issued by any
Lender or by any United States commercial bank having capital and
surplus of not less than $100,000,000 which have a maturity of one year
or less;
(d) investments in repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in
subsection (a) above entered into with any bank meeting the
qualifications specified in subsection (c) above, provided all such
agreements require physical delivery of the securities securing such
repurchase agreement, except those delivered through the Federal
Reserve Book Entry System;
(e) investments in money market funds that invest solely, and
which are restricted by their respective charters to invest solely, in
investments of the type described in the immediately preceding
subsections (a), (b), (c), and (d) above;
(f) the Parent's investment existing on the date of this
Agreement in the Borrower and the other Subsidiaries, provided that
monies repaid by Foreign Subsidiaries (other than the Borrower) to the
Parent and then re-invested by the Parent in such Foreign Subsidiaries
shall be considered investments existing on the date of this Agreement
to the extent that the amount so re-invested does not exceed the amount
so repaid, and additional investments made from time to time by the
Parent, the Borrower or any Subsidiary in the Borrower or one or more
of the Domestic Subsidiaries;
(g) intercompany advances made from time to time from the
Parent or the Borrower to the Borrower or any one or more Domestic
Subsidiaries in the ordinary course of business to finance working
capital needs; and
(h) other investments, loans, and advances in addition to
those otherwise permitted by this Section in an amount not to exceed
$250,000 (or the equivalent thereof in another currency) in the
aggregate at any one time outstanding.
In determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.
Section 8.10. Mergers, Consolidations and Sales. The Parent shall not,
nor shall it permit the Borrower or any other Subsidiary to, be a party to any
merger or consolidation, or sell, transfer, lease or otherwise dispose of all or
any part of its Property, including any disposition of
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Property as part of a sale and leaseback transaction, or in any event sell or
discount (with or without recourse) any of its notes or accounts receivable;
provided, however, that this Section shall not apply to nor operate to prevent:
(a) the sale or lease of inventory in the ordinary course of
business;
(b) the sale, transfer, lease or other disposition of Property
of the Parent, the Borrower and the Domestic Subsidiaries to one
another in the ordinary course of its business;
(c) the merger of any Subsidiary with and into the Parent or
any other Domestic Subsidiary, provided that, in the case of any merger
involving the Parent, the Parent is the corporation surviving the
merger;
(d) the sale of delinquent notes or accounts receivable in the
ordinary course of business for purposes of collection only (and not
for the purpose of any bulk sale or securitization transaction);
(e) the sale, transfer or other disposition of any tangible
personal property that, in the reasonable business judgment of the
Parent, the Borrower or such Subsidiary, has become uneconomical,
obsolete or worn out, and which is disposed of in the ordinary course
of business; and
(f) the sale, transfer, lease or other disposition of Property
of the Parent, the Borrower or any Subsidiary (including any
disposition of Property as part of a sale and leaseback transaction)
aggregating for the Parent, the Borrower and the Subsidiaries not more
than $1,000,000 (or the equivalent thereof in another currency) during
any fiscal year of the Parent.
So long as no Default or Event of Default has occurred and is continuing or
would arise as a result thereof, upon the written request of the Parent or the
Borrower, the Administrative Agent shall release its Lien on any Property sold
pursuant to the foregoing provisions.
Section 8.11. Maintenance of Subsidiaries. The Parent shall not assign,
sell or transfer, nor shall it permit the Borrower or any other Subsidiary to
issue, assign, sell or transfer, any shares of capital stock or other equity
interests of a Subsidiary; provided, however, that the foregoing shall not
operate to prevent (a) Liens on the capital stock or other equity interests of
Subsidiaries granted to the Administrative Agent pursuant to the Collateral
Documents, (b) the issuance, sale and transfer to any person of any shares of
capital stock of a Subsidiary solely for the purpose of qualifying, and to the
extent legally necessary to qualify, such person as a director of such
Subsidiary, and (c) any transaction permitted by Section 8.10(c) above.
Section 8.12. Dividends and Certain Other Restricted Payments. The
Parent shall not, nor shall it permit the Borrower or any other Subsidiary to,
(a) declare or pay any dividends on or make any other distributions in respect
of any class or series of its capital stock or other equity interests or (b)
directly or indirectly purchase, redeem, or otherwise acquire or retire any of
its
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capital stock or other equity interests or any warrants, options, or similar
instruments to acquire the same; provided, however, that the foregoing shall not
operate to prevent the making of dividends or distributions by any Wholly-owned
Subsidiary of the Parent to its parent corporation, other than dividends or
distributions by a Domestic Subsidiary to a Foreign Subsidiary other than the
Borrower.
Section 8.13. ERISA; Canadian Benefit Plan Obligations. The Parent
shall, and shall cause the Borrower and each other Subsidiary to, promptly pay
and discharge all obligations and liabilities arising under ERISA or under any
law applicable to a Canadian Benefit Plan or under the terms of the Canadian
Benefit Plan itself of a character which if unpaid or unperformed could
reasonably be expected to result in the imposition of a Lien against any of its
Property. The Parent shall, and shall cause the Borrower and each other
Subsidiary to, promptly notify the Administrative Agent and each Lender of: (a)
the occurrence of any reportable event (as defined in ERISA) with respect to a
Plan or the occurrence of an event in relation to a Canadian Benefit Plan which
would constitute such a "reportable event" if the Canadian Benefit Plan were
subject to ERISA, (b) receipt of any notice from the PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor, or receipt
from any government or regulatory authority having jurisdiction over a Canadian
Benefit Plan of notice of its intention to seek full or partial termination of
any Canadian Benefit Plan or notice of the appointment of an administrator
therefor, (c) its intention to terminate or withdraw from any Plan or Canadian
Benefit Plan, and (d) the occurrence of any event with respect to any Plan or
Canadian Benefit Plan which would result in the incurrence by the Parent, the
Borrower or any Subsidiary of any material liability, fine or penalty, or any
material increase in the contingent liability of the Parent, the Borrower or any
Subsidiary with respect to any post-retirement Welfare Plan benefit or Canadian
Benefit Plan.
Section 8.14. Compliance with Laws.
(a) The Parent shall, and shall cause the Borrower and each other
Subsidiary to, comply in all respects with the requirements of all federal,
state, or provincial, as applicable, and local laws, rules, regulations,
ordinances and orders including, without limitation, Environmental Laws,
applicable to or pertaining to its Property or business operations, where any
such non-compliance, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or result in a Lien upon any of its
Property.
(b) Without limiting the agreements set forth in Section 8.14(a) above,
the Parent shall at all times, and shall cause the Borrower and each other
Subsidiary to at all times, do the following to the extent the failure to do so
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect: (i) comply in all material respects with, and maintain
each of the Premises in compliance in all material respects with, all applicable
Environmental Laws; (ii) require that each tenant and subtenant, if any, of any
of the Premises or any part thereof comply in all material respects with all
applicable Environmental Laws; (iii) obtain and maintain in full force and
effect all material governmental approvals required by any applicable
Environmental Law for operations at each of the Premises; (iv) cure any material
violation by it or at any of the Premises of applicable Environmental Laws; (v)
not allow the presence or operation at any of the Premises of any (1) landfill
or dump or (2) hazardous waste management facility or solid waste disposal
facility as defined pursuant to RCRA or any comparable state law or law of
Canada or any province thereof; (vi) not manufacture, use,
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generate, transport, treat, store, release, dispose or handle any Hazardous
Material at any of the Premises except in the ordinary course of its business
and in de minimis amounts; (vii) within 10 Business Days notify the
Administrative Agent in writing of and provide any reasonably requested
documents upon learning of any of the following in connection with the Parent,
the Borrower or any Subsidiary or any of the Premises: (1) any material
liability for response or corrective action, natural resource damage or other
harm pursuant to CERCLA, RCRA or any comparable state law; (2) any material
Environmental Claim; (3) any material violation of an Environmental Law or
material release, threatened release or disposal of a Hazardous Material; (4)
any restriction on the ownership, occupancy, use or transferability arising
pursuant to any (x) release, threatened release or disposal of a Hazardous
Substance or (y) Environmental Law; or (5) any environmental, natural resource,
health or safety condition, which could reasonably be expected to have a
Material Adverse Effect; (viii) conduct at its expense any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or xxxxx any material release,
threatened release or disposal of a Hazardous Material as required by any
applicable Environmental Law, (ix) abide by and observe any restrictions on the
use of the Premises imposed by any governmental authority as set forth in a deed
or other instrument affecting the Parent's, the Borrower's or any Subsidiary's
interest therein; (x) promptly provide or otherwise make available to the
Administrative Agent any reasonably requested environmental record concerning
the Premises which the Parent, the Borrower or any Subsidiary possesses or can
reasonably obtain; and (xi) perform, satisfy, and implement any operation or
maintenance actions required by any governmental authority or Environmental Law,
or included in any no further action letter or covenant not to xxx issued by any
governmental authority under any Environmental Law.
Section 8.15. Burdensome Contracts with Affiliates. The Parent shall
not, nor shall it permit the Borrower or any other Subsidiary to, enter into any
contract, agreement or business arrangement with any of its Affiliates (other
than with the Borrower or Wholly-owned Subsidiaries which are Domestic
Subsidiaries) on terms and conditions which are less favorable to the Parent,
the Borrower or such Subsidiary than would be usual and customary in similar
contracts, agreements or business arrangements between Persons not affiliated
with each other, other than any such contracts, agreements or business
arrangements with Foreign Subsidiaries entered into in the ordinary course of
business on terms and conditions substantially similar to similar contracts,
agreements or business arrangements entered into prior to the Closing Date.
Section 8.16. No Changes in Fiscal Year. The fiscal year of the Parent,
the Borrower and the Subsidiaries ends on September 30 of each year; and the
Parent shall not, nor shall it permit the Borrower or any Subsidiary to, change
its fiscal year from its present basis.
Section 8.17. Formation of Subsidiaries. Promptly upon the formation or
acquisition of any Subsidiary, the Parent shall provide the Administrative Agent
and the Lenders notice thereof and timely comply with the requirements of
Section 4 hereof (at which time Schedule 6.2 shall be deemed amended to include
reference to such Subsidiary).
Section 8.18. Change in the Nature of Business. The Parent shall not,
nor shall it permit the Borrower or any other Subsidiary to, engage in any
business or activity if as a result the general nature of the business of the
Parent, the Borrower or any Subsidiary would be changed in
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any material respect from the general nature of the business engaged in by it as
of the Closing Date.
Section 8.19. Use of Loan Proceeds. The Borrower shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.
Section 8.20. No Restrictions. Except as provided herein, the Parent
shall not, nor shall it permit the Borrower or any other Subsidiary to, directly
or indirectly create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of the
Parent, the Borrower or any Subsidiary to: (a) pay dividends or make any other
distribution on the Borrower's or any Subsidiary's capital stock or other equity
interests owned by the Parent, the Borrower or any other Subsidiary, (b) pay any
indebtedness owed to the Parent, the Borrower or any other Subsidiary, (c) make
loans or advances to the Parent, the Borrower or any other Subsidiary, (d)
transfer any of its Property to the Parent, the Borrower or any other Subsidiary
or (e) guarantee the Obligations and/or grant Liens on its assets to the
Administrative Agent as required by the Loan Documents.
Section 8.21. Total Funded Debt to EBITDA Ratio. As of the last day of
each fiscal quarter of the Parent ending during the periods set forth below, the
Parent shall not permit the Total Funded Debt to EBITDA Ratio to be greater than
the following:
TOTAL FUNDED DEBT TO
EBITDA RATIO SHALL
FROM AND INCLUDING TO AND INCLUDING NOT BE GREATER THAN:
the date hereof 6/30/02 2.75 to 1.0
7/1/02 6/30/03 2.5 to 1.0
7/1/03 and at all times thereafter 2.0 to 1.0
Section 8.22. Net Worth. The Parent shall, at all times during the term
of this Agreement, maintain Net Worth of the Parent and the Subsidiaries
determined on a consolidated basis in an amount not less than the sum of (a)
$16,500,000 plus (b) 50% of Net Income (without deduction for losses) for each
fiscal quarter of the Parent commencing with the fiscal quarter ending March 31,
2002.
Section 8.23. Fixed Charge Coverage Ratio. As of the last day of each
fiscal quarter of the Parent, the Parent shall maintain a ratio of (a) EBITDA
for the four fiscal quarters of the Parent then ended, less Capital Expenditures
for the Parent and the Subsidiaries on a consolidated basis for such four fiscal
quarters, to (b) Fixed Charges for the same four fiscal quarters then ended of
not less than the following:
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FIXED CHARGE COVERAGE
RATIO SHALL NOT BE
FROM AND INCLUDING TO AND INCLUDING LESS THAN:
the date hereof 6/30/02 1.5 to 1.0
7/1/02 6/30/03 1.75 to 1.0
7/1/03 6/30/04 2.0 to 1.0
7/1/04 and at all times thereafter 2.25 to 1.0
provided that, for the purposes of calculating rolling four-quarter EBITDA for
the five fiscal quarters of the Parent ending on September 30, 2001, December
31, 2001, March 31, 2002, June 30, 2002 and September 30, 2002, EBITDA
attributable to the Delphax Assets for the fiscal quarters ending on December
31, 2000, March 31, 2001, June 30, 2001, September 30, 2001 and December 31,
2001 is deemed by the parties hereto to be $1,400,000 per fiscal quarter.
Section 8.24. Operating Leases. The Parent shall not, nor shall it
permit any Subsidiary to, acquire the use or possession of any Property under a
lease or similar arrangement, whether or not the Parent, the Borrower or any
Subsidiary has the express or implied right to acquire title to or purchase such
Property, at any time if, after giving effect thereto, the aggregate amount of
fixed rentals and other consideration payable by the Parent, the Borrower and
the Subsidiaries under all such leases and similar arrangements would exceed
$2,500,000 (or the equivalent thereof in another currency) during any fiscal
year of the Parent. Capital Leases shall not be included in computing compliance
with this Section to the extent the Parent's, the Borrower's and the
Subsidiaries' liability in respect of the same is permitted by Section 8.7
hereof.
Section 8.25. Interest Rate Protection. Not later than the Closing
Date, the Borrower will hedge its interest rate risk on at least $5,000,000 of
the principal amount of the Revolving Loans outstanding through the use of an
interest rate cap with the foregoing to effectively limit the amount of interest
that the Borrower must pay on notional amounts of not less than such portion of
the Revolving Loans to not more than a rate acceptable to the Administrative
Agent in its discretion for a period ending no earlier than 5 calendar years
after the Closing Date and to be with the Lenders, their respective Affiliates
or with other parties reasonably acceptable to the Administrative Agent.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment when due of all or any part of the
principal of or for a period of 2 Business Days in payment of interest
on any Note (whether at the stated
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maturity thereof or at any other time provided for in this Agreement)
or of any Reimbursement Obligation or of any fee or other Obligation
payable hereunder or under any other Loan Document;
(b) default in the observance or performance of any covenant
set forth in Sections 8.1, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.16,
8.19, 8.21, 8.22, 8.23 or 8.24 hereof or of any provision in any Loan
Document dealing with the use, disposition or remittance of the
proceeds of Collateral or requiring the maintenance of insurance
thereon;
(c) default in the observance or performance of any other
provision hereof or of any other Loan Document which is not remedied
within 30 days after the earlier of (i) the date on which such failure
shall first become known to any officer of the Parent or the Borrower
or (ii) written notice thereof is given to the Parent or the Borrower
by the Administrative Agent;
(d) any representation or warranty made herein or in any other
Loan Document or in any certificate furnished to the Administrative
Agent or the Lenders pursuant hereto or thereto or in connection with
any transaction contemplated hereby or thereby proves untrue in any
material respect as of the date of the issuance or making or deemed
making thereof;
(e) any event occurs or condition exists (other than those
described in subsections (a) through (d) above) which is specified as
an event of default under any of the other Loan Documents, or any of
the Loan Documents shall for any reason not be or shall cease to be in
full force and effect or is declared to be null and void, or any of the
Collateral Documents shall for any reason fail to create a valid and
perfected first priority Lien in favor of the Administrative Agent in
any Collateral purported to be covered thereby except as expressly
permitted by the terms thereof, or any Subsidiary takes any action for
the purpose of terminating, repudiating or rescinding any Loan Document
executed by it or any of its obligations thereunder;
(f) default shall occur under any Indebtedness for Borrowed
Money issued, assumed or guaranteed by the Parent, the Borrower or any
Subsidiary aggregating in excess of $500,000 (or the equivalent thereof
in another currency), or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of
the maturity of any such Indebtedness for Borrowed Money (whether or
not such maturity is in fact accelerated), or any such Indebtedness for
Borrowed Money shall not be paid when due (whether by demand, lapse of
time, acceleration or otherwise);
(g) any judgment or judgments, writ or writs or warrant or
warrants of attachment, or any similar process or processes, shall be
entered or filed against the Parent, the Borrower or any Subsidiary, or
against any of their Property, in an aggregate amount in excess of
$250,000 (or the equivalent thereof in another currency) (except to the
extent fully covered by insurance pursuant to which the insurer has
accepted liability
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therefor in writing), and which remains undischarged, unvacated,
unbonded, or unstayed for a period of 30 days;
(h) the Parent, the Borrower or any Subsidiary, or any member
of its Controlled Group, shall fail to pay when due an amount or
amounts aggregating in excess of $250,000 which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA or to or
in respect of a Canadian Benefit Plan in accordance with its terms or
in accordance with applicable law; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Vested Liabilities (or, in the
case of a Canadian Benefit Plan, unfunded solvency liabilities) in
excess of $250,000 or the equivalent in Canadian Dollars (collectively,
a "Material Plan") shall be filed under Title IV of ERISA (or, in the
case of a Canadian Benefit Plan, filed with the applicable government
or regulatory authority having jurisdiction over the Canadian Benefit
Plan) by the Parent, the Borrower or any Subsidiary, or any other
member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA or under any applicable Canadian law to
terminate or to cause a trustee to be appointed to administer any
Material Plan or a proceeding shall be instituted by a fiduciary of any
Material Plan against the Parent, the Borrower or any Subsidiary, or
any member of its Controlled Group, to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by reason of
which the PBGC or any Canadian regulatory authority would be entitled
to obtain a decree adjudicating that any Material Plan must be
terminated;
(i) any Change of Control shall occur;
(j) the Parent, the Borrower or any Subsidiary shall (i) have
entered involuntarily against it an order for relief under the United
States Bankruptcy Code, as amended, or the bankruptcy laws of Canada as
in effect from time to time, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered
against it an order for relief under the United States Bankruptcy Code,
as amended, or the bankruptcy laws of Canada as in effect from time to
time, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, (vi) take any corporate action in furtherance of any matter
described in parts (i) through (v) above, or (vii) fail to contest in
good faith any appointment or proceeding described in Section 9.1(k)
hereof; or
(k) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Parent, the Borrower or any
Subsidiary, or any substantial part of any of its Property, or a
proceeding described in Section 9.1(j)(v) shall be instituted against
the Parent, the Borrower or any Subsidiary, and such appointment
continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 days.
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Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other
than those described in subsection (j) or (k) of Section 9.1 hereof has occurred
and is continuing, the Administrative Agent shall, by written notice to the
Borrower: (a) if so directed by the Required Lenders, terminate the remaining
Commitments and all other obligations of the Lenders hereunder on the date
stated in such notice (which may be the date thereof); (b) if so directed by the
Required Lenders, declare the principal of and the accrued interest on all
outstanding Notes to be forthwith due and payable and thereupon all outstanding
Notes, including both principal and interest thereon, shall be and become
immediately due and payable together with all other amounts payable under the
Loan Documents without further demand, presentment, protest or notice of any
kind; and (c) if so directed by the Required Lenders, demand that the Borrower
immediately pay to the Administrative Agent the full amount then available for
drawing under each or any Letter of Credit, and the Borrower agrees to
immediately make such payment and acknowledges and agrees that the Lenders would
not have an adequate remedy at law for failure by the Borrower to honor any such
demand and that the Administrative Agent, for the benefit of the Lenders, shall
have the right to require the Borrower to specifically perform such undertaking
whether or not any drawings or other demands for payment have been made under
any Letter of Credit. The Administrative Agent, after giving notice to the
Borrower pursuant to Section 9.1(c) or this Section 9.2, shall also promptly
send a copy of such notice to the other Lenders, but the failure to do so shall
not impair or annul the effect of such notice.
Section 9.3. Bankruptcy Defaults. When any Event of Default described
in subsections (j) or (k) of Section 9.1 hereof has occurred and is continuing,
then all outstanding Notes shall immediately become due and payable together
with all other amounts payable under the Loan Documents without presentment,
demand, protest or notice of any kind, the obligation of the Lenders to extend
further credit pursuant to any of the terms hereof shall immediately terminate
and the Borrower shall immediately pay to the Administrative Agent the full
amount then available for drawing under all outstanding Letters of Credit, the
Borrower acknowledging and agreeing that the Lenders would not have an adequate
remedy at law for failure by the Borrower to honor any such demand and that the
Lenders, and the Administrative Agent on their behalf, shall have the right to
require the Borrower to specifically perform such undertaking whether or not any
draws or other demands for payment have been made under any of the Letters of
Credit.
Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.9(b) or under Section 9.2 or 9.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Administrative Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Administrative Agent in one or more separate collateral accounts (each
such account, and the credit balances, properties, and any investments from time
to time held therein, and any substitutions for such account, any certificate of
deposit or other instrument evidencing any of the foregoing and all proceeds of
and earnings on any of the foregoing being collectively called the "Collateral
Account") as security for, and for application by the Administrative Agent (to
the extent available) to, the reimbursement of any payment under any Letter of
Credit then or
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thereafter made by the Administrative Agent, and to the payment of the unpaid
balance of any other Obligations. The Collateral Account shall be held in the
name of and subject to the exclusive dominion and control of the Administrative
Agent for the benefit of the Administrative Agent, the Lenders, and the L/C
Issuer. If and when requested by the Borrower, the Administrative Agent shall
invest funds held in the Collateral Account from time to time in direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America with a remaining
maturity of one year or less, provided that the Administrative Agent is
irrevocably authorized to sell investments held in the Collateral Account when
and as required to make payments out of the Collateral Account for application
to amounts due and owing from the Borrower to the L/C Issuer, the Administrative
Agent or the Lenders; provided, however, that if (i) the Borrower shall have
made payment of all such obligations referred to in subsection (a) above, (ii)
all relevant preference or other disgorgement periods relating to the receipt of
such payments have passed, and (iii) no Letters of Credit, Commitments, Loans or
other Obligations remain outstanding hereunder, then the Administrative Agent
shall release to the Borrower any remaining amounts held in the Collateral
Account.
Section 9.5. Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 9.1(c) hereof promptly upon being requested
to do so by any Lender and shall thereupon notify all the Lenders thereof.
Section 9.6. Expenses. The Borrower agrees to pay to the Administrative
Agent and each Lender, and any other holder of any Note outstanding hereunder,
all costs and expenses reasonably incurred or paid by the Administrative Agent
and such Lender or any such holder, including reasonable attorneys' fees and
court costs, in connection with any Default or Event of Default by the Borrower
hereunder or in connection with the enforcement of any of the Loan Documents
following a Default or an Event of Default (including all such costs and
expenses incurred in connection with any proceeding under the United States
Bankruptcy Code or the bankruptcy laws of Canada involving the Parent, the
Borrower or any Subsidiary as a debtor thereunder).
SECTION 10. CHANGE IN CIRCUMSTANCES.
Section 10.1. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note, if at any time any change in applicable law or
regulation or in the interpretation thereof makes it unlawful for any Lender to
make or continue to maintain any Eurodollar Loans or to perform its obligations
as contemplated hereby, such Lender shall promptly give notice thereof to the
Borrower and such Lender's obligations to make or maintain Eurodollar Loans
under this Agreement shall be suspended until it is no longer unlawful for such
Lender to make or maintain Eurodollar Loans. The Borrower shall prepay on demand
the outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon and all other amounts then due and payable to
such Lender under this Agreement; provided, however, subject to all of the terms
and conditions of this Agreement, the Borrower may then elect to borrow the
principal amount of the affected Eurodollar Loans from such Lender by means of
Base Rate Loans from such Lender, which Base Rate Loans shall not be made
ratably by the Lenders but only from such affected Lender.
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Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:
(a) the Administrative Agent determines that deposits in U.S.
Dollars (in the applicable amounts) are not being offered to it in the
interbank eurodollar market for such Interest Period, or that by reason
of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR, or
(b) the Required Lenders advise the Administrative Agent that
(i) LIBOR as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of funding their Eurodollar
Loans for such Interest Period or (ii) that the making or funding of
Eurodollar Loans become impracticable,
then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make Eurodollar Loans shall be suspended.
Section 10.3. Increased Cost and Reduced Return. (a) If, on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject any Lender (or its Lending Office) to any
tax, duty or other charge with respect to its Eurodollar Loans or Fixed
Rate Loan, its Notes, its Letter(s) of Credit, or its participation in
any thereof, any Reimbursement Obligations owed to it or its obligation
to make Eurodollar Loans or the Fixed Rate Loan, issue a Letter of
Credit, or to participate therein, or shall change the basis of
taxation of payments to any Lender (or its Lending Office) of the
principal of or interest on its Eurodollar Loans or Fixed Rate Loan,
Letter(s) of Credit, or participations therein or any other amounts due
under this Agreement or any other Loan Document in respect of its
Eurodollar Loans or Fixed Rate Loan, Letter(s) of Credit, any
participation therein, any Reimbursement Obligations owed to it, or its
obligation to make Eurodollar Loans or the Fixed Rate Loan, or issue a
Letter of Credit, or acquire participations therein (except for changes
in the rate of tax on the overall net income of such Lender or its
Lending Office imposed by the jurisdiction in which such Lender's
principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Eurodollar Loans any
such requirement included in an applicable Eurodollar Reserve
Percentage) against assets of, deposits with or for the account of, or
credit extended by,
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any Lender (or its Lending Office) or shall impose on any Lender (or
its Lending Office) or on the interbank market any other condition
affecting its Eurodollar Loans or Fixed Rate Loan, its Notes, its
Letter(s) of Credit, or its participation in any thereof, any
Reimbursement Obligation owed to it, or its obligation to make
Eurodollar Loans or the Fixed Rate Loan, or to issue a Letter of
Credit, or to participate therein;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Eurodollar Loan or Fixed
Rate Loan, issuing or maintaining a Letter of Credit, or participating therein,
or to reduce the amount of any sum received or receivable by such Lender (or its
Lending Office) under this Agreement or under any other Loan Document with
respect thereto, by an amount deemed by such Lender to be material, then, within
15 days after demand by such Lender (with a copy to the Administrative Agent),
the Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction.
(b) If, after the date hereof, any Lender or the Administrative Agent
shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has had the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(c) A certificate of a Lender claiming compensation under this Section
10.3 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive if reasonably determined. In determining such
amount, such Lender may use any reasonable averaging and attribution methods.
Section 10.4. Lending Offices. Each Lender may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Administrative Agent.
Section 10.5. Discretion of Lender as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder with respect to Eurodollar Loans shall
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be made as if each Lender had actually funded and maintained each Eurodollar
Loan through the purchase of deposits in the interbank eurodollar market having
a maturity corresponding to such Loan's Interest Period, and bearing an interest
rate equal to LIBOR for such Interest Period.
SECTION 11. THE ADMINISTRATIVE AGENT.
Section 11.1. Appointment and Authorization of Administrative Agent.
Each Lender hereby appoints Xxxxxx Trust and Savings Bank as the Administrative
Agent under the Loan Documents and hereby authorizes the Administrative Agent to
take such action as Administrative Agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. The Lenders expressly agree that the Administrative Agent is not acting
as a fiduciary of the Lenders in respect of the Loan Documents, the Parent, the
Borrower or otherwise, and nothing herein or in any of the other Loan Documents
shall result in any duties or obligations on the Administrative Agent or any of
the Lenders except as expressly set forth herein.
Section 11.2. Administrative Agent and Its Affiliates. The Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise or refrain from exercising
such rights and power as though it were not the Administrative Agent, and the
Administrative Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower or any Affiliate
of the Borrower as if it were not the Administrative Agent under the Loan
Documents. The term "Lender" as used herein and in all other Loan Documents,
unless the context otherwise clearly requires, includes the Administrative Agent
in its individual capacity as a Lender. References in Section 1 hereof to the
Administrative Agent's Loans, or to the amount owing to the Administrative Agent
for which an interest rate is being determined, refer to the Administrative
Agent in its individual capacity as a Lender.
Section 11.3. Action by Administrative Agent. If the Administrative
Agent receives from the Parent or the Borrower a written notice of an Event of
Default pursuant to Section 8.5 hereof, the Administrative Agent shall promptly
give each of the Lenders written notice thereof. The obligations of the
Administrative Agent under the Loan Documents are only those expressly set forth
therein. Without limiting the generality of the foregoing, the Administrative
Agent shall not be required to take any action hereunder with respect to any
Default or Event of Default, except as expressly provided in Sections 9.2 and
9.5. Upon the occurrence of an Event of Default, the Administrative Agent shall
take such action to enforce its Lien on the Collateral and to preserve and
protect the Collateral as may be directed by the Required Lenders. Unless and
until the Required Lenders give such direction, the Administrative Agent may
(but shall not be obligated to) take or refrain from taking such actions as it
deems appropriate and in the best interest of all the Lenders. In no event,
however, shall the Administrative Agent be required to take any action in
violation of applicable law or of any provision of any Loan Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Loan Document unless it first
receives any further assurances of its indemnification from the Lenders that it
may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expense, and liability
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which may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall be entitled to assume that no Default or
Event of Default exists unless notified in writing to the contrary by a Lender
or the Borrower. In all cases in which the Loan Documents do not require the
Administrative Agent to take specific action, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder. Any instructions of the Required Lenders, or of any other
group of Lenders called for under the specific provisions of the Loan Documents,
shall be binding upon all the Lenders and the holders of the Obligations.
Section 11.4. Consultation with Experts. The Administrative Agent may
consult with legal counsel, independent public accountants, and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 11.5. Liability of Administrative Agent; Credit Decision.
Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
with the Loan Documents: (i) with the consent or at the request of the Required
Lenders or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify: (i) any statement, warranty or representation made in
connection with this Agreement, any other Loan Document or any Credit Event;
(ii) the performance or observance of any of the covenants or agreements of the
Parent, the Borrower or any Subsidiary contained herein or in any other Loan
Document; (iii) the satisfaction of any condition specified in Section 7 hereof,
except receipt of items required to be delivered to the Administrative Agent; or
(iv) the validity, effectiveness, genuineness, enforceability, perfection,
value, worth or collectibility hereof or of any other Loan Document or of any
other documents or writing furnished in connection with any Loan Document or of
any Collateral; and the Administrative Agent makes no representation of any kind
or character with respect to any such matter mentioned in this sentence. The
Administrative Agent may execute any of its duties under any of the Loan
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders, the Parent, the Borrower, or any other Person for
the default or misconduct of any such agents or attorneys-in-fact selected with
reasonable care. The Administrative Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, other document or
statement (whether written or oral) believed by it to be genuine or to be sent
by the proper party or parties. In particular and without limiting any of the
foregoing, the Administrative Agent shall have no responsibility for confirming
the accuracy of any compliance certificate or other document or instrument
received by it under the Loan Documents. The Administrative Agent may treat the
payee of any Note as the holder thereof until written notice of transfer shall
have been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent. Each Lender acknowledges that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based upon such information, investigations and inquiries as it
deems appropriate, made its own credit analysis and decision to extend credit to
the Borrower in the manner set forth in the Loan Documents. It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Parent, the Borrower and the Subsidiaries, and the Administrative Agent
shall have no liability to any Lender with respect thereto.
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Section 11.6. Indemnity. The Lenders shall ratably, in accordance with
their respective Percentages, indemnify and hold the Administrative Agent, and
its directors, officers, employees, agents, and representatives harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
it under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the
Lenders under this Section shall survive termination of this Agreement. The
Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent hereunder (whether as fundings of
participations, indemnities or otherwise), but shall not be entitled to offset
against amounts owed to the Administrative Agent by any Lender arising outside
of this Agreement and the other Loan Documents.
Section 11.7. Resignation of Administrative Agent and Successor
Administrative Agent. The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation of the Administrative Agent, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which may be any Lender hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent under the Loan
Documents, and the retiring Administrative Agent shall be discharged from its
duties and obligations thereunder. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 11
and all protective provisions of the other Loan Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent, but no successor Administrative Agent shall in any event
be liable or responsible for any actions of its predecessor. If the
Administrative Agent resigns and no successor is appointed, the rights and
obligations of such Administrative Agent shall be automatically assumed by the
Required Lenders and (i) the Borrower shall be directed to make all payments due
each Lender hereunder directly to such Lender and (ii) the Administrative
Agent's rights in the Collateral Documents shall be assigned without
representation, recourse or warranty to the Lenders as their interests may
appear.
Section 11.8. L/C Issuer. The L/C Issuer shall act on behalf of the Lenders
with respect to any Letters of Credit issued by it and the documents associated
therewith. The L/C Issuer shall have all of the benefits and immunities (i)
provided to the Administrative Agent in this Section 11 with respect to any acts
taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the Applications
pertaining to such Letters of Credit as fully as if the term "Administrative
Agent", as used in this Section 11, included L/C Issuer with respect to such
acts or omissions and (ii) as additionally provided in this Agreement with
respect to such L/C Issuer.
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Section 11.9. Hedging Liability and ACH and Overdraft Liability
Arrangements. By virtue of a Lender's execution of this Agreement or an
assignment agreement pursuant to Section 13.12 hereof, as the case may be, any
Affiliate of such Lender with whom the Parent, the Borrower or any Subsidiary
has entered into an agreement creating Hedging Liability or ACH and Overdraft
Liability shall be deemed a Lender party hereto for purposes of any reference in
a Loan Document to the parties for whom the Administrative Agent is acting, it
being understood and agreed that the rights and benefits of such Affiliate under
the Loan Documents consist exclusively of such Affiliate's right to share in
payments and collections out of the Collateral and the Guaranties as more fully
set forth in Section 3.1 hereof. In connection with any such distribution of
payments and collections, the Agent shall be entitled to assume no amounts are
due to any Lender or its Affiliate with respect to Hedging Liability or ACH and
Overdraft Liability unless such Lender or its Affiliate has notified the Agent
in writing of the amount of any such liability owed to it prior to such
distribution.
Section 11.10. Designation of Additional Agents. The Administrative Agent
shall have the continuing right, for purposes hereof, at any time and from time
to time to designate one or more of the Lenders (and/or its or their Affiliates)
as "syndication agents," "documentation agents," "arrangers," or other
designations for purposes hereto, but such designation shall have no substantive
effect, and such Lenders and their Affiliates shall have no additional powers,
duties, or responsibilities as a result thereof.
SECTION 12. THE GUARANTEES.
Section 12.1. The Guarantees. To induce the Lenders to provide the credits
described herein and in consideration of benefits expected to accrue to the
Borrower by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Borrower, the
Parent, each Subsidiary of the Borrower and each subsidiary of the Parent
(individually a "Guarantor" and collectively the "Guarantors," including
Subsidiaries of the Borrower or subsidiaries of the Parent formed or acquired
after the date hereof executing an Additional Guarantor Supplement in the form
attached hereto as Exhibit H or such other form acceptable to the Administrative
Agent, but excluding Foreign Subsidiaries) hereby unconditionally and
irrevocably guarantees to the Administrative Agent, the Lenders, and their
Affiliates, and each other holder of any of the Obligations, (x) the due and
punctual payment of all present and future Obligations evidenced by or arising
out of the Loan Documents, including, but not limited to, the due and punctual
payment of principal of and interest on the Notes, the Reimbursement
Obligations, and the due and punctual payment of all other Obligations now or
hereafter owed by the Borrower or any Subsidiary under the Loan Documents, and
(y) the due and punctual payment of all present and future Hedging Liability and
ACH and Overdraft Liability as and when the same shall become due and payable,
whether at stated maturity, by acceleration, or otherwise, according to the
terms hereof and thereof, provided that the Borrower shall not be understood to
be a Guarantor of any Obligations or Hedging Liability or ACH and Overdraft
Liability with respect to which it is the primary obligor. In case of failure by
the Borrower or any Subsidiary to timely pay any Obligations or other amounts
guaranteed hereby, each Guarantor hereby unconditionally agrees to make such
payment or to cause such payment to be timely made as and when the same shall
become due and payable,
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whether at stated maturity, by acceleration, or otherwise, and as if such
payment were made by the Borrower or such Subsidiary, as the case may be.
Section 12.2. Guarantee Unconditional. The obligations of each Guarantor
under this Section 12 shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged, or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver, or
release in respect of any obligation of the Borrower or of any other
guarantor under this Agreement or any other Loan Document or by
operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any other Loan Document;
(c) any change in the corporate existence, structure, or
ownership of, or any insolvency, bankruptcy, reorganization, or other
similar proceeding affecting, the Borrower, any other guarantor, or any
of their respective assets, or any resulting release or discharge of
any obligation of the Borrower or of any other guarantor contained in
any Loan Document;
(d) the existence of any claim, set-off, or other rights which
the Borrower or any other guarantor may have at any time against the
Administrative Agent, any Lender, or any other Person, whether or not
arising in connection herewith;
(e) any failure to assert, or any assertion of, any claim or
demand or any exercise of, or failure to exercise, any rights or
remedies against the Borrower, any other guarantor, or any other Person
or Property;
(f) any application of any sums by whomsoever paid or
howsoever realized to any obligation of the Borrower, regardless of
what obligations of the Borrower remain unpaid;
(g) any invalidity or unenforceability relating to or against
the Borrower or any other guarantor for any reason of this Agreement or
of any other Loan Document or any provision of applicable law or
regulation purporting to prohibit the payment by the Borrower or any
other guarantor of the principal of or interest on any Note or any
Reimbursement Obligation, any Hedging Liability, any ACH and Overdraft
Liability, or any other amount payable under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by
the Administrative Agent, any Lender, or any other Person or any other
circumstance whatsoever that might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the obligations
of any Guarantor under this Section 12.
Section 12.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor's obligations under this Section 12 shall remain
in full force and
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effect until the Commitments are terminated, all agreements giving rise to
Hedging Liability and ACH and Overdraft Liability have terminated, all Letters
of Credit have expired, and the principal of and interest on the Notes and all
other amounts payable by the Borrower and the Guarantors under this Agreement
and all other Loan Documents and all Hedging Liability and ACH and Overdraft
Liability shall have been paid in full. If at any time any payment of the
principal of or interest on any Note or any Reimbursement Obligation or any
other amount payable by the Borrower under the Loan Documents or any Hedging
Liability and ACH and Overdraft Liability is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy, or reorganization of the
Borrower or of any guarantor, or otherwise, each Guarantor's obligations under
this Section 12 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.
Section 12.4. Subrogation. Each Guarantor agrees it will not exercise any
rights which it may acquire by way of subrogation by any payment made hereunder,
or otherwise, until all the Obligations, Hedging Liability and ACH and Overdraft
Liability shall have been paid in full subsequent to the termination of all the
Commitments and expiration of all Letters of Credit. If any amount shall be paid
to a Guarantor on account of such subrogation rights at any time prior to the
later of (x) the payment in full of the Obligations, Hedging Liability and ACH
and Overdraft Liability and all other amounts payable by the Borrower hereunder
and the other Loan Documents and (y) the termination of the Commitments and
expiration of all Letters of Credit, such amount shall be held in trust for the
benefit of the Administrative Agent and the Lenders and shall forthwith be paid
to the Administrative Agent for the benefit of the Lenders or be credited and
applied upon the Obligations, Hedging Liability and ACH and Overdraft Liability
whether matured or unmatured, in accordance with the terms of this Agreement.
Section 12.5. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest, and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Administrative
Agent, any Lender, or any other Person against the Borrower, another guarantor,
or any other Person.
Section 12.6. Limit on Recovery. Notwithstanding any other provision
hereof, the right of recovery against each Guarantor under this Section 12 shall
not exceed $1.00 less than the lowest amount which would render such Guarantor's
obligations under this Section 12 void or voidable under applicable law,
including, without limitation, fraudulent conveyance law.
Section 12.7. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Borrower under this Agreement or any other Loan
Document is stayed upon the insolvency, bankruptcy, or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement or the other Loan Documents shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Administrative Agent made at the
request of the Required Lenders.
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SECTION 13. MISCELLANEOUS.
Section 13.1. Withholding Taxes.
(a) Payments Free of Withholding. Except as otherwise required by law
and subject to Section 13.1(b) hereof, each payment by the Borrower under this
Agreement or the other Loan Documents shall be made without withholding for or
on account of any present or future taxes (other than overall net income taxes
on the recipient) imposed by or within the jurisdiction in which the Borrower is
domiciled, any jurisdiction from which the Borrower makes any payment, or (in
each case) any political subdivision or taxing authority thereof or therein. If
any such withholding is so required, the Borrower shall make the withholding,
pay the amount withheld to the appropriate governmental authority before
penalties attach thereto or interest accrues thereon and forthwith pay such
additional amount as may be necessary to ensure that the net amount actually
received by each Lender and the Administrative Agent free and clear of such
taxes (including such taxes on such additional amount) is equal to the amount
which that Lender or the Administrative Agent (as the case may be) would have
received had such withholding not been made. If the Administrative Agent or any
Lender pays any amount in respect of any such taxes, penalties or interest, the
Borrower shall reimburse the Administrative Agent or such Lender for that
payment on demand in the currency in which such payment was made. If the
Borrower pays any such taxes, penalties or interest, it shall deliver official
tax receipts evidencing that payment or certified copies thereof to the Lender
or Administrative Agent on whose account such withholding was made (with a copy
to the Administrative Agent if not the recipient of the original) on or before
the thirtieth day after payment.
THE BORROWER ACKNOWLEDGES THAT PAYMENTS OF INTEREST HEREUNDER TO
LENDERS DOMICILED IN THE UNITED STATES OF AMERICA WILL, UNDER THE LAWS OF CANADA
IN EFFECT ON THE CLOSING DATE, REQUIRE WITHHOLDING AT THE STATUTORY RATE, AND
THE BORROWER AGREES TO MAKE SUCH WITHHOLDING, PAY THE INCREASED INTEREST
REQUIRED HEREUNDER TO SUCH LENDERS, AND DELIVER TO SUCH LENDERS TAX RECEIPTS AS
HEREIN REQUIRED.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Administrative Agent on or before the date the
initial Credit Event is made hereunder or, if later, the date such financial
institution becomes a Lender hereunder, two duly completed and signed copies of
(i) either Form W-8 BEN (relating to such Lender and entitling it to a complete
exemption from withholding under the Code on all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender, including
fees, pursuant to the Loan Documents and the Obligations) of the United States
Internal Revenue Service or (ii) solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8 BEN, or any
successor form prescribed by the Internal Revenue Service, and a certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code).
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Thereafter and from time to time, each Lender shall submit to the Borrower and
the Administrative Agent such additional duly completed and signed copies of one
or the other of such Forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) and such other
certificates as may be (i) requested by the Borrower in a written notice,
directly or through the Administrative Agent, to such Lender and (ii) required
under then-current United States law or regulations to avoid or reduce United
States withholding taxes on payments in respect of all amounts to be received by
such Lender, including fees, pursuant to the Loan Documents or the Obligations.
Upon the request of the Borrower or the Administrative Agent, each Lender that
is a United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrower and the Administrative Agent a certificate to
the effect that it is such a United States person.
(c) Inability of Lender to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Administrative Agent any form or certificate that such Lender is
obligated to submit pursuant to subsection (b) of this Section 13.1 or that such
Lender is required to withdraw or cancel any such form or certificate previously
submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Borrower and Administrative
Agent of such fact and the Lender shall to that extent not be obligated to
provide any such form or certificate and will be entitled to withdraw or cancel
any affected form or certificate, as applicable.
Section 13.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Administrative Agent or any Lender or on the part of the holder or
holders of any of the Obligations in the exercise of any power or right under
any Loan Document shall operate as a waiver thereof or as an acquiescence in any
default, nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The rights and remedies hereunder of the Administrative Agent, the
Lenders and of the holder or holders of any of the Obligations are cumulative
to, and not exclusive of, any rights or remedies which any of them would
otherwise have.
Section 13.3. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.
Section 13.4. Documentary Taxes. The Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
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Section 13.5. Survival of Representations. All representations and
warranties made herein or in any other Loan Document or in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and the other Loan Documents, and shall continue in full force and
effect with respect to the date as of which they were made as long as any credit
is in use or available hereunder.
Section 13.6. Survival of Indemnities. All indemnities and other provisions
relative to reimbursement to the Lenders of amounts sufficient to protect the
yield of the Lenders with respect to the Loans and Letters of Credit, including,
but not limited to, Sections 1.12, 10.3 and 13.15 hereof, shall survive the
termination of this Agreement and the other Loan Documents and the payment of
the Obligations.
Section 13.7. Sharing of Set-Off. Each Lender agrees with each other Lender
a party hereto that if such Lender shall receive and retain any payment, whether
by set-off or application of deposit balances or otherwise, on any of the Loans
or Reimbursement Obligations in excess of its ratable share of payments on all
such Obligations then outstanding to the Lenders, then such Lender shall
purchase for cash at face value, but without recourse, ratably from each of the
other Lenders such amount of the Loans or Reimbursement Obligations, or
participations therein, held by each such other Lenders (or interest therein) as
shall be necessary to cause such Lender to share such excess payment ratably
with all the other Lenders; provided, however, that if any such purchase is made
by any Lender, and if such excess payment or part thereof is thereafter
recovered from such purchasing Lender, the related purchases from the other
Lenders shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. For purposes
of this Section, amounts owed to or recovered by the L/C Issuer in connection
with Reimbursement Obligations in which Lenders have been required to fund their
participation shall be treated as amounts owed to or recovered by the L/C Issuer
as a Lender hereunder.
Section 13.8. Notices. Except as otherwise specified herein, all notices
hereunder and under the other Loan Documents shall be in writing (including,
without limitation, notice by telecopy) and shall be given to the relevant party
at its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the
Administrative Agent and the Borrower given by courier, by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
under the Loan Documents to the Lenders and the Administrative Agent shall be
addressed to their respective addresses or telecopier numbers set forth on the
signature pages hereof, and either the Borrower or the Parent to:
Check Technology Corporation
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Financial Officer
Telephone: (000) 000-0000 Ext. 208
Telecopy: (000) 000-0000
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Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or on the signature pages hereof and a confirmation of
such telecopy has been received by the sender, (ii) if given by mail, 5 days
after such communication is deposited in the mail, certified or registered with
return receipt requested, addressed as aforesaid or (iii) if given by any other
means, when delivered at the addresses specified in this Section or on the
signature pages hereof; provided that any notice given pursuant to Section 1
hereof shall be effective only upon receipt.
Section 13.9. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 13.10. Successors and Assigns. This Agreement shall be binding upon
the Parent and the Borrower and their respective successors and assigns, and
shall inure to the benefit of the Administrative Agent and each of the Lenders
and the benefit of their respective successors and assigns, including any
subsequent holder of any of the Obligations. Neither the Borrower nor the Parent
may assign any of its rights or obligations under any Loan Document without the
written consent of all of the Lenders.
Section 13.11. Participants. Each Lender shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Lender at any time and from time to time to one
or more other Persons; provided that no such participation shall relieve any
Lender of any of its obligations under this Agreement, and, provided, further
that no such participant shall have any rights under this Agreement except as
provided in this Section, and the Administrative Agent shall have no obligation
or responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide that the granting Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrower under
this Agreement and the other Loan Documents including, without limitation, the
right to approve any amendment, modification or waiver of any provision of the
Loan Documents, except that such agreement may provide that such Lender will not
agree to any modification, amendment or waiver of the Loan Documents that would
reduce the amount of or postpone any fixed date for payment of any Obligation in
which such participant has an interest. Any party to which such a participation
has been granted shall have the benefits of Section 1.12 and Section 10.3
hereof. The Borrower authorizes each Lender to disclose to any participant or
prospective participant under this Section any financial or other information
pertaining to the Parent, the Borrower or any Subsidiary.
Section 13.12. Assignments. (a) Each Lender shall have the right at any
time, with the prior consent of the Administrative Agent and, so long as no
Event of Default then exists, the Borrower (which consent of the Borrower shall
not be unreasonably withheld and shall not be required for an assignment by a
Lender to an Affiliate) to sell, assign, transfer or negotiate all or any part
of its rights and obligations under the Loan Documents (including, without
limitation, the indebtedness evidenced by the Notes then held by such assigning
Lender, together with an equivalent percentage of its obligation to make Loans
and participate in Letters of Credit) to one or more commercial banks or other
financial institutions or investors, provided that, unless
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otherwise agreed to by the Administrative Agent, such assignment shall be of a
fixed percentage (and not by its terms of varying percentage) of the assigning
Lender's rights and obligations under the Loan Documents; provided, however,
that in order to make any such assignment (i) unless the assigning Lender is
assigning all of its Commitments, outstanding Loans and interests in Letters of
Credit Obligations, the assigning Lender shall retain at least $5,000,000 in
unused Commitments, outstanding Loans and interests in Letters of Credit, (ii)
the assignee Lender shall have Commitments, outstanding Loans and interests in
Letters of Credit of at least $5,000,000, (iii) each such assignment shall be
evidenced by a written agreement (substantially in the form attached hereto as
Exhibit G or in such other form acceptable to the Administrative Agent) executed
by such assigning Lender, such assignee Lender or Lenders, the Administrative
Agent and, if required as provided above, the Borrower, which agreement shall
specify in each instance the portion of the Obligations which are to be assigned
to the assignee Lender and the portion of the Commitments of the assigning
Lender to be assumed by the assignee Lender, and (iv) the assigning Lender shall
pay to the Administrative Agent a processing fee of $3,500 and any out-of-pocket
attorneys' fees and expenses incurred by the Administrative Agent in connection
with any such assignment agreement. Any such assignee shall become a Lender for
all purposes hereunder to the extent of the rights and obligations under the
Loan Documents it assumes and the assigning Lender shall be released from its
obligations, and will have released its rights, under the Loan Documents to the
extent of such assignment. The address for notices to such assignee Lender shall
be as specified in the assignment agreement executed by it. Promptly upon the
effectiveness of any such assignment agreement, the Borrower shall execute and
deliver replacement Notes to the assignee Lender and the assigning Lender in the
respective amounts of their Commitments (or assigned principal amounts, as
applicable) after giving effect to the reduction occasioned by such assignment
(all such Notes to constitute "Notes" for all purposes of the Loan Documents),
and the assignee Lender shall thereafter surrender to the Borrower its old
Notes. The Borrower authorizes each Lender to disclose to any purchaser or
prospective purchaser of an interest in the Loans and interest in Letters of
Credit owed to it or its Commitments under this Section any financial or other
information pertaining to the Parent, the Borrower or any Subsidiary.
(b) Any Lender may at any time pledge or grant a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any such pledge or grant to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
secured party for such Lender as a party hereto; provided further, however, the
right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.
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Section 13.13. Amendments. Any provision of this Agreement or the other
Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Required
Lenders, and (c) if the rights or duties of the Administrative Agent are
affected thereby, the Administrative Agent; provided that:
(i) no amendment or waiver pursuant to this Section 13.13
shall (A) increase any Commitment of any Lender without the consent of
such Lender or (B) reduce the amount of or postpone the date for any
scheduled payment of any principal of or interest on any Loan or of any
Reimbursement Obligation or of any fee payable hereunder without the
consent of the Lender to which such payment is owing or which has
committed to make such Loan or Letter of Credit (or participate
therein) hereunder; and
(ii) no amendment or waiver pursuant to this Section 13.13
shall, unless signed by each Lender, increase the aggregate Commitments
of the Lenders, change the definitions of Revolving Credit Termination
Date or Required Lenders, change the provisions of this Section 13.13,
release any material guarantor or any substantial part of the
Collateral (except as otherwise provided for in the Loan Documents), or
affect the number of Lenders required to take any action hereunder or
under any other Loan Document.
Section 13.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 13.15. Costs and Expenses; Indemnification. (a) The Borrower agrees
to pay all costs and expenses of the Administrative Agent in connection with the
preparation, negotiation, syndication, and administration of the Loan Documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent, in connection with the preparation and execution of
the Loan Documents, and any amendment, waiver or consent related thereto,
whether or not the transactions contemplated herein are consummated, together
with any fees and charges suffered or incurred by the Administrative Agent in
connection with asset appraisals, collateral audits, collateral filing fees and
lien searches. The Borrower further agrees to indemnify the Administrative
Agent, each Lender, and their respective directors, officers, employees,
attorneys, agents, financial advisors, and consultants against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all reasonable expenses of litigation or preparation
therefor, whether or not the indemnified Person is a party thereto, or any
settlement arrangement arising from or relating to any such litigation) which
any of them may pay or incur arising out of or relating to any Loan Document or
any of the transactions contemplated thereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter of
Credit, other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. The Borrower, upon demand by
the Administrative Agent or a Lender at any time, shall reimburse the
Administrative Agent or such Lender for any legal or other expenses incurred in
connection with investigating or defending against any of the foregoing
(including any settlement costs relating to the foregoing) except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified. The obligations of the Borrower under this Section shall survive
the termination of this Agreement.
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(b) The Borrower unconditionally agrees to forever indemnify, defend
and hold harmless, and covenants not to xxx for any claim for contribution
against, the Administrative Agent and the Lenders for any damages, costs, loss
or expense, including without limitation, response, remedial or removal costs,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by the
Parent, the Borrower or any Subsidiary or otherwise occurring on or with respect
to its Property (whether owned or leased), (ii) the operation or violation of
any environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by the Parent, the Borrower or any Subsidiary or
otherwise occurring on or with respect to its Property (whether owned or
leased), (iii) any claim for personal injury or property damage in connection
with the Parent, the Borrower or any Subsidiary or otherwise occurring on or
with respect to its Property (whether owned or leased), and (iv) the inaccuracy
or breach of any environmental representation, warranty or covenant by the
Parent, the Borrower or any Subsidiary made herein or in any other Loan Document
evidencing or securing any Obligations or setting forth terms and conditions
applicable thereto or otherwise relating thereto, except for damages arising
from the willful misconduct or gross negligence of the party claiming
indemnification. This indemnification shall survive the payment and satisfaction
of all Obligations and the termination of this Agreement, and shall remain in
force beyond the expiration of any applicable statute of limitations and payment
or satisfaction in full of any single claim under this indemnification. This
indemnification shall be binding upon the successors and assigns of the Borrower
and shall inure to the benefit of Administrative Agent and the Lenders
directors, officers, employees, agents, and collateral trustees, and their
successors and assigns.
Section 13.16. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender and each subsequent holder of
any Obligation is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set-off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts, and in whatever currency denominated) and any
other indebtedness at any time held or owing by that Lender or that subsequent
holder to or for the credit or the account of the Borrower, whether or not
matured, against and on account of the Obligations of the Borrower to that
Lender or that subsequent holder under the Loan Documents, including, but not
limited to, all claims of any nature or description arising out of or connected
with the Loan Documents, irrespective of whether or not (a) that Lender or that
subsequent holder shall have made any demand hereunder or (b) the principal of
or the interest on the Loans or Notes and other amounts due hereunder shall have
become due and payable pursuant to Section 9 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
Section 13.17. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.
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Section 13.18. Governing Law. This Agreement and the other Loan Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of Illinois, United
States of America.
Section 13.19. Severability of Provisions. Any provision of any Loan
Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in this Agreement and the other Loan Documents may be
exercised only to the extent that the exercise thereof does not violate any
applicable mandatory provisions of law, and all the provisions of this Agreement
and other Loan Documents are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement or the other Loan
Documents invalid or unenforceable.
Section 13.20. Excess Interest. (a) Notwithstanding any provision to the
contrary contained herein or in any other Loan Document, no such provision shall
require the payment or permit the collection of any amount of interest in excess
of the maximum amount of interest permitted by applicable law to be charged for
the use or detention, or the forbearance in the collection, of all or any
portion of the Loans or other obligations outstanding under this Agreement or
any other Loan Document ("Excess Interest"). If any Excess Interest is provided
for, or is adjudicated to be provided for, herein or in any other Loan Document,
then in such event (a) the provisions of this Section shall govern and control,
(b) neither the Borrower nor any guarantor or endorser shall be obligated to pay
any Excess Interest, (c) any Excess Interest that the Administrative Agent or
any Lender may have received hereunder shall, at the option of the
Administrative Agent, be (i) applied as a credit against the then outstanding
principal amount of Obligations hereunder and accrued and unpaid interest
thereon (not to exceed the maximum amount permitted by applicable law), (ii)
refunded to the Borrower, or (iii) any combination of the foregoing, (d) the
interest rate payable hereunder or under any other Loan Document shall be
automatically subject to reduction to the maximum lawful contract rate allowed
under applicable usury laws (the "Maximum Rate"), and this Agreement and the
other Loan Documents shall be deemed to have been, and shall be, reformed and
modified to reflect such reduction in the relevant interest rate, and (e)
neither the Borrower nor any guarantor or endorser shall have any action against
the Administrative Agent or any Lender for any damages whatsoever arising out of
the payment or collection of any Excess Interest. Notwithstanding the foregoing,
if for any period of time interest on any of Borrower's Obligations is
calculated at the Maximum Rate rather than the applicable rate under this
Agreement, and thereafter such applicable rate becomes less than the maximum
Rate, the rate of interest payable on the Borrower's Obligations shall remain at
the Maximum Rate until the Lenders have received the amount of interest which
such Lenders would have received during such period on the Borrower's
Obligations had the rate of interest not been limited to the Maximum Rate during
such period.
(b) In furtherance of, and not by way of limitation of, the provisions
of the foregoing Section 13.20(a), notwithstanding any provision to the contrary
contained herein, in no event shall the aggregate "interest" (as defined in
Section 347 of the Criminal Code, Revised Statutes of Canada, 1985, C.46 as the
same may be amended, replaced or re-enacted from time to time)
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payable hereunder exceed the effective annual rate of interest on the "credit
advanced" (as defined in that Section) hereunder lawfully permitted under that
Section and, if any payment, collection or demand pursuant to this Agreement in
respect of "interest" (as defined in that Section) is determined to be contrary
to the provisions of that Section, such payment, collection or demand shall be
deemed to have been made by mutual mistake of the Borrower and the applicable
Lender or Lenders and the amount of such payment or collection shall be refunded
to the Borrower. For purposes hereof, the effective annual rate of interest
shall be determined in accordance with Canadian generally accepted actuarial
practices and principles over the term of this Agreement advanced on the basis
of annual compounding of the lawfully permitted rate of interest and, in the
event of dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by the Agent will be conclusive for the purposes of such
determination.
Section 13.21. Construction. Nothing contained herein shall be deemed or
construed to permit any act or omission which is prohibited by the terms of any
Collateral Document, the covenants and agreements contained herein being in
addition to and not in substitution for the covenants and agreements contained
in the Collateral Documents.
Section 13.22. Lender's Obligations Several. The obligations of the Lenders
hereunder are several and not joint. Nothing contained in this Agreement and no
action taken by the Lenders pursuant hereto shall be deemed to constitute the
Lenders a partnership, association, joint venture or other entity.
Section 13.23. Submission to Jurisdiction; Waiver of Jury Trial. The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Section 13.24. Judgment Currency. The obligation of the Borrower hereunder
to make payments to the Agent or any Lender in Dollars ("Other Currency") shall
not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into Canadian dollars except to the extent
that such tender or recovery shall result in the effective receipt by the Agent
or such Lender of the full amount of Other Currency so payable hereunder.
Accordingly, the obligation of the Borrower shall be enforceable as an
alternative or additional cause of action for the purpose of recovery in
Canadian dollars of the amount (if any) by which such effective receipt shall
fall short of the full amount of Other Currency so payable hereunder and shall
not be affected by any judgment being obtained for any other sums due hereunder.
[SIGNATURE PAGES TO FOLLOW]
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This Agreement is entered into between us for the uses and purposes
hereinabove set forth as of the date first above written.
CHECK TECHNOLOGY CANADA LTD.
By
Name________________________________
Title_______________________________
CHECK TECHNOLOGY CORPORATION,
as Parent and as Guarantor
By
Name________________________________
Title_______________________________
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"LENDERS"
Revolving Credit XXXXXX TRUST AND SAVINGS BANK,
Commitment $15,000,000 in its individual capacity as a Lender,
as L/C Issuer and as Administrative Agent
Term Loan
Commitment $4,000,000
By
Name______________________________________
Title_____________________________________
Address:
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Vice President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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EXHIBIT A
NOTICE OF PAYMENT REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of December 20,
2001 among Check Technology Canada Ltd., the Lenders party thereto, and Xxxxxx
Trust and Savings Bank, as Administrative Agent (the "Credit Agreement").
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the Credit Agreement. [The Borrower has failed to pay its
Reimbursement Obligation in the amount of $____________. Your Revolver
Percentage of the unpaid Reimbursement Obligation is $_____________] or
[__________________________ has been required to return a payment by the
Borrower of a Reimbursement Obligation in the amount of $_______________. Your
Revolver Percentage of the returned Reimbursement Obligation is
$_______________.]
Very truly yours,
XXXXXX TRUST AND SAVINGS BANK,
as L/C Issuer
By
Name__________________________________
Title_________________________________
EXHIBIT B
NOTICE OF BORROWING
Date:________________________, ____
To: Xxxxxx Trust and Savings Bank, as Administrative Agent for the Lenders
parties to the Credit Agreement dated as of December 20, 2001 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement"), among Check Technology Canada Ltd., certain Lenders which
are signatories thereto, and Xxxxxx Trust and Savings Bank, as
Administrative Agent
Ladies and Gentlemen:
The undersigned, Check Technology Canada Ltd. (the "Borrower"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 1.6 of the
Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing
is ___________, ____.
2. The aggregate amount of the proposed Borrowing
is $______________.
3. The Borrowing is being advanced under the
[REVOLVING] [TERM] Credit.
4. The Borrowing is to be comprised of $___________ of
[BASE RATE] [EURODOLLAR] Loans.
[5. THE DURATION OF THE INTEREST PERIOD FOR THE
EURODOLLAR LOANS INCLUDED IN THE BORROWING SHALL BE ____________
MONTHS.]
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the Parent and the
Borrower contained in Section 6 of the Credit Agreement are true and
correct as though made on and as of such date (except to the extent
such representations and warranties relate to an earlier date, in which
case they are true and correct as of such date); and
(b) no Default or Event of Default has occurred and is
continuing or would result from such proposed Borrowing.
CHECK TECHNOLOGY CANADA LTD.
By
Name___________________________________
Title__________________________________
EXHIBIT C
NOTICE OF CONTINUATION/CONVERSION
Date: ____________, ____
To: Xxxxxx Trust and Savings Bank, as Administrative Agent for the Lenders
parties to the Credit Agreement dated as of December 20, 2001 (as
extended, renewed, amended or restated from time to time, the "Credit
Agreement") among Check Technology Canada Ltd., certain Lenders which are
signatories thereto, and Xxxxxx Trust and Savings Bank, as Administrative
Agent
Ladies and Gentlemen:
The undersigned, Check Technology Canada Ltd. (the "Borrower"), refers
to the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 1.6 of the
Credit Agreement, of the [CONVERSION] [CONTINUATION] of the Loans specified
herein, that:
1. The conversion/continuation Date is __________, ____.
2. The aggregate amount of the [REVOLVING] [TERM]
Loans to be [CONVERTED] [CONTINUED] is $______________.
3. The Loans are to be [converted into] [continued as]
[Eurodollar] [Base Rate] Loans.
4. [IF APPLICABLE:] The duration of the Interest
Period for the [REVOLVING] [TERM] Loans included in the [CONVERSION]
[CONTINUATION] shall be _________ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed conversion/continuation
date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties of the Parent and the
Borrower contained in Section 6 of the Credit Agreement are true and
correct as though made on and as of such date (except to the extent
such representations and warranties relate to an earlier date, in which
case they are true and correct as of such date); provided, however,
that this condition shall not apply to the conversion of an outstanding
Eurodollar Loan to a Base Rate Loan; and
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed [CONVERSION]
[CONTINUATION].
CHECK TECHNOLOGY CANADA LTD.
By
Name___________________________________
Title__________________________________
EXHIBIT D-1
TERM NOTE
U.S. $_______________ December 20, 2001
FOR VALUE RECEIVED, the undersigned, Check Technology Canada Ltd., an
Ontario corporation (the "Borrower"), hereby promises to pay to the order of
_____________________ (the "Lender") at the principal office of Xxxxxx Trust and
Savings Bank, as Administrative Agent, in Chicago, Illinois, in immediately
available funds, the principal sum of ___________________ Dollars ($__________)
or, if less, the aggregate unpaid principal amount of all Term Loans made or
maintained by the Lender to the Borrower pursuant to the Credit Agreement, in
installments in the amounts called for by Section 1.8(a) of the Credit
Agreement, commencing on June 30, 2002, together with interest on the principal
amount of such Term Loan from time to time outstanding hereunder at the rates,
and payable in the manner and on the dates, specified in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement
dated as of December 20, 2001 among the Borrower, Xxxxxx Trust and Savings Bank,
as Administrative Agent and the Lenders party thereto (the "Credit Agreement"),
and this Note and the holder hereof are entitled to all the benefits and
security provided for thereby or referred to therein, to which Credit Agreement
reference is hereby made for a statement thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as in
the Credit Agreement. This Note shall be governed by and construed in accordance
with the internal laws of the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are
required to be made hereon, and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner as
provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.
CHECK TECHNOLOGY CANADA LTD.
By
Name___________________________________
Title__________________________________
EXHIBIT D-2
REVOLVING NOTE
U.S. $_______________ December 20, 2001
FOR VALUE RECEIVED, the undersigned, Check Technology Canada Ltd., an
Ontario corporation (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Lender") on the Revolving Credit Termination Date of
the hereinafter defined Credit Agreement, at the principal office of Xxxxxx
Trust and Savings Bank, as Administrative Agent, in Chicago, Illinois, in
immediately available funds, the principal sum of ___________________ Dollars
($__________) or, if less, the aggregate unpaid principal amount of all
Revolving Loans made by the Lender to the Borrower pursuant to the Credit
Agreement, together with interest on the principal amount of each Revolving Loan
from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement dated as of December 20, 2001 among the Borrower, Xxxxxx Trust and
Savings Bank, as Administrative Agent and the Lenders party thereto (the "Credit
Agreement"), and this Note and the holder hereof are entitled to all the
benefits and security provided for thereby or referred to therein, to which
Credit Agreement reference is hereby made for a statement thereof. All defined
terms used in this Note, except terms otherwise defined herein, shall have the
same meaning as in the Credit Agreement. This Note shall be governed by and
construed in accordance with the internal laws of the State of Illinois.
Voluntary prepayments may be made hereon, certain prepayments are
required to be made hereon, and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner as
provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.
CHECK TECHNOLOGY CANADA LTD.
By
Name___________________________________
Title__________________________________
EXHIBIT E
---------------------------------------
BORROWING BASE CERTIFICATE
To: Xxxxxx Trust and Savings Bank, as
Administrative Agent under, and the Lenders
party to, the Credit Agreement described below.
Pursuant to the terms of the Credit Agreement dated as of December 20,
2001 among Check Technology Canada Ltd., Check Technology Corporation, the
Lenders and the Administrative Agent (the "Credit Agreement"), we submit this
Borrowing Base Certificate to you and certify that the information set forth
below and on any attachments to this Certificate is true, correct and complete
as of the date of this Certificate.
A. RECEIVABLES IN BORROWING BASE
1. Gross Receivables ____________________
Less
(a) Ineligible sales ____________________
(b) Owed by an account debtor who is an Affiliate ____________________
(c) Owed by an account debtor who is in an insolvency ____________________
or reorganization proceeding
(d) Credits/allowances ____________________
(e) Unpaid more than 90 days from due date ____________________
(f) Unpaid more than 120 days from invoice date ____________________
(g) Otherwise ineligible ____________________
2. Total Deductions (sum of lines A1a - A1g) ____________________
3. Eligible Receivables (line A1 minus line A2) ____________________
4. Eligible Receivables in Borrowing Base ____________________
(line A3 x .85)
B. INVENTORY IN BORROWING BASE
1. Gross inventory of Finished Goods and raw materials ____________________
2. Less
(a) inventory not located at approved locations ____________________
(b) Obsolete, slow moving, or not merchantable ____________________
(c) Otherwise ineligible ____________________
2. Total Deductions (sum of lines B2a - B2c above) ____________________
3. Eligible Inventory (line B1 minus line B2) ____________________
4. Eligible Inventory in Borrowing Base (line B3 x .50) ____________________
5. Inventory Cap $7,000,000
6. Lesser of line B4 or Line B5 $_________
C. TOTAL BORROWING BASE
1. Line A4 ____________________
2. Line B6 ____________________
3. Sum of Lines C1 and C2 (Borrowing Base) ____________________
D. REVOLVING CREDIT ADVANCES
1. Loans ____________________
2. Letters of Credit ____________________
3. Total Outstandings (line D1 plus D2) ____________________
E. AVAILABLE BORROWING BASE CAPACITY
(line C6 minus line D3) ____________________
Dated as of this ______ day of __________________.
CHECK TECHNOLOGY CORPORATION
By
Name___________________________________
Title__________________________________
E-2
EXHIBIT F
---------------------------------------------------
COMPLIANCE CERTIFICATE
To: Xxxxxx Trust and Savings Bank, as
Administrative Agent under, and the Lenders
party to, the Credit Agreement described below
This Compliance Certificate is furnished to the Administrative Agent
and the Lenders pursuant to that certain Credit Agreement dated as of December
20, 2001 among us, Check Technology Canada Ltd. (the "Borrower"), the Lenders
party thereto and you (the "Credit Agreement"). Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed thereto
in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ____________ of Check Technology Corporation;
2. I have reviewed the terms of the Credit Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Parent, the Borrower and the Subsidiaries
during the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Compliance Certificate, except as set forth below;
4. The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this Compliance
Certificate are true, correct and complete as of the date and for the periods
covered thereby; and
5. The Schedule I hereto sets forth financial data and computations
evidencing the Parent's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
__________________ 20___.
CHECK TECHNOLOGY CORPORATION
By
Name____________________________________
Title___________________________________
SCHEDULE I
TO COMPLIANCE CERTIFICATE
CHECK TECHNOLOGY CORPORATION
COMPLIANCE CALCULATIONS
FOR CREDIT AGREEMENT DATED AS OF DECEMBER 20, 2001
CALCULATIONS AS OF _____________, _______
==============================================================================================================
A. Total Funded Debt to EBITDA* (Section 8.21)
1. Total Funded Debt $___________
2. Net Income for past 4 quarters ___________
3. Interest Expense for past 4 quarters ___________
4. Income taxes for past 4 quarters ___________
5. Depreciation and Amortization Expense for past 4 quarters ___________
6. Sum of Lines A2, A3, A4, and A5 ("EBITDA") ___________
7. Ratio of Line A1 to A6 ____:1.0
8. Line A7 ratio must not exceed ____:1.0
9. The Parent is in compliance (circle yes or no) yes/no
B. Consolidated Net Worth (Section 8.22)
1. Consolidated Net Worth $___________
2. Line B1 shall not be less than $___________
3. The Parent is in compliance (circle yes or no) yes/no
C. Fixed Charge Coverage Ratio (Section 8.23)
1. EBITDA for past 4 quarters (line A6, above) $___________
2. Principal payments made or to be made in past 4 quarters $___________
3. Cash Interest Expense for past 4 quarters $___________
4. Sum of Lines C2 and C3 $___________
5. Ratio of Line C1 to Line C4 ____:1.0
6. Line C5 ratio must not be less than ____:1.0
7. The Parent is in compliance (circle yes or no) yes/no
D. Operating Leases (Section 8.24)
1. Rentals during most recent fiscal year $___________
2. Line D1 shall not be greater than $___________
3. The Parent is in compliance (circle yes or no) yes/no
----------------
* Use deemed EBITDA amount as set forth in definition of "Total Funded
Debt to EBITDA Ratio" with respect to Delphax Assets as indicated.
EXHIBIT G
ASSIGNMENT AND ACCEPTANCE
Dated _____________, _______
Reference is made to the Credit Agreement dated as of December 20, 2001
(the "Credit Agreement") among Check Technology Canada Ltd., the Lenders (as
defined in the Credit Agreement) and Xxxxxx Trust and Savings Bank, as
Administrative Agent for the Lenders (the "Administrative Agent"). Terms defined
in the Credit Agreement are used herein with the same meaning.
_________________________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, a _______%
interest in and to all of the Assignor's rights and obligations under
the Credit Agreement and the other Loan Documents as of the Effective
Date (as defined below), including, without limitation, such percentage
interest in the Assignor's Commitments as in effect on the Effective
Date and the Loans, if any, owing to the Assignor on the Effective Date
and the Assignor's Percentage of any outstanding L/C Obligations and
the Assignor's Percentage interest in any Collateral.
2. The Assignor (i) represents and warrants that as of the
date hereof (A) its Revolving Credit Commitment is $_______________ and
its Term Loan Commitment is $____________, (B) the aggregate
outstanding principal amount of Loans made by it under the Credit
Agreement that have not been repaid is $___________ ($____________ of
Revolving Loans including $__________ of a Fixed Rate Loan and
$__________ of other Revolving Loans, and $____________ of Term Loans)
and a description of the interest rates and interest periods of such
Loans is attached as Annex 1 hereto, and (C) the aggregate principal
amount of Assignor's Percentage of outstanding L/C Obligations is
$___________; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim, lien, or
encumbrance of any kind; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of their respective
obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto or the condition or existence of
any Collateral.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement and the other Loan Documents, together with copies
of the most recent financial statements delivered to the Lenders
pursuant to Section 8.5(a) and (b) thereof and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action as Administrative Agent on its
behalf and to exercise such powers under the Credit Agreement and the
other Loan Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (v)
specifies as its lending office (and address for notices) the offices
set forth beneath its name on the signature pages hereof.
4. As consideration for the assignment and sale contemplated
in Annex 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in Federal funds an amount equal to $________________*.
It is understood that commitment and/or letter of credit fees accrued
to the Effective Date with respect to the interest assigned hereby are
for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee. Each of
the Assignor and the Assignee hereby agrees that if it receives any
amount under the Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
5. The effective date for this Assignment and Acceptance shall
be ___________, 20___ (the "Effective Date"). Following the execution
of this Assignment and Acceptance, it will be delivered to the
Administrative Agent for acceptance and recording by the Administrative
Agent and, if required, the relevant Borrower.
6. Upon such acceptance and recording, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to
the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.
----------------
* Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee.
It may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
G-2
7. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments under
the Credit Agreement in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and
Assignee shall make all appropriate adjustments in payments under the
Credit Agreement for periods prior to the Effective Date directly
between themselves.
8. In accordance with Section 13.12 of the Credit Agreement,
the Assignor and the Assignee request and direct that the
Administrative Agent prepare and cause the relevant Borrower to execute
and deliver to the Assignee the relevant Notes payable to the Assignee
in the amount of its Commitments and new Notes to the Assignor in the
amount of its Commitments after giving effect to this assignment.
9. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Illinois.
[Assignor Lender]
By
Name___________________________________
Title__________________________________
[Assignee Lender]
By
Name___________________________________
Title__________________________________
Lending office (and address for notices):
Accepted and consented this
____ day of _____________
__________________________________
By______________________________________________
Name__________________________________________
Title_________________________________________
Accepted and consented to by the Administrative Agent this
_______ day of _________________
XXXXXX TRUST AND SAVINGS BANK, as Administrative Agent
By______________________________________________
Name__________________________________________
Title_________________________________________
G-3
ANNEX I
TO ASSIGNMENT AND ACCEPTANCE
PRINCIPAL AMOUNT TYPE OF LOAN INTEREST RATE MATURITY DATE
G-4
EXHIBIT H
ADDITIONAL GUARANTOR SUPPLEMENT
______________, ___
XXXXXX TRUST AND SAVINGS BANK, as
Administrative Agent for the Lenders
named in the Credit Agreement dated
as of December 20, 2001, among Check
Technology Canada Ltd., as Borrower,
the Parent, the Guarantors referred
to therein, the Lenders from time to
time party thereto, and the
Administrative Agent (the "Credit
Agreement")
Ladies and Gentlemen:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [NAME OF SUBSIDIARY GUARANTOR], a [JURISDICTION OF
INCORPORATION OR ORGANIZATION] hereby elects to be a "Guarantor" for all
purposes of the Credit Agreement, effective from the date hereof. The
undersigned confirms that the representations and warranties set forth in
Section 6 of the Credit Agreement are true and correct as to the undersigned as
of the date hereof.
Without limiting the generality of the foregoing, the undersigned
hereby agrees to perform all the obligations of a Guarantor under, and to be
bound in all respects by the terms of, the Credit Agreement, including without
limitation Section 12 thereof, to the same extent and with the same force and
effect as if the undersigned were a signatory party thereto.
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Illinois.
Very truly yours,
[NAME OF SUBSIDIARY GUARANTOR]
By ________________________________
Name ____________________________
Title ___________________________
