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CREDIT AGREEMENT
Among
SPINNAKER COATING, INC.,
SPINNAKER COATING-MAINE, INC.
and
ENTOLETER, INC.,
as Borrowers,
SPINNAKER INDUSTRIES, INC.,
as Guarantor,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO, TOGETHER WITH
THOSE ASSIGNEES PURSUANT TO SECTION 11.8 HEREOF,
as Lenders,
and
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as Agent
Dated as of August 9, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 General Definitions ..................................... 1
SECTION 1.2 Accounting Terms and Determinations ..................... 36
SECTION 1.3 Other Terms; Headings.................................... 37
SECTION 1.4 Computation of Time Periods.............................. 37
ARTICLE II
REVOLVING LOANS
SECTION 2.1 Revolving Credit Commitments............................. 37
SECTION 2.2 Borrowing of Revolving Loans............................. 39
SECTION 2.3 Disbursement of Revolving Loans.......................... 40
SECTION 2.4 Notices of Borrowing..................................... 40
SECTION 2.5 Same Day Settlement of Lender Advances................... 40
SECTION 2.6 Periodic Settlement of Agent Advances and Repayments..... 41
SECTION 2.7 Sharing of Payments...................................... 42
SECTION 2.8 Defaulting Lenders....................................... 42
SECTION 2.9 Mandatory and Voluntary Payment; Mandatory and Voluntary
Reduction of Commitments................................ 43
SECTION 2.10 Maintenance of Loan Account; Statements of Account....... 45
SECTION 2.11 Payment Procedures....................................... 45
SECTION 2.12 Collections.............................................. 45
SECTION 2.13 Application of Payments.................................. 46
ARTICLE III
LETTERS OF CREDIT
SECTION 3.1 Issuance of Letters of Credit............................ 46
SECTION 3.2 Terms of Letters of Credit............................... 48
SECTION 3.3 Lenders' Participation................................... 48
SECTION 3.4 Notice of Issuance....................................... 49
SECTION 3.5 Payment of Amount Drawn Under Letters of Credit.......... 49
SECTION 3.6 Payment by Lenders....................................... 50
SECTION 3.7 Nature of Agent's Duties................................. 50
SECTION 3.8 Obligations Absolute..................................... 51
ARTICLE IV
INTEREST, FEES AND EXPENSES
SECTION 4.1 Interest on Prime Rate Loans............................. 52
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SECTION 4.2 Interest on Eurodollar Rate Loans........................ 52
SECTION 4.3 Interest and Letter of Credit Fees After Event of Default 52
SECTION 4.4 Letter of Credit Fees.................................... 52
SECTION 4.5 Unused Line Fee; Closing Fee; Agent Fee; Early
Termination Fee.......................................... 53
SECTION 4.6 Other Fees and Expenses.................................. 54
SECTION 4.7 Calculations............................................. 54
SECTION 4.8 Special Provisions Relating to Eurodollar Rate Loans..... 54
SECTION 4.9 Indemnification in Certain Events........................ 57
SECTION 4.10 Net Payments............................................. 58
SECTION 4.11 Affected Lenders......................................... 62
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to Initial Loans and Letters of Credit........ 63
SECTION 5.2 Conditions Precedent to All Loans and Letters of Credit.. 66
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties of the Credit Parties..... 66
ARTICLE VII
COVENANTS OF THE CREDIT PARTIES
SECTION 7.1 Affirmative Covenants.................................... 77
SECTION 7.2 Negative Covenants....................................... 91
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Events of Default....................................... 103
SECTION 8.2 Acceleration, Termination and Cash Collateralization.... 105
SECTION 8.3 Rescission of Acceleration.............................. 106
SECTION 8.4 Remedies................................................ 106
SECTION 8.5 Right of Setoff......................................... 107
SECTION 8.6 License for Use of Software and Other
Intellectual Property................................... 107
SECTION 8.7 No Marshaling; Deficiencies; Remedies Cumulative........ 107
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ARTICLE IX
CROSS GUARANTIES
SECTION 9.1 Guarantee............................................... 108
SECTION 9.2 Obligations Unconditional............................... 108
SECTION 9.3 Reinstatement........................................... 110
ARTICLE X
THE AGENT
SECTION 10.1 Appointment of Agent.................................... 110
SECTION 10.2 Nature of Duties of Agent............................... 110
SECTION 10.3 Lack of Reliance on Agent............................... 110
SECTION 10.4 Certain Rights of the Agent............................. 111
SECTION 10.5 Reliance by Agent....................................... 111
SECTION 10.6 Indemnification of Agent................................ 111
SECTION 10.7 The Agent in Its Individual Capacity.................... 112
SECTION 10.8 Holders of Revolving Notes.............................. 112
SECTION 10.9 Successor Agent......................................... 112
SECTION 10.10 Collateral Matters...................................... 113
SECTION 10.11 Actions with Respect to Defaults........................ 114
SECTION 10.12 Delivery of Information................................. 114
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Governing Law........................................... 114
SECTION 11.2 Submission to Jurisdiction.............................. 115
SECTION 11.3 Service of Process...................................... 115
SECTION 11.4 Jury Trial.............................................. 115
SECTION 11.5 Limitation of Liability................................. 115
SECTION 11.6 Delays; Partial Exercise of Remedies.................... 116
SECTION 11.7 Notices................................................. 116
SECTION 11.8 Assignments and Participations.......................... 116
SECTION 11.9 Confidentiality......................................... 119
SECTION 11.10 Indemnification; Reimbursement of Expenses of Collection 120
SECTION 11.11 Amendments and Waivers.................................. 121
SECTION 11.12 Nonliability of Agent and Lenders....................... 122
SECTION 11.13 Independent Nature of Lenders' Rights................... 123
SECTION 11.14 Counterparts............................................ 123
SECTION 11.15 Effectiveness........................................... 123
SECTION 11.16 Severability............................................ 123
SECTION 11.17 Maximum Rate............................................ 123
SECTION 11.18 Entire Agreement; Successors and Assigns................ 124
SECTION 11.19 Release of Entoleter.................................... 124
Schedules
Schedule 1 - List of Lenders, Lending Offices and Commitments
Schedule 2 - Existing Indebtedness
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Schedule 5.1(c) - List of Closing Documents
Schedule 6.1(a) - Jurisdictions in which the Credit Parties and
the Subsidiaries are Qualified to do Business
Schedule 6.1(k) - Location of Offices, Records and Collateral
Schedule 6.1(l) - List of Subsidiaries
Schedule 6.1(m) - Pending Litigation, etc.
Schedule 6.1(p) - Labor Contracts
Schedule 6.1(r) - Pension Plans
Schedule 6.1(u) - Environmental Actions
Schedule 6.1(w) - Real Property
Schedule 6.1(x) - Material Contracts
Schedule 6.1(y) - Intellectual Property
Schedule 6.1(ad) - Affiliate Transactions
Schedule 7.2(a) - Permitted Liens
Schedule 7.2(f) - Investments
Schedule 7.2(p) - Bank Accounts
Exhibits
Exhibit A - Revolving Note
Exhibit B - Borrowing Base Certificate
Exhibit C - Notice of Borrowing
Exhibit D - Notice of Continuation
Exhibit E - Notice of Conversion
Exhibit F - Letter of Credit Request
Exhibit G - Security Agreement
Exhibit H - Guaranty
Exhibit I - Lockbox Agreement
Exhibit J - Collateral Access Agreement
Exhibit K - Contribution Agreement
Exhibit L - Intercompany Subordinated Note
Exhibit M - Compliance Certificate
Exhibit N - Assignment and Assumption Agreement
Exhibit O - Indenture Borrowing Base Certificate
Exhibit P - Intellectual Property Security Agreement
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THIS CREDIT AGREEMENT is entered into as of August 9, 1999,
among Spinnaker Coating, Inc., a Delaware corporation formerly known as
Xxxxx-Bridge Industries, Inc. with its chief executive office and principal
place of business at 000 Xxxx Xxxxx Xxxxxx, Xxxx, Xxxx 00000-0000
("COATING"), Entoleter, Inc., a Delaware corporation with its chief executive
office and principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxx 00000 ("ENTOLETER"), Spinnaker Coating-Maine, Inc., a Delaware
corporation with its chief executive office and principal place of business
at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx 00000 ("SCM" and, together with
Coating and Entoleter, the "BORROWERS"), Spinnaker Industries, Inc., a
Delaware corporation with its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the
"GUARANTOR"), each of the financial institutions identified as Lenders on
Schedule 1 hereto (together with each of their respective successors and
assigns, each a "LENDER", and collectively, the "LENDERS"), and Transamerica
Business Credit Corporation, acting in the manner and to the extent described
in Article X (in such capacity, the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrowers wish to obtain a revolving credit
facility to refinance existing indebtedness and for general working capital
purposes; and
WHEREAS, the Lenders are willing to make loans and other
extensions of credit in an aggregate outstanding amount not to exceed
$40,000,000 on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the Borrowers, the Guarantor, the Lenders
and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1 GENERAL DEFINITIONS. As used herein, the
following terms shall have the meanings herein specified (to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCEPTANCE DATE" is defined in Section 11.8(b).
"ACCOUNTS" is defined in the Security Agreement.
"ACQUISITION" means the acquisition of stock, all or
substantially all of the assets of a Person or any
business or line of business of a Person.
"ACQUISITION NOTIFICATION LAWS" means the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Acts of 1976, as
amended, and the Exon-Xxxxxx Amendment to the Omnibus Trade
and Competitiveness Act of 1988.
"ADJUSTED EBITDA" means, in any fiscal period,
Specified Net Income plus the amount of all Interest Expense
on all Indebtedness, income tax expense, depreciation and
amortization, including amortization of any goodwill or other
intangibles, in all cases as may have been subtracted or
added, as the case may be, in calculating Specified Net Income
of the Guarantor and its Restricted Subsidiaries, on a
consolidated basis, for such period all determined in
accordance with GAAP.
"ADJUSTED EURODOLLAR RATE" means, with respect to
each Interest Period for any Eurodollar Rate Loan, the rate
obtained by dividing (i) the Eurodollar Rate for such Interest
Period by (ii) a percentage equal to 1 minus the stated
maximum rate (stated as a decimal) of all reserves, if any,
required to be maintained against "Eurocurrency liabilities"
as specified in Regulation D of the Board of Governors Federal
Reserve System (or against any other category of liabilities
which includes deposits by reference to which the interest
rate on Eurodollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of any Lender to United States
residents).
"ADJUSTED NET INCOME" means, in any fiscal period,
Net Income of a Person plus or minus (as the case may be)
losses or gains from extraordinary items and from sales of
assets, other than the Central Sale, the Electrical Tape Sale,
other than asset sales resulting in a loss or a gain of less
than $100,000 and sales of Inventory in the ordinary course of
business, in each case to the extent added or subtracted in
determining such Person's Net Income.
"AFFILIATE" of a Person means another Person who
directly or indirectly controls, is controlled by, is under
common control with or is a director or officer of such
Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the Voting Stock of such Person or
the direct or indirect power to direct the management and
policies of a business.
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"AGENT" means TBCC as provided in the Preamble to
this Credit Agreement or any successor to TBCC.
"AGENT ADVANCES" is defined in Section 2.2.
"AGENT FEE" is defined in Section 4.5(c).
"APPLICABLE LENDING OFFICE" means, with respect to
each Lender, such Lender's Eurodollar Lending Office in the
case of a Eurodollar Rate Loan, and such Lender's Domestic
Lending Office in the case of a Prime Rate Loan.
"APPLICABLE MARGIN" means (a) from the date hereof
until the first anniversary of the Closing Date, 1.00% per
annum for Prime Rate Loans and 2.50% per annum for Eurodollar
Rate Loans and Letters of Credit and (b) thereafter, a
percentage per annum determined by reference to the Debt to
EBITDA Ratio as set forth below:
Prime Eurodollar Letters
Debt to EBITDA Ratio Rate Loans Rate Loans of Credit
-------------------- ---------- ---------- ---------
Level I .50% 2.00% 2.00%
-------
less than 3.25 to 1.0
Level II .75% 2.25% 2.25%
--------
3.25 to 1.0 or greater, but less than
3.75 to 1.0
Level III 1.00% 2.50% 2.50%
---------
3.75 to 1.0 or greater
The Applicable Margin for each Prime Rate Loan shall be
determined by reference to the Debt to EBITDA Ratio in effect
from time to time and the Applicable Margin for each
Eurodollar Rate Loan shall be determined by reference to the
ratio in effect on the first day of each Interest Period for
such Loan; PROVIDED, HOWEVER, that (i) no change in the
Applicable Margin shall be effective until three (3) Business
Days after the date on which the Agent receives the relevant
Financial Statements pursuant to Section 7.1(a)(i) or (iii),
as the case may be, and a duly executed Compliance Certificate
demonstrating such ratio, (ii) the Applicable Margin shall not
change more than once during any fiscal quarter and (iii) the
Applicable Margin shall be at Level III for so long as the
Agent has not received the information described in
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clause (i) of this proviso as and when required under
Section 7.1(a)(i) or (iii), as the case may be.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase
Agreement dated as of April 9, 1999 among Electrical Tape, the
Guarantor and the Buyer, as amended, supplemented or otherwise
modified from time to time.
"ASSET SALE" means, for any Person, any sale, lease,
transfer or other disposition or series of sales, transfers,
leases or other dispositions of any assets of such Person
(including, without limitation, by merger or consolidation or
by exchange of assets and whether by casualty, loss, operation
of law or otherwise) or the grant of any option or other right
to purchase, lease or otherwise acquire any assets made by
such Person or any of its Restricted Subsidiaries to any
Person, in each case other than the sale of inventory in the
ordinary course of business of such Person.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined
in Section 11.8(b).
"AUDITORS" means a nationally recognized firm of
independent public accountants selected by a Borrower or
Guarantor satisfactory to the Agent in its sole discretion.
For purposes of this Credit Agreement, the Guarantor's and
Borrowers' current firm of independent public accountants,
Ernst & Young L.L.P. shall be deemed to be satisfactory to the
Agent.
"AUTHORIZED OFFICERS" means the Chief Executive
Officer, the President, the Chief Financial Officer, the Vice
President-Treasurer, the Vice President-Finance, Controller or
the Assistant Treasurer of a Credit Party.
"BASE AMOUNT" is defined in Section 7.2(r).
"BENEFIT PLAN" means a "defined benefit plan" as
defined in Section 3(35) of ERISA for which any Credit Party,
any Subsidiary of a Credit Party or any ERISA Affiliate has
been an "employer" as defined in Section 3(5) of ERISA within
the past six years.
"BORROWERS" is defined in the Preamble to this
Agreement.
"BORROWING" means a borrowing consisting of a
Revolving Loan of the same Type made on the same day by the
Lenders.
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"BORROWING BASE" means, on any day, the lesser of (a)
the sum of the Coating Borrowing Base, the Entoleter Borrowing
Base and the SCM Borrowing Base on such day and (b) the
Indenture Borrowing Base on any such day.
"BORROWING BASE CERTIFICATE" is defined in Section
7.1(b)(i).
"XXXXX/XXXXXXX" means Xxxxx, Xxxxxxx & Co. Inc.,
a Delaware corporation.
"BUSINESS DAY" means any day other than a Saturday,
Sunday or a day on which commercial banks in New York, New
York are required or permitted by law to close. When used in
connection with Eurodollar Rate Loans, this definition will
also exclude any day on which commercial banks are not open
for dealing in Dollar deposits in the London (England, U.K.)
interbank market.
"BUYER" means Intertape Polymer Group, Inc., a
corporation organized under the Canada Business Corporations
Act.
"CAPITAL EXPENDITURES" means, for any period, the sum
of all expenditures capitalized for financial statement
purposes in accordance with GAAP (whether payable in cash or
other property or accrued as liability), including the
capitalized portion of capital leases. Capital Expenditures
shall exclude (i) proceeds of a Casualty Loss applied to the
repair or replacement of the property affected by the Casualty
Loss, and (ii) an amount equal to the proceeds (including the
value received in any exchange or trade) of a sale or other
disposition of an asset permitted under the terms of this
Credit Agreement and applied to the replacement or purchase of
property, plant or equipment.
"CAPITAL STOCK" of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participations, or other equivalent of or interests in
(however designated) the common or preferred equity of such
Person, including, without limitation, partnership interests.
"CASH EQUIVALENTS" means (i) securities issued,
guaranteed or insured by the United States or any of its
agencies with maturities of not more than one year from the
date acquired; (ii) certificates of deposit with maturities of
not more than one year from the date
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acquired, issued by a U.S. federal or state chartered
commercial bank of recognized standing, which has capital
and unimpaired surplus in excess of $200,000,000 and which
bank or its holding company has a short-term commercial
paper rating of at least A-1 or the equivalent by Standard
& Poor's Corporation or at least P-1 or the equivalent by
Xxxxx'x Investors Service, Inc.; (iii) repurchase
agreements and reverse repurchase agreements with terms of
not more than seven days from the date acquired, for
securities of the type described in (i) above and entered
into only with commercial banks having the qualifications
described in (ii) above; (iv) commercial paper, other than
commercial paper issued by the Guarantor or a Borrower or
any of their Affiliates, issued by any Person incorporated
under the laws of the United States or any state thereof
and rated at least A-1 or the equivalent thereof by
Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc., in
each case with maturities of not more than one year from
the date acquired; (v) investments in money market funds
registered under the Investment Company Act of 1940, which
have net assets of at least $200,000,000 and at least
eighty-five percent (85%) of whose assets consist of
securities and other obligations of the type described in
clauses (i) through (iv) above; and (vi) other instruments,
commercial paper or investments acceptable to the Agent in
its sole discretion.
"CASUALTY LOSS" is defined in Section 7.1(g).
"CENTRAL PROCEEDS" means the gross proceeds received
by the Guarantor in respect of the Central Sale on the closing
date of the Central Sale.
"CENTRAL SALE" means the sale of all of the
outstanding capital stock of Central Products Company pursuant
to the Stock Purchase Agreement.
"CHANGE OF CONTROL" means one or more of the
following events:
(a) less than a majority of the members of the
Guarantor's or (if Xxxxx Corporation owns, directly or
indirectly, more than a 50% interest in the Voting Stock of
the Guarantor) Xxxxx Corporation's Board of Directors shall be
persons who either (i) were serving as directors on the
Closing Date or (ii) were nominated as directors and approved
by the vote of the majority of the directors who are directors
referred to in clause (i) above or this clause (ii); or
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(b) the sale, lease or transfer, in one or a series
of transactions, of all or substantially all of the assets of
a Credit Party or of the Guarantor and its Subsidiaries taken
as a whole, to any Person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) other than to any one or more of the Permitted
Holders or their Related Parties; or
(c) the stockholders of a Credit Party shall approve
any plan or proposal for the liquidation or dissolution of
such Credit Party; or
(d) the Guarantor shall fail to own, beneficially and
of record, one hundred percent (100%) of the capital stock of
any Borrower; or
(e) So long as Xxxxxxx X. Xxxxx and Xxx X. Xxxxxxx,
III are employees of the Guarantor, Xxxxx/Xxxxxxx shall cease
to beneficially own and control or have the right to own and
control at least fifty percent (50%) of the aggregate number
of shares of common stock of the Guarantor which Xxxxx/Xxxxxxx
either owned or had the right to purchase on the Closing Date
or if either Xxxxxxx X. Xxxxx or Xxx X. Xxxxxxx, III is no
longer employed by the Guarantor then the one which is still
employed by the Guarantor shall cease to beneficially own or
control or have the right to own and control at least fifty
percent (50%) of the aggregate number of shares of common
stock of the Guarantor that he owned or had the right to
purchase on the Closing Date; or
(f) any Person or group of Persons (other than one or
more of the Permitted Holders is or becomes, as a result of a
tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, the direct or indirect
beneficial owner (as defined below of securities of the
Guarantor representing more than fifty percent (50%) of the
combined Voting Stock of the Guarantor, PROVIDED, HOWEVER,
that the Permitted Holders "beneficially own" (as so defined),
a direct or indirect interest in a lesser percentage of the
total voting power of all the Voting Stock of the Guarantor
than such other Person or group and do not have the right or
ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors
(for purposes of this clause, any Person shall be deemed to
beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the
"parent corporation"), if such Person or group "beneficially
owns" (as so defined), a direct or indirect interest in
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more than fifty percent (50%) of the voting power of the
Voting Stock of such parent corporation and the Permitted
Holders and their Related Parties "beneficially own" (as so
defined), a direct or indirect interest in a lesser
percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such
parent corporation). For purposes of this clause (f),
"beneficial owner" shall have the meaning given to it by
Rules 13(d)-(3) and 13(d)-(5) of the Securities Exchange
Act of 1934, as amended from time to time except that (x) a
Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after
the passage of time and (y) in the case of a group which is
not a Permitted Holder but includes as members thereof one
or more Permitted Holders, such group (except to the extent
provided in preceding clause (x) shall not be considered to
be the "beneficial owner" of any capital stock of the
Company beneficially owned (other than as a result of
attribution to Permitted Holders by reason of their being
members of such group).
"CLOSING DATE" means the date of execution and
delivery of this Credit Agreement.
"CLOSING FEE" is defined in Section 4.5(b).
"COATING" is defined in the Preamble to this
Credit Agreement.
"COATING ACCOUNTS BORROWING BASE" means, on any day,
an amount up to 85% of the outstanding Eligible Accounts
Receivable of Coating on such day.
"COATING BORROWING BASE" means, on any day, an amount
equal to the sum of (a) the Coating Accounts Borrowing Base on
such day, (b) the Coating Inventory Borrowing Base on such day
and (c) commencing on the date the Credit Parties have
complied with Section 7.1(r), $3,000,000.
"COATING INVENTORY BORROWING BASE" means, on any day,
an amount up to 65% of the Eligible Inventory of Coating on
such day.
"COATING LETTER OF CREDIT OBLIGATIONS" means the sum
of the aggregate undrawn amount of all Letters of Credit
outstanding for Coating's account, plus the aggregate amount
of all drawings under Letters of
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Credit issued for Coating's account for which the Borrowers
have not reimbursed the Agent, plus the aggregate amount of
all payments made by the Lenders to the Agent for
participations in Letters of Credit issued for Coating's
account for which the Borrowers have not reimbursed the
Lenders.
"COATING LINE OF CREDIT" means the aggregate
revolving line of credit extended by the Lenders to Coating
for Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $24,000,000 as such revolving line of credit may be
reduced from time to time in accordance with this Credit
Agreement.
"CODE" is defined in Section 1.3.
"COLLATERAL" means the Accounts, Inventory,
Equipment, Mortgaged Properties and other property identified
as security for the Obligations under the Collateral
Documents.
"COLLATERAL ACCESS AGREEMENTS" means any landlord
waiver, mortgagee waiver, bailee letter or any similar
acknowledgment agreement of any warehouseman or processor in
possession of Inventory, in each case substantially in the
form of Exhibit J.
"COLLATERAL DOCUMENTS" means all contracts,
instruments and other documents now or hereafter executed and
delivered in connection with this Credit Agreement, pursuant
to which liens and security interests are granted to the Agent
in the Collateral for the benefit of the Lenders, including
without limitation, the Security Agreement, the Intellectual
Property Security Agreement, the Mortgages, each Control
Agreement and any amendments, supplements or modifications
thereto.
"COLLECTION ACCOUNT" is defined in Section 2.12.
"COLLECTIONS" means all cash, funds, checks, notes,
instruments and any other form of remittance tendered by
account debtors in payment of Accounts.
"COMMITMENT" means, with respect to a Lender, its
commitment to make Revolving Loans and to participate in
Letters of Credit up to the amount set forth opposite its name
on Schedule 1, as such amount may be reduced from time to time
in accordance with the terms of this Credit Agreement.
"COMPLIANCE CERTIFICATE" is defined in Section
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7.1(a)(i).
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means with
respect to the Guarantor and its Restricted Subsidiaries for
any period, the ratio of (X) Adjusted EBITDA for such period
to (Y) (i) scheduled principal amounts of all Indebtedness
paid or payable by such Person in such period, whether or not
such payments are actually made (other than payments on the
Line of Credit which do not permanently reduce the
Commitments), PLUS (ii) all interest and fees for the use of
money or the availability of money, including commitment,
facility and like fees and charges upon Indebtedness
(excluding the Senior Notes but including Indebtedness to the
Lenders) payable by such Persons during such period whether or
not such interest or fees are actually paid, PLUS (iii) all
interest and fees for the use of money or the availability of
money, including commitment facility and like fees and charges
upon Net Senior Note Indebtedness payable by such Persons
during such period whether or not such interest or fees are
actually paid, (iv) all loans and Investments made by such
Persons in or to any other Person made during such period
(other than Investments made with shares of common stock of
the Guarantor), PLUS (v) all cash dividends paid or declared
by the Guarantor during such period, regardless of whether or
when such dividends are actually paid, PLUS (vi) all cash
taxes paid or payable by such Persons during such period, PLUS
(vii) all Capital Expenditures paid or payable by such Persons
during such period (other than Capital Expenditures financed
with (A) the proceeds of Indebtedness permitted hereunder, (B)
the Equity Proceeds Amount and (C) the Central Proceeds).
"CONSOLIDATED INTEREST COVERAGE RATIO" means, with
respect to the Guarantor and its Restricted Subsidiaries, as
of the date of determination thereof for any applicable
period, the ratio of (a) Adjusted EBITDA for such period to
(b) Interest Expense on Net Senior Note Indebtedness and
Interest Expense on all Indebtedness (other than the Senior
Notes) for such period.
"CONSOLIDATED NET WORTH" means the consolidated
assets of the Guarantor and its Restricted Subsidiaries minus
their consolidated liabilities, all as reflected on the
Financial Statements.
"CONTINGENT OBLIGATION" means any direct, indirect,
contingent or non-contingent guaranty or obligation for the
Indebtedness of another, except endorsements in the ordinary
course of business.
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"CONTINGENT RIGHTS" means the rights of certain
former minority stockholders of Coating to receive payment for
their shares of capital stock of Coating which were converted
to common stock of Spinnaker, cash and the right to a
contingent payment.
"CONTRIBUTION AGREEMENT" means the Contribution
Agreement, substantially in the form of Exhibit K, among the
Borrowers and the Agent, as amended, supplemented or otherwise
modified from time to time.
"CONTROL AGREEMENT" means a control agreement, in
form and substance satisfactory to the Agent, among the
Guarantor or one of its Restricted Subsidiaries, the Agent and
the applicable securities intermediary with respect to the
applicable Securities Account and related Investment Property
(as defined in the Security Agreement).
"COVERED TAXES" is defined in Section 4.10(a).
"CREDIT AGREEMENT" means this Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"CREDIT DOCUMENTS" means this Credit Agreement, the
Revolving Notes, the Guaranty, the Security Agreement, the
Intercompany Subordinated Notes, the SDW Subordinated Note,
the SDW Subordinated Guaranty, the Contribution Agreement, the
Lockbox Agreements, the Letter of Credit Related Documents,
each Borrowing Base Certificate, each Indenture Borrowing Base
Certificate, each Control Agreement, the Intellectual Property
Security Agreement, each Mortgage, the Environmental Indemnity
Agreement and each other document, agreement and instrument
from time to time executed by any Credit Party and delivered
to the Agent or a Lender in connection herewith or in
connection with any amendment hereto, as each may be amended,
supplemented or otherwise modified from time to time.
"CREDIT PARTIES" means the Borrowers and the
Guarantor and any other Person which becomes a guarantor of
the Obligations.
"DEBT" means, as of the date of determination, the
sum of the Indebtedness described in subsection (a) and (b) of
the definition of Indebtedness of the Guarantor and its
Restricted Subsidiaries at such date, as would appear on a
balance sheet determined in accordance with GAAP.
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"DEFAULT" means an event, condition or default which
with the giving of notice, the passage of time or both would
be an Event of Default.
"DEFAULTING LENDER" is defined in Section 2.8(a).
"DESIGNATED ACCOUNTS" means bank accounts in the name
of the Guarantor maintained with The Chase Manhattan Bank or
Bankers Trust Company.
"DOLLARS" and the sign "$" mean freely transferable
lawful money of the United States.
"DOMESTIC LENDING OFFICE" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule 1, as such
Schedule may be amended from time to time.
"EBITDA" means, in any fiscal period, Adjusted Net
Income plus the amount of all Interest Expense, income tax
expense, depreciation and amortization, including amortization
of any goodwill or other intangibles, in all cases as may have
been subtracted or added, as the case may be, in calculating
Adjusted Net Income of the Guarantor and its Restricted
Subsidiaries, on a consolidated basis, for such period all
determined in accordance with GAAP.
"ELECTRICAL TAPE" means Spinnaker Electrical Tape
Company, a Delaware corporation and an Unrestricted
Subsidiary.
"ELECTRICAL TAPE SALE" means the sale of all or
substantially all of the assets of Electrical Tape pursuant
to the Asset Purchase Agreement.
"ELIGIBLE ACCOUNTS RECEIVABLE" means Accounts of a
Borrower evidenced by an invoice and deemed by the Agent in
its Permitted Discretion to be eligible for inclusion in the
calculation of such Borrower's Borrowing Base; provided that
no Accounts acquired by a Borrower pursuant to a Permitted
Acquisition shall be included in such Borrower's Borrowing
Base until the Agent has completed its review of and due
diligence with respect to such Accounts and have agreed to the
inclusion of such Accounts in such Borrower's Borrowing Base.
In determining the amount to be so included, the face amount
of such Accounts shall be reduced by the amount of all
returns, discounts, claims, credits, charges, or other
allowances and by the aggregate amount of all reserves, limits
and deductions provided for in this definition and elsewhere
in this Credit
-12-
Agreement. If any Account is denominated in a currency
other than Dollars, then the face amount of such Account
shall be converted into Dollars at the Rate of Exchange on
the date that the Accounts are calculated. Unless otherwise
approved in writing by the Agent, no Account shall be
deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate to the extent such Account or all Accounts arising
out of sales made by a Borrower to any Affiliate exceed in the
aggregate $250,000; or
(b) its payment terms are forty-two (42) days or less
from the date of invoice and it remains unpaid ninety (90)
days from the date of invoice; or
(c) its payment terms are greater than forty-two (42)
days from the date of invoice and it remains unpaid for more
than ninety (90) but less than one hundred twenty (120) days
from the date of invoice to the extent the amount of such
Account or the total of all similar Accounts exceeds
$1,000,000 to the extent of such excess; or
(d) it is from the same account debtor (or any
Affiliate thereof) and fifty percent (50%) or more of all
Accounts from such account debtor (or any Affiliate thereof)
are ineligible under clause (b) or (c) above; or
(e) the Account, when aggregated with all other
Accounts of such account debtor, exceeds twenty-five percent
(25%) in face value of all Accounts of a Borrower then
outstanding, to the extent of such excess; PROVIDED, HOWEVER,
that Accounts supported or secured by an irrevocable letter of
credit in form and substance satisfactory to the Agent, issued
by a financial institution satisfactory to the Agent, and duly
pledged to the Agent (together with sufficient documentation
to permit direct draws by the Agent) shall be excluded for
purposes of such calculation; or
(f) the account debtor for the Account is a creditor
of a Borrower, has or has asserted a right of setoff, has
disputed its liability or made any claim with respect to the
Account or any other Account which has not been resolved, to
the extent of the amount owed by such Borrower to the account
debtor, the amount of such actual or asserted right of setoff,
or the amount of such dispute or claim, as the case may be; or
(g) the account debtor is (or its assets are) the
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subject of an Insolvency Event or, in the reasonable judgment
of the Agent, likely to become subject to an Insolvency Event;
or
(h) the sale is to an account debtor outside of the
United States, unless (i) the Account is supported by an
irrevocable letter of credit issued or confirmed by a United
States bank satisfactory to the Agent in form and substance
satisfactory to the Agent and assigned to and directly
drawable by the Agent or (ii) the Account is supported by an
irrevocable letter of credit in form and substance
satisfactory to the Agent which provides for payment directly
into a bank account controlled by the Agent and is issued by a
financial institution satisfactory to the Agent, does not
exceed $250,000 and when combined with all other such Accounts
does not exceed $1,000,000 in the aggregate, (iii) the Account
is denominated in Dollars, payable in the United States and
the sale giving rise to the Account is to an account debtor in
Canada and the amount of such Account or the total of all
similar Accounts does not exceed $3,000,000 or (iv) the
Account is covered by a credit insurance policy in form and
substance, and issued by an insurer, satisfactory to the
Agent; or
(i) the sale to the account debtor is on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval or consignment basis or made pursuant to any other
written agreement providing for repurchase or return; or
(j) the Agent determines in its Permitted Discretion
that collection of such Account is uncertain or the Account
may not be paid; or
(k) the goods giving rise to such Account have not
been shipped and delivered to and accepted by the account
debtor, the services giving rise to such Account have not been
performed and accepted by the account debtor or the Account
otherwise does not represent a final sale; or
(l) the Account does not comply with all Requirements
of Law, including, without limitation, the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve
System; or
(m) the Agent for the ratable benefit of the Lenders
does not have a valid and perfected first priority Lien (other
than Liens permitted under the Credit Documents) on such
Account or the Account does
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not otherwise conform to the representations and warranties
contained in this Credit Agreement or the other Credit
Documents; or
(n) the account debtor is the United States of
America or any department, body, agency, authority or
instrumentality thereof, unless a Borrower duly assigns its
right to payment of such Account to the Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sections 3727 et seq.), in form and substance satisfactory
to the Agent, and otherwise complies with such Act; or
(o) the Account is subject to any adverse security
deposit, progress payment or other similar advance made by or
for the benefit of the applicable account debtor; PROVIDED,
that such Accounts of Entoleter shall not be ineligible to the
extent that they are subject to adverse security deposits,
progress payments or other similar advances in an aggregate
amount not to exceed $250,000; or
(p) the account debtor with respect to the Account is
located in New Jersey, Minnesota or any other state imposing
conditions on the right of a creditor to collect accounts
receivable, unless the applicable Borrower has either
qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business
Activities Report or other appropriate report with the taxing
or other designated authorities of such state for the then
current year.
"ELIGIBLE ASSIGNEE" shall mean (i) a Lender or any
Affiliate thereof; (ii) a commercial bank having total assets
in excess of $1,000,000,000; (iii) a finance company,
insurance company, other financial institution or fund,
reasonably acceptable to the Agent, which is regularly engaged
in making, purchasing or investing in loans and having total
assets in excess of $1,000,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the
United States or any state thereof which has a net worth,
determined in accordance with GAAP, in excess of $500,000,000;
or (v) a finance company, insurance company, bank or other
financial institution reasonably acceptable to the Agent;
PROVIDED, HOWEVER, that neither a Credit Party nor an
Affiliate of a Credit Party shall qualify as an Eligible
Assignee under this definition.
"ELIGIBLE INVENTORY" means the aggregate amount of
Inventory of a Borrower deemed by the Agent in the
-15-
exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of such Borrower's Borrowing
Base; provided that no Inventory acquired by a Borrower
pursuant to a Permitted Acquisition shall be included in
such Borrower's Borrowing Base until the Agent has
completed its review of and due diligence with respect to
such Inventory and agreed to the inclusion of such
Inventory in such Borrower's Borrowing Base. In determining
the amount of Inventory to be included in a Borrower's
Borrowing Base, Inventory shall be valued at the lower of
cost or market on a FIFO or a specific identification
method basis. Unless otherwise approved in writing by the
Agent, an item of Inventory shall not be included in
Eligible Inventory if:
(a) it is not owned solely by a Borrower or a
Borrower does not have good, valid and marketable title
thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by
a Borrower or in a contract warehouse, subject to a Collateral
Access Agreement executed by the mortgagee, lessor or the
contract warehouseman, as the case may be, and segregated or
otherwise separately identifiable from goods of others, if
any, stored on the premises; or
(d) it is not subject to a valid and perfected first
priority Lien (other than Liens permitted under the Credit
Documents) in favor of the Agent except, with respect to
Inventory stored at sites described in clause (c) above, for
Liens for unpaid rent or normal and customary warehousing
charges; or
(e) it consists of goods returned or rejected by a
Borrower's customers (other than first quality, unimpaired,
merchandisable and not special ordered goods) or goods in
transit to third parties (other than to warehouse sites
covered by a Collateral Access Agreement); or
(f) it is not first-quality finished goods, work in
process or raw materials, is obsolete or slow moving, or does
not otherwise conform to the representations and warranties
contained in the Credit Documents; or
(g) it was purchased by a Borrower in or as part of a
"bulk" transfer or sale of assets unless the seller thereof
and Borrower have complied with all
-16-
applicable bulk sales or bulk transfer laws or such
Borrower has provided an indemnity agreement satisfactory
to the Agent; or
(h) it consists of supplies, catalysts or off-size
Inventory (if and to the extent that such inventory has not
been written down to the lower of its cost or market value);
or
(i) it is consigned Inventory.
"ENTOLETER" is defined in the Preamble to this
Credit Agreement.
"ENTOLETER ACCOUNTS BORROWING BASE" means, on any
day, an amount up to 85% of the outstanding Eligible Accounts
Receivable of Entoleter on such day.
"ENTOLETER BORROWING BASE" means, on any day, an
amount equal to the sum of (a) the Entoleter Accounts
Borrowing Base on such day and (b) the Entoleter Inventory
Borrowing Base on such day.
"ENTOLETER INVENTORY BORROWING BASE" means, on any
day, an amount up to (a) the sum of (i) 60% of the Eligible
Inventory of Entoleter consisting of uncut rolled steel, PLUS
(ii) 50% of the Eligible Inventory of Entoleter consisting of
raw materials other than rolled steel (cut or uncut) and spare
parts, PLUS (iii) 30% of the Eligible Inventory of Entoleter
consisting of spare parts.
"ENTOLETER LETTER OF CREDIT OBLIGATIONS" means the
sum of the aggregate undrawn amount of all Letters of Credit
outstanding for Entoleter's account, plus the aggregate amount
of all drawings under Letters of Credit issued for Entoleter's
account for which the Borrowers have not reimbursed the Agent,
plus the aggregate amount of all payments made by the Lenders
to the Agent for participations in Letters of Credit issued
for Entoleter's account for which the Borrowers have not
reimbursed the Lenders.
"ENTOLETER LINE OF CREDIT" means the aggregate
revolving line of credit extended by the Lenders to Entoleter
for Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $1,000,000 as such revolving line of credit may be
reduced from time to time in accordance with this Credit
Agreement.
"ENVIRONMENTAL INDEMNITY AGREEMENT" is defined in
Section 7.1(r)(v).
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"ENVIRONMENTAL LAWS" means all federal, state and
local statutes, laws (including common or case law), rulings,
regulations or governmental, administrative or judicial orders
or interpretations applicable to the business or property of
the Credit Parties or any of their Subsidiaries relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including
without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials.
"EQUIPMENT" is defined in the Security Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, 29 U.S.C. Sections 1000 et seq., amendments
thereto, successor statutes, and regulations or guidance
promulgated thereunder.
"ERISA AFFILIATE" means any entity required to be
aggregated with a Credit Party or any of its Subsidiaries
under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
"EQUITY PROCEEDS AMOUNT" shall initially be zero,
which amount shall be (a) INCREASED at the time of receipt by
the Guarantor of Net Cash Proceeds from the issuance of any
equity securities after the Closing Date by the amount of such
Net Cash Proceeds, (b) REDUCED at the time any Capital
Expenditure is made pursuant to Section 7.2(r)(ii) by the
amount of such Capital Expenditure, and (c) REDUCED at the
time any prepayment of the SDW Subordinated Note is made in
accordance with Section 2.9(d) by the amount of such
prepayment.
"EURODOLLAR LENDING OFFICE" means, with respect to
any Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name on Schedule 1,
as such Schedule may be amended from time to time (or, if no
such office is specified, its Domestic Lending Office), or
such other office or Affiliate of such Lender as such Lender
may from time to time specify in writing to the Borrowers and
the Agent.
"EURODOLLAR RATE" means, with respect to the Interest
Period for each Eurodollar Rate Loan
-18-
comprising part of the same Borrowing, the reserve adjusted
rate PER ANNUM equal to the 30-day London Interbank Offered
Rate (in the case of a 30-day Interest Period), the 60-day
London Interbank Offered Rate (in the case of a 60-day
Interest Period) and the 90-day London Interbank Offered Rate
(in the case of a 90 day Interest Period) that appears in the
"Money Rates" section of THE WALL STREET JOURNAL on the
first day of such Interest Period; PROVIDED, HOWEVER, that
if THE WALL STREET JOURNAL no longer publishes such London
Interbank Offered Rate, reference shall be made to the
Reuters Screen ISDA Page for such London Interbank Offered
Rate.
"EURODOLLAR RATE LOAN" means a Loan that bears
interest as provided in Section 4.2.
"EVENT OF DEFAULT" is defined in Section 8.1.
"EXISTING CREDIT AGREEMENT" means (a) the Credit
Agreement dated as of October 23, 1996 among the Borrowers,
the Guarantor, Central Products Company, the financial
institutions parties thereto, BT Commercial Corporation, as
agent, Transamerica Business Credit Corporation, as collateral
agent, and Bankers Trust Company, as issuing bank and (b) all
agreements, documents and instruments executed or delivered in
connection therewith, in each case as heretofore amended,
supplemented or otherwise modified.
"EXISTING INDEBTEDNESS" means the Indebtedness of the
Guarantor and its Restricted Subsidiaries existing on the date
of the initial Loan hereunder as set forth on Schedule 2.
"EXISTING LETTERS OF CREDIT" means the letters of
credit in an aggregate undrawn face amount of $542,079.70
which were issued under the Existing Credit Agreement and are
outstanding on the date hereof.
"EXPENSES" means all costs and expenses of the Agent
incurred in connection with the Credit Documents and the
transactions contemplated therein, including, without
limitation, (i) the costs of conducting record searches,
examining collateral, opening bank accounts and lockboxes,
depositing checks, receiving and transferring funds (including
charges for checks for which there are insufficient funds),
and other costs of administration and enforcement of the
rights of the Lenders under the Credit Documents, (ii) the
reasonable fees and expenses of legal counsel and paralegals
(including the allocated cost of internal counsel and
paralegals so long as not duplicative of outside
-19-
counsel), accountants, appraisers and other consultants,
experts or advisors retained by the Agent, (iii) fees and
taxes in connection with the filing of financing
statements, and (iv) the costs of preparing and recording
Collateral Documents, releases of Collateral, and waivers,
amendments, and terminations of any of the Credit Documents.
"EXPIRATION DATE" means the earlier of December 31,
2001 and the date of termination of the Commitments pursuant
to the terms hereof.
"FACING FEE" is defined in Section 4.4(a).
"FEDERAL FUNDS RATE" means, for any period, a
fluctuating interest rate per annum equal, for each day during
such period, to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is
a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal
Funds brokers of recognized standing selected by it.
"FEES" means, collectively, the Unused Line Fee, the
Agent Fee, the Closing Fee, Letter of Credit Fees, the Issuing
Bank Fees and the Facing Fee.
"FINANCIAL STATEMENTS" means the consolidated (and if
requested by the Agent, consolidating) balance sheets,
statements of operations, statements of cash flows and
statements of changes in shareholder's equity of a Person for
the period specified, prepared in accordance with GAAP and
consistent with prior practices.
"FOREIGN LENDER" means any Lender organized under the
laws of a jurisdiction outside of the United States.
"FUNDING BANK" is defined in Section 4.9.
"GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to
time.
"GOVERNING DOCUMENTS" means, as to any Person, the
certificate or articles of incorporation and by-laws or other
organizational or governing documents of such
-20-
Person.
"GOVERNMENTAL AUTHORITY" means any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"GUARANTOR" is defined in the Preamble to this
Agreement.
"GUARANTOR ACCOUNT" is defined in Section 7.2(p).
"GUARANTY" means the Guaranty, substantially in the
form of Exhibit H, made by the Guarantor in favor of the Agent
for the benefit of the Lenders, as amended, supplemented or
otherwise modified from time to time.
"HAZARDOUS MATERIALS" means any and all pollutants
and contaminants and any and all toxic, caustic, radioactive
or hazardous materials, substances or wastes that are
regulated under any Environmental Laws, including without
limitation, petroleum, its derivatives and by-products and any
other hydrocarbons.
"HIGHEST LAWFUL RATE" means, at any given time during
which any Obligations shall be outstanding hereunder, the
maximum non-usurious interest rate, if any, that at any time
or from time to time may be contracted for, taken, reserved,
charged or received on the Obligations, under the laws of the
State of New York (or the law of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other
provisions of this Credit Agreement and the other Credit
Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher
maximum nonusurious interest rate than under New York (or such
other jurisdiction's) law, in any case after taking into
account, to the extent permitted by applicable law, any and
all relevant payments or charges under this Credit Agreement
and any other Credit Documents executed in connection
herewith, and any available exemptions, exceptions and
exclusions.
"INDEBTEDNESS" of any Person means (a) indebtedness
for borrowed money or for the deferred purchase price of
property or services (other than trade liabilities incurred in
the ordinary course of business and payable in accordance with
customary practices), whether on open account or evidenced by
a note, bond, debenture or similar instrument,
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(b) obligations under capital leases computed in accordance
with GAAP, (c) reimbursement obligations for letters of
credit, banker's acceptances or other credit
accommodations, (d) liabilities under any Interest Rate
Agreement, (e) Contingent Obligations and (f) obligations
secured by any Lien on that Person's property, even if that
Person has not assumed such obligations.
"INDEMNIFIED PARTY" is defined in Section 11.10(a).
"INDENTURE" means the Indenture dated as of October
23, 1996 among the Credit Parties and The Chase Manhattan
Bank, as Trustee, as amended, supplemented or otherwise
modified from time to time.
"INDENTURE BORROWING BASE" means, on any day, the
outstanding principal amount of Indebtedness permitted under
Section 4.09(b)(i) of the Indenture on such day.
"INDENTURE BORROWING BASE CERTIFICATE" is defined
in Section 7.1(b)(iii).
"INSOLVENCY EVENT" means, with respect to any Person,
the occurrence of any of the following: (a) such Person shall
be adjudicated insolvent or bankrupt, or shall generally fail
to pay or admit in writing its inability to pay its debts as
they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its
property, assets or business or to effect a plan or other
arrangement with its creditors, (c) such Person shall make a
general assignment for the benefit of its creditors, or
consent to or acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for a substantial portion of
its property, assets or business, (d) such Person shall file a
voluntary petition under any bankruptcy, insolvency or similar
law, or (e) such Person, or a substantial portion of its
property, assets or business shall become the subject of an
involuntary proceeding or petition for its dissolution,
reorganization, or the appointment of a receiver, trustee,
custodian or liquidator or shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the
Intellectual Property Security Agreement, substantially in the
form of Exhibit P, made by the Credit Parties in favor of the
Agent for the benefit of
-22-
the Lenders, as amended, supplemented or otherwise modified
from time to time.
"INTERCOMPANY SUBORDINATED NOTE" means an
Intercompany Subordinated Note, substantially in the form of
Exhibit L and which incorporates the terms set forth on Annex
A thereto, made by one Credit Party in favor of another Credit
Party, as amended, supplemented or otherwise modified from
time to time.
"INTEREST EXPENSE" means the consolidated expense of
a Person for interest on Indebtedness, computed in accordance
with GAAP.
"INTEREST INCOME" means the consolidated income of a
Person from interest on the Central Proceeds, computed in
accordance with GAAP.
"INTEREST PERIOD" means for any Eurodollar Rate Loan
the period commencing on the date of such Borrowing and ending
on the 29th, 59th or 89th day thereafter, as selected by the
applicable Borrower; PROVIDED, HOWEVER, that (i) a Borrower
may not select any Interest Period that ends after the
Expiration Date; and (ii) whenever the last day of an Interest
Period would otherwise occur on a day other than a Business
Day, the last day of such Interest Period shall be extended to
occur on the next succeeding Business Day, except that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, then the last day
of such Interest Period shall occur on the next preceding
Business Day.
"INTEREST RATE AGREEMENT" means any interest rate
protection or hedge agreement, including, without limitation,
any interest rate future, option, swap and cap agreement
approved by the Majority Lenders.
"INTERNAL REVENUE CODE" means the Internal Revenue
Code of 1986, any amendments thereto, and any successor
statute thereto and regulations and guidance promulgated
thereunder.
"INTERNAL REVENUE SERVICE" or "IRS" means the United
States Internal Revenue Service and any successor agency.
"INVENTORY" is defined in the Security Agreement.
"INVESTMENT" means all expenditures made and all
liabilities incurred and assumed (including Contingent
Obligations) for or in connection with acquisitions,
-23-
loans, advances, capital contributions or transfers of
property to a Person. In determining the aggregate amount
of Investments outstanding at any particular time, (a) a
guaranty shall be valued at not less than the principal
amount outstanding of the obligation guaranteed, or if
less, the maximum stated amount of such guaranty; (b)
returns of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating
distribution) shall be deducted; (c) earnings, whether as
dividends, interest or otherwise, shall not be deducted;
and (d) decreases in the market value of such Investments
shall not be deducted unless such decreases are computed in
accordance with GAAP.
"ISSUING BANK FEES" is defined in Section 4.4(b).
"IVEX SALE" means the collective reference to (a) the
sale by Coating of the inventory, equipment, customer list and
outstanding contracts relating solely to Coating's dry gum,
non-postage conventional and instantaneous heat-sealed gummed
coating products business, excluding all assets relating to
business with Helisys, Inc., and (b) the grant by Coating of a
license to use all applicable technology, trade secrets and
intellectual property relating to the products described in
clause (a) above.
"LENDER" is defined in the Preamble to this
Credit Agreement.
"LENDER ADVANCES" is defined in Section 2.2.
"LETTER OF CREDIT AGREEMENT" means the collective
reference to any and all agreements from time to time entered
into by the Agent and a bank or financial institution (each,
an "issuing bank") pursuant to which the Agent causes such
issuing bank to issue Letters of Credit for the account or
benefit of a Borrower in accordance with the terms of his
Agreement.
"LETTER OF CREDIT FEE" is defined in Section 4.4(a).
"LETTER OF CREDIT OBLIGATIONS" means, without
duplication, the total of the SCM Letter of Credit
Obligations, the Coating Letter of Credit Obligations and the
Entoleter Letter of Credit Obligations.
"LETTER OF CREDIT RELATED DOCUMENTS" is defined
in Section 3.8.
"LETTER OF CREDIT REQUEST" is defined in
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Section 3.4.
"LETTERS OF CREDIT" means all letters of credit
issued for the account of a Borrower pursuant to Article III
of this Credit Agreement and all amendments, renewals,
extensions or replacements thereof.
"LIEN" means any lien, claim, charge, pledge,
security interest, assignment, hypothecation, deed of trust,
mortgage, lease, conditional sale, retention of title, or
other preferential arrangement having substantially the same
economic effect as any of the foregoing, whether voluntary or
imposed by law.
"LINE OF CREDIT" means the aggregate revolving line
of credit extended by the Lenders to the Borrowers for
Revolving Loans and Letters of Credit pursuant to and in
accordance with the terms of this Credit Agreement, in the
amount of $40,000,000, as such revolving line of credit may be
reduced from time to time in accordance with this Credit
Agreement.
"LOAN ACCOUNT" is defined in Section 2.10.
"LOANS" means the Revolving Loans made from time
to time hereunder.
"LOCKBOX AGREEMENTS" is defined in Section 2.12.
"LOCKBOX BANKS" is defined in Section 2.12.
"LOCKBOXES" is defined in Section 2.12.
"MAJORITY LENDERS" means those Lenders owed or
holding in the aggregate 51% or more of the total Commitments
or if the Commitments are terminated, 51% or more of the
Revolving Loans or Letter of Credit Obligations then
outstanding.
"MATERIAL ADVERSE EFFECT" means (i) a material
adverse effect on the business, prospects, operations, results
of operations, assets, liabilities or condition (financial or
otherwise) of the Guarantor and its Restricted Subsidiaries,
taken as a whole, (ii) the impairment of any Credit Party's
ability to perform its obligations under the Credit Documents
to which it is a party or the material impairment of the
ability of the Agent or the Lenders to enforce the Obligations
or realize upon the Collateral, or (iii) a material adverse
effect on the value of the Collateral or the amount which the
Agent or the Lenders would be likely to receive (after giving
consideration to delays in
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payment and costs of enforcement) in the liquidation of
such Collateral.
"MATERIAL CONTRACT" means any contract or other
arrangement to which a Credit Party or any of its Subsidiaries
is a party (other than the Credit Documents) for which breach,
nonperformance, cancellation or failure to renew could have a
Material Adverse Effect. Material Contract shall include the
Tax Sharing Agreement and the Overhead Allocation Agreement.
"MORTGAGED PROPERTIES" means the collective reference
to parcels of real property located at (a) 000 Xxxx Xxxxx
Xxxxxx, Xxxx, Xxxx 00000-0000, (b) 00 Xxxx Xxxx Xxxxx, Xxxx,
Xxxx 00000 and (c) 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx 00000.
"MORTGAGE" is defined in Section 7.1(r)(i).
"MULTIEMPLOYER PLAN" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which any Credit
Party, any of its Subsidiaries or any ERISA Affiliate has
contributed within the past six years or with respect to which
any Credit Party or any of its Subsidiaries may incur any
liability.
"NET CASH PROCEEDS" means, with respect to any Asset
Sale or issuance of any equity securities by a Credit Party,
the aggregate amount of cash received from time to time by or
on behalf of such Credit Party in connection with such
transaction after deducting therefrom only (a) reasonable and
customary brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees
and commissions, (b) the amount of taxes payable in connection
with or as a result of such transaction, and (c) in the case
of any Asset Sale (other than the Central Sale or the sale of
stock in any other Borrower), the amount of any Indebtedness
secured by a Lien on such asset that, by the terms of such
transaction, is required to be repaid upon such disposition.
"NET DEBT" means Debt (other than the Senior
Notes) and Net Senior Note Indebtedness.
"NET DEBT TO ADJUSTED EBITDA RATIO" means at any date
of determination, the ratio of Net Debt as of the last day of
the most recently ended fiscal quarter to Adjusted EBITDA for
the most recently ended four fiscal quarters.
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"NET INCOME" means, for any period, the net income of
a Person, as reflected on the Financial Statements of such
Person for such period.
"NET SENIOR NOTE INDEBTEDNESS" means, at any date,
the outstanding principal amount of the Senior Notes as
reduced by the amount of the Senior Notes redeemed with the
Central Proceeds through such date minus the cash balances on
deposit in the Designated Accounts on such date.
"NOTICE OF BORROWING" is defined in Section 2.2(a).
"NOTICE OF CONTINUATION" is defined in Section 4.8(a).
"NOTICE OF CONVERSION" is defined in Section 4.8(b).
"OBLIGATIONS" means the unpaid principal and interest
hereunder (including interest accruing on or after the
occurrence of an Insolvency Event, whether or not an allowed
claim), reimbursement obligations under Letters of Credit,
Fees, Expenses and all other obligations and liabilities of
the Guarantor or any of the Borrowers to the Agent, or to the
Lenders under this Credit Agreement, the Revolving Notes or
any other Credit Document.
"OTHER TAXES" is defined in Section 4.10(b).
"OVERHEAD ALLOCATION AGREEMENT" means the Overhead
Allocation Agreement among the Guarantor and its Restricted
Subsidiaries dated October 23, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation
and any Person succeeding to the functions thereof.
"PENDING BORROWINGS" means, with respect to a
Borrower, prospective Borrowings by such Borrower for which a
Notice of Borrowing has been delivered but for which Revolving
Loans have not been advanced.
"PERMITTED ACQUISITIONS" means an Acquisition which:
(i) would not and does not contravene the
provisions of Sections 7.2(f) and (i), the SDW
Subordinated Note or any of the Senior Note Documents;
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(ii) is not an Acquisition of capital stock or
assets (unless such assets are principally located in
the United States) of a corporation incorporated
outside of the United States or an Acquisition which
is principally of assets located outside of the
United States; and
(iii) involves an Investment by or through the
Guarantor or a Borrower;
PROVIDED that (A) if capital stock of a Person is issued or
otherwise acquired by a Borrower or the Guarantor in
connection with such Investment, such Person promptly becomes
a Credit Party, guarantees the Obligations and grants the
Agent liens and security interests on all of its assets, (B)
if assets (other than capital stock) are acquired in
connection with such Acquisition, the Agent is granted
perfected, first priority liens and security interests on all
of such assets, (C) all documentation granting the Agent a
guaranty or a security interest shall be in form and substance
satisfactory to the Agent, (D) the Credit Parties shall take,
and shall cause each Subsidiary to take, all such further
actions and execute all such further documents and instruments
as the Agent reasonably determines in its sole discretion to
be necessary or desirable to cause the execution, delivery and
performance of such documentation to be duly authorized and to
perfect, protect or enforce the security interests and Liens
(and the priority status thereof) granted to the Agent and (E)
the Agent shall receive such legal opinions and certifications
with respect to such Permitted Acquisition (including, without
limitation, as to the matters set forth in clause (D) above)
as the Agent shall reasonably request.
"PERMITTED DISCRETION" means the Agent's good faith
judgment based upon any factor which the Agent believes in
good faith: (i) will or could reasonably be expected to
materially adversely affect the value of any Collateral, the
enforceability or priority of the Agent's Liens thereon or the
amount which the Agent and the Lenders would be likely to
receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral;
(ii) suggests that any collateral report or financial
information delivered to the Agent by any Person on behalf of
a Credit Party is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of
a bankruptcy, reorganization or other insolvency proceeding
involving the Guarantor or any of its Subsidiaries or any of
the
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Collateral; or (iv) creates or reasonably could be
expected to create a Default or Event of Default. In
exercising such judgment, the Agent may consider such factors
already included in or tested by the definition of Eligible
Accounts Receivable or Eligible Inventory, as well as any of
the following factors: (i) changes in collection history and
dilution with respect to the Accounts, (ii) changes in demand
for, and pricing of, Inventory, (iii) changes in any
concentration of risk with respect to Accounts or Inventory,
and (iv) any other factors that change the credit risk of
lending to the Borrowers on the security of the Accounts or
Inventory. The burden of establishing lack of good faith shall
be on the Borrowers.
"PERMITTED HOLDERS" means and includes (a) Xxxxx
Xxxxxxx; each Affiliate of Xxxxx Xxxxxxx (or which was such
preceding the death of Xxxxx Xxxxxxx); Xxxxxxx X. Xxxxx; each
Affiliate of Xxxxxxx X. Xxxxx; Xxx X. Xxxxxxx, III; each
Affiliate of Xxx X. Xxxxxxx, III; each member of the immediate
family of each of the foregoing natural persons and any trust
or similar device created for the benefit of any one or more
of the foregoing and each Person which acquires a direct or
indirect beneficial ownership interest in shares of stock of
the Guarantor as an executor or administrator for or by way of
inheritance or bequest from one or more of the natural persons
described in the preceding clause (a) following the death of
such Person; and (b) each group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) which
is controlled by (with the term "controlled by" as used herein
to be determined in a manner consistent with the phrase
"controlled by" as used in the definition of Affiliate
contained herein) one or more of the Permitted Holders
described in the preceding clause (a), but only so long as the
respective such group to so controlled.
"PERMITTED LIENS" means such of the following as to
which no enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced and be
continuing: (a) Liens for taxes, assessments and governmental
charges not yet due and payable or which are being diligently
contested in good faith by a Credit Party or one of its
Subsidiaries by appropriate proceedings, provided that in any
such case an adequate reserve is being maintained by the
Credit Party or one of its Subsidiaries for the payment of the
same; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and
other similar Liens arising in the ordinary course of business
securing obligations that are not overdue
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and, in any case, where the property subject thereto is not
material to the operations of the Person whose assets are
subject to such Lien or which are being diligently
contested in good faith and by appropriate proceedings and
as to which appropriate reserves are being maintained; (c)
pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure
public or statutory obligations, not to exceed an aggregate
of $200,000; and (d) easements, rights of way and other
encumbrances 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 Person whose
property is subject to such easement, right of way or
encumbrance.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity,
party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs
and assigns of each.
"PLAN" means any employee benefit plan, program or
arrangement maintained or contributed to by a Credit Party,
any of its Subsidiaries or any ERISA Affiliate or with respect
to which any of them may incur liability.
"PRIME LENDING RATE" means the higher of (a) the
highest prime, base or equivalent rate of interest publicly
announced from time to time by Citibank, N.A., Bank One,
Chicago, The First National Bank of Chicago and Bank of
America National Trust and Savings Association or any
successor to any of the foregoing banks (which may not be the
lowest rate of interest charged by such bank) and (b) the
published annualized rate for 90-day dealer commercial paper
that appears in the "Money Rates" section of THE WALL STREET
JOURNAL.
"PRIME RATE LOAN" means a Loan that bears interest as
provided in Section 4.1.
"PROHIBITED TRANSACTION" is defined in Section
6.1(r)(v).
"PROPORTIONATE SHARE" of a Lender means a fraction,
expressed as a decimal, obtained by dividing its Commitment by
the total Commitments of all the Lenders or, if the
Commitments are terminated, by dividing its then outstanding
Revolving Loans and/or
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Letter of Credit Obligations by the aggregate Revolving
Loans and/or Letter of Credit Obligations then outstanding.
"PURCHASE AGREEMENTS" means the collective reference
to the Asset Purchase Agreement and the Stock Purchase
Agreement.
"PURCHASE DOCUMENTS" means the Purchase Agreements
and each other document, agreement and instrument executed in
connection therewith.
"PURCHASE MONEY LIENS" is defined in Section 7.2(b)(v).
"RATE OF EXCHANGE" means the rate at which the Agent
is able on the relevant date to purchase Dollars with other
currency and shall include any premiums and costs of exchange
payable in connection with the purchase of or conversion into
Dollars.
"REDUCED RATE" is defined in Section 4.10(e),
relating to backup withholding tax.
"REGISTER" is defined in Section 11.8(c).
"REPORTABLE EVENT" means any of the events described
in Section 4043 of ERISA and the regulations thereunder, other
than a reportable event for which the 30-day notice
requirement to the PBGC has been waived.
"REQUIRED LENDERS" means (a) if there are two Lenders
or less, those Lenders owed or holding in the aggregate more
than 75% of the total Commitments or if the Commitments are
terminated, more than 75% of the Revolving Loans or Letter of
Credit Obligations then outstanding or (b) if there are more
than two Lenders, the Majority Lenders.
"REQUIREMENT OF LAW" means (a) the Governing
Documents of a Person, (b) any law, treaty, rule or regulation
or determination of an arbitrator, court or other Governmental
Authority, or (c) any franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of
way, right or approval binding on a Person or any of its
property.
"RESTRICTED SUBSIDIARY" of any Person means any
Subsidiary of such Person which at the time of determination
is not an Unrestricted Subsidiary.
"RETIREE HEALTH PLAN" means an "employee welfare
benefit plan" within the meaning of Section 3(1) of
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ERISA that provides benefits to persons after termination
of employment, other than as required by Section 601 of
ERISA.
"REVOLVING LOANS" is defined in Section 2.1(a).
"REVOLVING NOTE" means a promissory note of each
Borrower payable to the order of each Lender, substantially in
the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"SCM" is defined in the Preamble to this Credit
Agreement.
"SCM ACCOUNTS BORROWING BASE" means, on any day, an
amount up to 85% of the outstanding Eligible Accounts
Receivable of SCM on such day.
"SCM BORROWING BASE" means, on any day, an amount
equal to the sum of (a) the SCM Accounts Borrowing Base on
such day and (b) the SCM Inventory Borrowing Base on such day.
"SCM INVENTORY BORROWING BASE" means, on any day, an
amount up to 65% of the Eligible Inventory of SCM on such day.
"SCM LETTER OF CREDIT OBLIGATIONS" means, the sum of
the aggregate undrawn amount of all Letters of Credit
outstanding for SCM's account, plus the aggregate amount of
all drawings under Letters of Credit issued for SCM's account
for which the Borrowers have not reimbursed the Agent, plus
the aggregate amount of all payments made by the Lenders to
the Agent for participations in Letters of Credit issued for
SCM's account for which the Borrowers have not reimbursed the
Lenders.
"SCM LINE OF CREDIT" means the aggregate revolving
line of credit extended by the Lenders to SCM for Revolving
Loans and Letters of Credit pursuant to and in accordance with
the terms of this Credit Agreement, in the amount of
$15,000,000, as such revolving line of credit may be reduced
from time to time in accordance with this Credit Agreement.
"SDW SUBORDINATED GUARANTY" means the subordinated
guaranty dated as of March 17, 1998 made by the Borrowers in
favor of S.D. Xxxxxx Company, as amended, supplemented or
otherwise modified from time to time in accordance with the
terms hereof.
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"SDW SUBORDINATED NOTE" means the subordinated note
dated March 17, 1998 made by the Guarantor in favor of S.D.
Xxxxxx Company, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"SECURITIES ACCOUNT" has the meaning specified in
Section 8-501 of the Code.
"SECURITY AGREEMENT" means the Security Agreement,
substantially in the form of Exhibit G, made by the Credit
Parties in favor of the Agent for the benefit of the Lenders,
as amended, supplemented or otherwise modified from time to
time.
"SENIOR NOTE DOCUMENTS" is defined in Section 5.1(g).
"SENIOR NOTE GUARANTY" means the Guaranty, dated
October 23, 1996, made by the Borrowers in favor of the Chase
Manhattan Bank, as Trustee, as amended, supplemented or
otherwise modified in accordance with the terms of this
Agreement and any Guaranty of the Senior Notes by any Credit
Party as permitted by the terms of this Agreement.
"SENIOR NOTES" means $115,000,000 aggregate principal
amount of the Guarantor's 10.75% Senior Secured Notes due 2006
issued pursuant to the Indenture.
"SETTLEMENT DATE" is defined in Section 2.6(a).
"SPECIFIED NET INCOME" means, in any fiscal period,
Net Income of a Person, minus Interest Income, plus or minus
(as the case may be) losses or gains from extraordinary items
and from sales of assets, other than the Central Sale, the
Electrical Tape Sale, other than asset sales resulting in a
loss or a gain of less than $100,000 and sales of Inventory in
the ordinary course of business, in each case to the extent
added or subtracted in determining such Person's Net Income.
"SPECIFIED PLAN WITHDRAWAL" means the complete
withdrawal by Electrical Tape from the Benefit Plan known
as the Laborer's International Union of North America
Industrial Pension Fund.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of April 9, 1999 between the Buyer and the
Guarantor, as amended, supplemented or otherwise modified from
time to time.
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"SUBSIDIARY" means as to any Person, a corporation or
other entity in which that Person directly or indirectly owns
or controls the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board
of directors or appoint other managers of such corporation or
other entity. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Credit Agreement
shall refer to a Subsidiary or Subsidiaries of the Guarantor.
"TAXES" is defined in Section 4.10(a).
"TAX SHARING AGREEMENT" means the Tax Sharing
Agreement among the Guarantor and its Subsidiaries dated April
5, 1996.
"TAX TRANSFEREE" is defined in Section 4.10(a).
"TBCC" means Transamerica Business Credit
Corporation, in its individual capacity.
"TBCC ACCOUNT" is defined in Section 2.12.
"TERMINATION EVENT" means (i) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan; (ii) the
withdrawal of a Credit Party, any of its Subsidiaries or any
ERISA Affiliate from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section
4001(a)(2) of ERISA); (iii) the providing of notice of intent
to terminate a Benefit Plan in a distress termination (as
described in Section 4041(c) of ERISA); (iv) the institution
by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which is
reasonably likely to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee
to administer, any Benefit Plan or Multiemployer Plan, or (b)
that is reasonably likely to result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi)
the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of a Credit Party, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan.
"TRUSTEE CERTIFICATIONS" is defined in Section
6.1(ah).
"TYPE" means, with respect to any Loan, whether such
Loan is a Eurodollar Rate Loan or a Prime Rate Loan.
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"UNRESTRICTED SUBSIDIARY" means a Subsidiary of the
Guarantor (other than a Credit Party) that is designated an
Unrestricted Subsidiary by the Board of Directors of the
Guarantor in the manner provided below and any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the
Guarantor may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary but excluding any Credit
Party) to be an Unrestricted Subsidiary unless such Subsidiary
owns any capital stock of, or owns or holds any Lien on, any
property of the Guarantor or any of its Subsidiaries (other
than a Subsidiary of the Subsidiary to be designated as an
Unrestricted Subsidiary) PROVIDED that the Guarantor certifies
to the Agent that such designation complies with 7.2(f)(x) and
each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to
any Indebtedness pursuant to which any lender has recourse to
any of the assets of the Guarantor or any of its Restricted
Subsidiaries. The Board of Directors of the Guarantor may
designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if immediately before and immediately after
giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing and the Majority
Lenders approve such designation in writing. Any such
designation by the Board of Directors shall be evidenced to
the Agent by promptly sending to the Agent a copy of the
resolution giving effect to such designation and an officers'
certificate that such designation complied with the foregoing
provisions.
"UNUSED AVAILABILITY" means, at any time of
determination, the excess of (x) the lesser of the Borrowing
Base or the Line of Credit over (y) the sum of the unpaid
principal amount of the Loans outstanding, Pending Borrowings
and the Letter of Credit Obligations.
"UNUSED LINE FEE" is defined in Section 4.5(a).
"VOTING STOCK" with respect to any Person means all
classes of Capital Stock of such Person then outstanding and
normally entitled to vote in elections of directors of such
Person.
"YEAR 2000 COMPLIANT shall mean, with respect to any
Person, that (i) all software in the equipment used by and
material to the business, operations or financial condition of
such Person is able to interpret and manipulate data on and
involving all calendar dates
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correctly and without causing any abnormal ending scenario,
including dates in and after the year 2000, and (ii) all
equipment material to the business, operations or financial
condition of such Persons that contains embedded microchips
(including, without limitation, all systems and equipment
supplied by others or with which such Person's information
systems interface) will function properly with respect to
all dates in and after the year 2000.
SECTION .1 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise defined or specified herein, all accounting terms used in this
Credit Agreement shall be construed in accordance with GAAP, applied on a
basis consistent in all material respects with the audited Financial
Statements of the Guarantor and its Restricted Subsidiaries delivered to the
Agent on or before the Closing Date. All accounting determinations for
purposes of determining compliance with Sections 7.2(r), (t) and (u) shall be
made in accordance with GAAP as in effect on the Closing Date and applied on
a basis consistent in all material respects with the audited Financial
Statements of the Guarantor and its Restricted Subsidiaries delivered to the
Agent on or before the Closing Date. The Financial Statements required to be
delivered hereunder from and after the Closing Date, and all financial
records, shall be maintained in accordance with GAAP. If GAAP shall change
from the basis used in preparing the audited Financial Statements of the
Guarantor and its Restricted Subsidiaries delivered to the Agent on or before
the Closing Date, the certificates required to be delivered pursuant to
Section 7.1 demonstrating compliance with the covenants contained herein
shall include calculations setting forth the adjustments necessary to
demonstrate how the Guarantor and its Restricted Subsidiaries are in
compliance with the financial covenants based upon GAAP as in effect on the
Closing Date. All financial covenants hereunder shall be calculated without
giving effect to Central Products Company.
SECTION .2 OTHER TERMS; HEADINGS. Terms used herein that
are defined in the Uniform Commercial Code, in effect from time to time, in
the State of New York (the "CODE") shall have the meanings given in the Code.
Each of the words "hereof," "herein," and "hereunder" refer to this Credit
Agreement as a whole. An Event of Default shall "continue" or be "continuing"
until such Event of Default has been cured or waived in accordance with
Section 11.11 hereof. References to Articles, Sections, Annexes, Schedules,
and Exhibits are internal references to this Credit Agreement, and to its
attachments, unless otherwise specified. The headings and the Table of
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Credit Agreement.
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SECTION .3 COMPUTATION OF TIME PERIODS. In this Credit
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
ARTICLE I
REVOLVING LOANS
SECTION I.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions set forth
in this Credit Agreement, on and after the Closing Date and to and excluding
the Expiration Date, each Lender severally agrees to make loans and advances
("REVOLVING LOANS") to the following Borrowers in an amount not to exceed at
any time its Proportionate Share of the following:
(i) TO COATING: an aggregate amount equal to the
lesser of (x) the Coating Line of Credit and (y) the Coating
Borrowing Base, minus in each case, the then outstanding
Coating Letter of Credit Obligations and the Pending
Borrowings of Coating; provided that no Revolving Loan or
Letter of Credit may be incurred if after giving effect
thereto an amount equal to fifty percent (50%) of the sum of
the Revolving Loans extended by the Lenders to Coating and
Coating Letter of Credit Obligations exceeds the Coating
Accounts Borrowing Base;
(ii) TO ENTOLETER: an aggregate amount equal to
the lesser of (x) the Entoleter Line of Credit and (y) the
Entoleter Borrowing Base, minus, in each case, the then
outstanding Entoleter Letter of Credit Obligations and the
Pending Borrowings of Entoleter; provided that no Revolving
Loan or Letter of Credit may be incurred if after giving
effect thereto an amount equal to forty-five percent (45%) of
the sum of the Revolving Loans extended by the Lenders to
Entoleter and Entoleter Letter of Credit Obligations exceeds
the Entoleter Accounts Borrowing Base; and
(iii) TO SCM: an aggregate amount equal to the
lesser of (x) the SCM Line of Credit and (y) the SCM Borrowing
Base, minus, in each case, the then outstanding SCM Letter of
Credit Obligations and the Pending Borrowings of SCM; provided
that no Revolving Loan or Letter of Credit may be incurred if
after giving effect thereto an amount equal to fifty percent
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(50%) of the sum of the Revolving Loans extended by the
Lenders to SCM and SCM Letter of Credit Obligations exceeds
the SCM Accounts Borrowing Base.
(b) The Agent, at any time in the exercise of
its Permitted Discretion upon not less than ten (10) days' prior written
notice to the applicable Borrower, may (i) establish and increase or decrease
reserves against Eligible Accounts Receivable and Eligible Inventory for any
of the Borrowers, and (ii) impose additional restrictions (or eliminate the
same) to the standards of eligibility set forth in the definitions of
Eligible Accounts Receivable and Eligible Inventory. The ten (10) day notice
in this section shall not apply to a determination by the Agent with respect
to whether a specific Account, all Accounts of an account debtor or any
Inventory should be deemed ineligible. Such determination may be made at any
time by the Agent without notice in the exercise of its Permitted Discretion.
The Agent may, but shall not be obligated to, rely on each Borrowing Base
Certificate and any other schedules or reports in determining the eligibility
of Accounts and Inventory.
(c) Notwithstanding anything in this Credit
Agreement to the contrary, the Lenders shall not be obligated to make any
Revolving Loans to any Borrower if such requested Revolving Loan, when added
to the aggregate amount of Revolving Loans and all Letter of Credit
Obligations then outstanding, would cause the sum of the Revolving Credit
Loans and the Letter of Credit Obligations to exceed the lesser of (i) the
Line of Credit and (ii) the Borrowing Base then in effect.
(d) The outstanding principal amount of the
Revolving Loans, together with all accrued and unpaid interest thereon, shall
be paid on the Expiration Date.
SECTION I.2 BORROWING OF REVOLVING LOANS. It is
contemplated that Revolving Loans will be made available to the Borrowers by
the Lenders ("LENDER ADVANCES") and, in the circumstances described in
Section 2.2(b), from the Agent acting on behalf of the Lenders ("AGENT
ADVANCES"). The Revolving Loans made by any Lender to any Borrower shall be
evidenced by a Revolving Note made by such Borrower payable to the order of
such Lender, with appropriate insertions as to the date and principal amount.
(a) LENDER ADVANCES OF REVOLVING LOANS.
Subject to the determination by the Agent and the Lenders that the conditions
for borrowing contained in Section 5.2 are satisfied, upon notice from a
Borrower to the Agent, substantially in the form of Exhibit C ("NOTICE OF
BORROWING") received by the Agent before 1:00 p.m. (New York City time) on a
Business Day, Lender Advances of Revolving Loans shall be made to such
Borrower to the
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extent of each Lender's Proportionate Share of the requested Borrowing. The
Notice of Borrowing shall specify whether the requested Borrowing is of Prime
Rate Loans or Eurodollar Rate Loans and, in the case of Eurodollar Rate
Loans, the length of the Interest Period therefor.
(b) AGENT ADVANCES OF REVOLVING LOANS. The
Agent is authorized by the Lenders, but is not obligated, to make Agent
Advances upon a Notice of Borrowing received by the Agent before 2:00 p.m.
(New York City time) on a Business Day. All Agent Advances shall be Prime
Rate Loans. Agent Advances will not at any time exceed the applicable amount
available for borrowing under Section 2.1(a). Agent Advances will be subject
to periodic settlement with the Lenders under Section 2.6. Agent Advances may
be made only in the following circumstances:
(i) For administrative convenience, the Agent
may, but is not obligated to, make Agent Advances in reliance
upon a Borrower's actual or deemed representations under
Section 5.2 that the conditions for borrowing are satisfied.
(ii) If the conditions for borrowing under Section
5.2 cannot be fulfilled, a Borrower shall in its Notice of
Borrowing or otherwise give immediate notice thereof to the
Agent, with a copy to each of the Lenders, and the Agent may,
but is not obligated to, continue to make Agent Advances for
twenty (20) Business Days from the date the Agent first
receives such notice, or until sooner instructed by the
Majority Lenders to cease.
SECTION I.3 DISBURSEMENT OF REVOLVING LOANS. The proceeds
of Revolving Loans shall be transmitted by the Agent (a) in the circumstances
described in Section 3.5, directly to the Agent and (b) in all other
circumstances, as requested by a Borrower in its Notice of Borrowing.
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SECTION I.4 NOTICES OF BORROWING. Notices of Borrowing may
be given under this Section by telephone or facsimile transmission, and, if
by telephone, promptly confirmed by a writing. A Borrower shall specify in
each Notice of Borrowing whether the conditions for the requested borrowing
are satisfied. A Borrower may request one or more borrowings of Prime Rate
Loans by Notice of Borrowing given not later than 1:00 p.m. (New York City
time) on the same Business Day as the proposed Borrowing. Notice of Borrowing
for Eurodollar Rate Loans shall be given not later than 1:00 p.m. (New York
City time) on the third Business Day prior to the proposed Borrowing. Each
Notice of Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Revolving Loans of the same Type and, if such Borrowing
is to consist of Eurodollar Rate Loans, shall be in an aggregate amount for
all Lenders of not less than $1,000,000 or an integral multiple of $100,000
in excess thereof. The right of a Borrower to choose Eurodollar Rate Loans is
subject to the provisions of Section 4.8. Once given, a Notice of Borrowing
is irrevocable by and binding on the Borrower delivering such notice. Each
Borrower shall provide to the Agent a list, with specimen signatures, of
officers authorized to request Revolving Loans and Letters of Credit. The
Agent is entitled to rely upon each such list until it is replaced by the
applicable Borrower.
SECTION I.5 SAME DAY SETTLEMENT OF LENDER ADVANCES. The
Agent shall give each Lender prompt notice by telephone or facsimile
transmission of a Notice of Borrowing that requests Lender Advances of
Revolving Loans. No later than 2:00 p.m. (New York City time) on the date of
receipt of the Notice of Borrowing, each Lender shall make available to the
Agent at the Agent's address such Lender's Proportionate Share of such
borrowing in immediately available funds. Unless the Agent receives contrary
written notice prior to the date of any such borrowing of Revolving Loans, it
is entitled to assume that each Lender will make available its Proportionate
Share of the borrowing and in reliance upon that assumption, but without any
obligation to do so, may advance such Proportionate Share on behalf of such
Lender.
SECTION I.6 PERIODIC SETTLEMENT OF AGENT ADVANCES AND
REPAYMENTS.
(a) THE SETTLEMENT DATE. The amount of each
Lender's Proportionate Share of Revolving Loans shall be computed weekly (or
more frequently in the Agent's discretion) and shall be adjusted upward or
downward based on all Revolving Loans (including Agent Advances) and
repayments received by the Agent as of 5:00 p.m. (New York City time) on the
last Business Day of the period specified by the Agent (such date, the
"SETTLEMENT DATE").
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(b) SUMMARY STATEMENTS; SETTLEMENTS OF PRINCIPAL.
The Agent shall deliver to each of the Lenders promptly after the Settlement
Date a summary statement of the amount of outstanding Revolving Loans
(including Agent Advances) to each of the Borrowers. As reflected on the
summary statement: (i) the Agent shall transfer to each Lender its
Proportionate Share of repayments; and (ii) each Lender shall transfer to the
Agent, or the Agent shall transfer to each Lender, such amounts as are
necessary to insure that, after giving effect to all such transfers, the
amount of Revolving Loans made by each Lender shall be equal to such Lender's
Proportionate Share of the aggregate amount of Revolving Loans outstanding as
of such Settlement Date. If the summary statement requires transfers to be
made to the Agent by the Lenders and is received by the Lenders prior to
12:00 Noon (New York City time) on a Business Day, such transfers shall be
made in immediately available funds no later than 3:00 p.m. (New York City
time) that day; and, if received after 12:00 Noon (New York City time), then
no later than 3:00 p.m. (New York City time) on the next Business Day. The
obligation of each Lender to transfer such funds is irrevocable,
unconditional and without recourse to or warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE
FEES. Interest on the Revolving Loans (including Agent Advances), shall be
allocated by the Agent to each Lender in accordance with the proportionate
share of Revolving Loans actually advanced by and repaid to each Lender, and
shall accrue from and including the date such Revolving Loans are so advanced
and to but excluding the date such Revolving Loans are either repaid or
actually settled under this Section. The amount of the Unused Line Fee shall
be allocated by the Agent to each Lender in accordance with that Lender's
Proportionate Share. After the end of each month, the Agent shall promptly,
upon receipt from a Borrower, distribute to each Lender its share of the
interest and Unused Line Fee accrued during such month. The Agent shall, upon
receipt from a Borrower, distribute interest on Eurodollar Rate Loans
promptly after it is received from a Borrower.
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SECTION I.7 SHARING OF PAYMENTS. If any Lender shall obtain
any payment pursuant to the terms of this Credit Agreement (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) on
account of the Loans made by it or its participation in Letters of Credit in
excess of its Proportionate Share of payments on account of the Loans or Letters
of Credit obtained by all the Lenders, such Lender shall forthwith purchase from
the other Lenders such participations in the Loans made by them or in their
participation in Letters of Credit as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered, and PROVIDED,
FURTHER that this Section shall not apply with respect to any fees which are
intended to be for the benefit of less than all of the Lenders. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of set-off) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation. Notwithstanding anything
contained herein to the contrary, the sharing provisions of this Section shall
not apply to any payments received by any Lender from or on behalf of the
Borrowers or the Agent that is not made pursuant to the express terms and
provisions of this Credit Agreement.
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SECTION I.8 DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its
Proportionate Share of any Revolving Loans (including Agent Advances) made
available by the Agent on such Lender's behalf, or who fails to pay any other
amount owing by it to the Agent, is a defaulting lender ("DEFAULTING
LENDER"). The Agent may recover all such amounts owing by a Defaulting Lender
on demand. If the Defaulting Lender does not pay such amounts on the Agent's
demand, the Agent shall promptly notify the Borrowers and the Borrowers
shall, jointly and severally, pay such amounts within five (5) Business Days.
In addition, the Defaulting Lender or the Borrowers, jointly and severally,
shall pay the Agent interest on such amount for each day from the date it was
made available by the Agent to the Borrowers to the date it is recovered by
the Agent at a rate PER ANNUM equal to (x) the overnight Federal Funds Rate,
if paid by the Defaulting Lender, or (y) the then applicable rate of interest
calculated under Section 4.1, if paid by the Borrowers; plus, in each case,
the Expenses and losses, if any, incurred as a result of the Defaulting
Lender's failure to perform its obligations.
(b) The failure of any Lender to fund its
Proportionate Share of any Revolving Loan (including Agent Advances) shall
not relieve any other Lender of its obligation to fund its Proportionate
Share of such Revolving Loan. Conversely, no Lender shall be responsible for
the failure of another Lender to fund such other Lender's Proportionate Share
of a Revolving Loan.
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(c) The Agent shall not be obligated to transfer
to a Defaulting Lender any payments made by a Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender
shall instead be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender. For
purposes of voting or consenting to matters with respect to the Credit
Documents and determining Proportionate Shares, such Defaulting Lender shall
be deemed not to be a "Lender" and such Lender's Commitment shall be deemed
to be zero (-0-). This Section shall remain effective with respect to such
Lender until (x) the Defaulting Lender has paid all amounts required to be
paid to the Agent hereunder or (y) the Majority Lenders, the Agent and the
Borrowers shall have waived such Lender's default in writing. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by the
Borrowers of their duties and obligations hereunder.
SECTION I.9 MANDATORY AND VOLUNTARY PAYMENT; MANDATORY
AND VOLUNTARY REDUCTION OF COMMITMENTS.
(a) In no event shall the sum of the aggregate
outstanding principal balance of the Revolving Loans and all Letter of Credit
Obligations outstanding exceed the lesser of the Borrowing Base and the Line
of Credit at any time. Immediately upon the discovery by a Borrower that any
of the lending limits set forth in Sections 2.1(a) or this Section 2.9(a) has
been exceeded, an amount sufficient to reduce the outstanding balances to the
applicable maximum allowed amount shall become immediately due and payable.
(b) On the Expiration Date, the Commitment of
each Lender and the Line of Credit shall automatically reduce to zero and may
not be reinstated.
(c) The Borrowers may reduce or terminate the
Commitments on a PRO RATA basis as among the Lenders at any time and from
time to time in whole or in part; PROVIDED, HOWEVER, that each such reduction
must be in an aggregate amount for all Lenders of not less than $1,000,000
(and in increments of $1,000,000 thereafter). Any reduction in the
Commitments shall reduce the Line of Credit on a dollar-for-dollar basis. If
the Borrowers seek to reduce the Commitments to an aggregate amount of less
than $5,000,000, then the Commitments shall be reduced to zero and this
Credit Agreement shall be terminated. Once reduced, no portion of the
Commitments or the Line of Credit may be reinstated.
(d) If any Credit Party shall receive any Net Cash
Proceeds from the consummation of any Asset Sale (other than
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the Central Sale) or from the issuance of any equity securities, (i) 100% of
such Net Cash Proceeds shall be immediately paid to the Agent to be applied
to repay the outstanding Revolving Loans, which amounts may be reborrowed,
subject to the terms and conditions contained herein and (ii) 100% of such
Net Cash Proceeds from the consummation of such Asset Sale shall be applied
as a mandatory reduction of the Commitments and the Line of Credit, except to
the extent that, within 270 days of the date of such sale, such Net Cash
Proceeds have been used to make Capital Expenditures permitted under Section
7.2(r)(i) and the Agent has received a certificate from an Authorized Officer
certifying the same. Any Net Cash Proceeds from the Central Sale shall be
applied as follows: (i) 100% of such Net Cash Proceeds shall be immediately
applied in accordance with Section 5.1(o) and (ii) at least $60,000,000 of
such Net Cash Proceeds shall be applied as a mandatory reduction of the
Commitments and the Line of Credit, except to the extent that, within 270
days of the date of the Central Sale, (A) such Net Cash Proceeds have been
used (x) to make Capital Expenditures permitted under Section 7.2(r)(i), (y)
to make Investments permitted under Section 7.2(f)(ix) or (z) to prepay or
redeem the Senior Notes in accordance with Section 4.11 of the Indenture and
(B) the Agent has received a certificate from an Authorized Officer of the
Guarantor certifying the same, together with a legal opinion relating thereto
as the Agent shall reasonably request. Any reduction of the Commitments shall
reduce the Commitment of each Lender proportionately by its Proportionate
Share of the amount of such reduction. Any reduction of the Line of Credit
shall reduce the Coating Line of Credit by 60% of the amount of such
reduction, the Entoleter Line of Credit by 2.5% of the amount of such
reduction and the SCM Line of Credit by 37.5% of the amount of such
reduction. Notwithstanding the foregoing, if (i) a Credit Party receives Net
Cash Proceeds from the issuance of equity securities, (ii) after giving
effect thereto, Unused Availability shall be equal to or greater than
$15,000,000 and (iii) no Event of Default has occurred and is continuing,
then such Credit Party shall not be required to apply such Net Cash Proceeds
to repay the Revolving Loans to the extent that Unused Availability exceeds
$15,000,000 (it being understood that such Credit Party may apply such excess
to make mandatory prepayments of the SDW Subordinated Note in accordance with
Section 3.1 of the SDW Subordinated Note as in effect on March 17, 1998).
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SECTION I.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
ACCOUNT. The Agent shall maintain an account on its books in the name of each
Borrower (each, a "LOAN ACCOUNT") in which a Borrower will be charged with
all loans and advances made by the Lenders to such Borrower or for such
Borrower's account, including the Revolving Loans, the Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations. Each
Borrower's Loan Account will be credited with all amounts received by the
Agent from such Borrower or for such Borrower's account, including, as set
forth below, all amounts received in the applicable Collection Account from
any Lockbox Bank. The Agent shall send each Borrower a monthly statement
reflecting the activity in its Loan Account. Absent manifest error, each
monthly statement shall be an account stated and shall be final, conclusive
and binding on the Borrowers.
SECTION I.11 PAYMENT PROCEDURES. The Borrowers hereby
authorize the Agent to charge the Loan Accounts with the amount of all
interest, Fees and Expenses and other payments to be made hereunder and under
the other Credit Documents. The Borrowers' obligations to the Agent and the
Lenders with respect to such payments shall be discharged by the Agent's
charging the Loan Accounts as provided herein.
SECTION I.12 COLLECTIONS. The Borrowers shall at all times
maintain separate lockboxes (the "LOCKBOXES") and shall instruct all account
debtors on their Accounts to remit all Collections to their respective
Lockboxes. The Borrowers shall enter into agreements with the Agent and
financial institutions selected by the Borrowers and acceptable to the Agent
(the "LOCKBOX BANKS") substantially in the form of Exhibit I (the "LOCKBOX
AGREEMENTS"), which among other things shall provide for the opening of an
account with such Lockbox Bank for the deposit of Collections (each, a
"COLLECTION ACCOUNT") and shall require the Agent's consent to its
termination. All Collections and other amounts received by a Borrower from
any account debtor, in addition to all other cash received from any other
source, shall upon receipt be deposited into a Collection Account maintained
by such Borrower. Upon the terms and subject to the conditions set forth in
the Lockbox Agreements, all available amounts held in each Collection Account
maintained by a Borrower shall be wired each Business Day into an account
maintained by the Agent at The First National Bank of Chicago, Account No.
0000000 (the "TBCC ACCOUNT"). Termination of such arrangements shall also be
subject to approval by the Agent. All amounts, other than Collections,
received by the Borrowers from any source shall upon receipt be deposited
into a second Collection Account maintained by the Agent at a Lockbox Bank.
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SECTION I.13 APPLICATION OF PAYMENTS. All available
amounts held in the TBCC Account with respect to a Borrower shall be
distributed and applied on a daily basis in the following order: FIRST, to
the payment of any Fees, Expenses or other Obligations then due and payable
by such Borrower to the Agent under any of the Credit Documents, including
amounts advanced by the Agent on behalf of the Lenders pursuant to Section
2.4 or 2.5; SECOND, to the ratable payment of fees, Expenses or other
Obligations then due and payable by such Borrower to the Lenders under any of
the Credit Documents other than those Obligations specifically referred to in
this Section 2.13; THIRD, to the ratable payment of any interest then due and
payable on the Loans to such Borrower; FOURTH, to the ratable payment of
principal of any Loans to such Borrower which is then due and payable; and
FIFTH, to cash collateralize Letters of Credit in accordance with the
provisions of Section 8.2(c). On any date after giving effect to the payment
of all amounts required to be paid pursuant to the immediately preceding
sentence by all Borrowers, to the extent there remain available funds in the
TBCC Account with respect to a Borrower, such funds may be accessed by such
Borrower and utilized by it for general corporate purposes pursuant to the
terms of this Agreement. Any payment received hereunder as a distribution in
any proceeding referred to in Section 8.1(g) shall, unless paid with respect
to amounts specifically owing to the Agent, be distributed and applied by the
Agent to the payment of the amounts due hereunder and under the Notes ratably
in accordance with such amounts (or, if a court of competent jurisdiction
shall otherwise specify, as specified by such court).
ARTICLE II
LETTERS OF CREDIT
SECTION II.1 ISSUANCE OF LETTERS OF CREDIT. Subject to the
terms and conditions of this Credit Agreement and in reliance upon the
representations and warranties of Borrowers set forth herein, the Agent shall
use its best efforts to cause a bank acceptable to the Agent to issue Letters
of Credit hereunder at the request of a Borrower and for its account, as more
specifically described below. The Agent shall not be obligated to cause to be
issued any Letter of Credit for the account of any Borrower on or after the
Expiration Date or if at the time of such requested issuance:
(a) The face amount of such Letter of Credit
requested by Coating, (i) when added to the Coating Letter of Credit
Obligations then outstanding, would cause the Coating Letter of Credit
Obligations to exceed $5,000,000 or (ii) when added to the aggregate amount
of Revolving Loans to Coating and
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all Coating Letter of Credit Obligations then outstanding would cause the sum
of the Revolving Loans to Coating and the Coating Letter of Credit
Obligations to exceed the lesser of (x) the Coating Line of Credit and (y)
the Coating Borrowing Base then in effect; or
(b) The face amount of such Letter of Credit
requested by Entoleter, (i) when added to the Entoleter Letter of Credit
Obligations then outstanding, would cause the Entoleter Letter of Credit
Obligations to exceed $1,000,000 or (ii) when added to the aggregate amount
of Revolving Loans to Entoleter and all Entoleter Letter of Credit
Obligations then outstanding, would cause the sum of Revolving Loans to
Entoleter and the Entoleter Letter of Credit Obligations to exceed the lesser
of (x) the Entoleter Line of Credit and (y) the Entoleter Borrowing Base in
effect; or
(c) The face amount of such Letter of Credit
requested by SCM, (i) when added to the SCM Letter of Credit Obligations then
outstanding, would cause the SCM Letter of Credit Obligations to exceed
$4,000,000 or (ii) when added to the aggregate amount of Revolving Loans to
SCM and all SCM Letter of Credit Obligations then outstanding would cause the
sum of the Revolving Loans to SCM and the SCM Letter of Credit Obligations to
exceed the lesser of (x) the SCM Line of Credit and (y) the SCM Borrowing
Base then in effect; or
(d) The face amount of such Letter of Credit, when
added to the aggregate amount of Revolving Loans and all Letter of Credit
Obligations then outstanding would cause the sum of the Revolving Loans and
the Letter of Credit Obligations to exceed the lesser of (i) the Line of
Credit and (ii) the Borrowing Base then in effect; or
(e) Any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its terms to enjoin or
restrain any issuing bank from issuing such Letter of Credit or any
Requirement of Law applicable to such issuing bank or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such issuing bank shall prohibit, or request
such issuing bank refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon such issuing bank
with respect to such Letter of Credit any restriction or reserve or capital
requirement (for which the issuing bank is not otherwise compensated) not in
effect as of the Closing Date, or any unreimbursed loss, cost or expense
which was not applicable, in effect or known to such issuing bank as of the
Closing Date and which such issuing bank deems in good faith to be material
to it; or
(f) A default of any Lender's obligations to fund
under Section 3.6 exists, or such Lender is a Defaulting Lender
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unless the Agent has entered into satisfactory arrangements with the
Borrowers to eliminate the Agent's risk with respect to such Lender,
including cash collateralization of such Lender's Proportionate Share of the
Letter of Credit Obligations.
SECTION II.2 TERMS OF LETTERS OF CREDIT. The Letters of
Credit shall be in a form customarily caused to be issued by the Agent or in
such other form as has been approved by the Agent. At the time of issuance,
the amount and the terms and conditions of each Letter of Credit, and of any
drafts or acceptances thereunder, shall be subject to approval by the Agent
and the applicable Borrower. In no event may the term of any Letter of Credit
issued hereunder exceed 365/366 days (except that such Letters of Credit may
provide for annual renewal) and all Letters of Credit issued hereunder shall
expire no later than the date that is five (5) Business Days prior to the
Expiration Date. Any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding
any other provisions thereof, it shall not be renewable on or after the
Expiration Date and it shall expire no later than the date that is five (5)
Business Days prior to the Expiration Date. Notwithstanding the foregoing, a
Letter of Credit may have an expiry date subsequent to the Expiration Date if
such Letter of Credit is cash collateralized in a manner satisfactory to the
Agent and in an amount equal to 105% of the aggregate face amount thereof or
is supported by another letter of credit which is issued by a financial
institution reasonably acceptable to the Agent and is in a form and contains
terms and conditions reasonably satisfactory to the Agent.
SECTION II.3 LENDERS' PARTICIPATION. Immediately upon
issuance or amendment of any Letter of Credit in accordance with the
procedures set forth in Sections 3.1 and 3.2, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received from the Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Proportionate Share of the liability and obligations
under and with respect to such Letter of Credit and the Letter of Credit
Agreements (including, without limitation, all obligations of the Borrowers
with respect thereto, other than amounts owing to the Agent consisting of
Issuing Bank Fees) and any security therefor or guaranty pertaining thereto.
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SECTION II.4 NOTICE OF ISSUANCE. (i) Whenever a Borrower
desires the issuance of a Letter of Credit, such Borrower shall deliver to
the Agent a written notice no later than 1:00 p.m. New York City time at
least ten (10) Business Days (or such shorter period as may be agreed to by
the Agent) in advance of the proposed date of issuance of a letter of credit
request in substantially the form attached as Exhibit F (a "LETTER OF CREDIT
REQUEST"). The transmittal by a Borrower of each Letter of Credit Request
shall be deemed to be a representation and warranty by such Borrower that the
Letter of Credit may be issued in accordance with and will not violate any of
the requirements of Sections 3.1 and 3.2. Prior to the date of issuance of
each Letter of Credit, the requesting Borrower shall provide to the Agent a
precise description of the documents and the text of any certificate to be
presented by the beneficiary of such Letter of Credit which if presented by
such beneficiary on or prior to the expiration date of the Letter of Credit
would require the issuing bank to make payment under the Letter of Credit.
The Agent, in its reasonable judgment, may require changes in any such
documents and certificates. No Letter of Credit shall require payment against
a conforming draft to be made thereunder prior to the second Business Day
after the date on which such draft is presented. A Letter of Credit Request
may be given in writing or electronically and, if requested by the Agent,
with prompt confirmation in writing. Any electronic Letter of Credit Request
shall be deemed to have been prepared by, or under the supervision of the
chief financial officer or other Authorized Officer of the requesting
Borrower.
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SECTION II.5 PAYMENT OF AMOUNT DRAWN UNDER LETTERS OF CREDIT.
In the event of any request for drawing under any Letter of Credit by the
beneficiary thereof, (i) the Borrower on whose behalf such Letter of Credit was
issued shall be deemed to have timely given a Notice of Borrowing to the Agent
to make Revolving Loans to such Borrower on the date on which such drawing is
honored in an amount equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the applicable conditions specified in Article V and
the other terms and conditions of Borrowings contained herein, the Lenders
shall, on the date of such drawing, make Revolving Loans in the amount of such
drawing, the proceeds of which shall be applied directly by the Agent to
reimburse the issuing bank for the amount of such drawing or payment. The Agent
shall give such Borrower notice of such Revolving Loans. If for any reason,
proceeds of Revolving Loans are not received by the Agent on such date in an
amount equal to the amount of such drawing, the Borrowers shall, jointly and
severally, be obligated to and shall reimburse the Agent, on the Business Day
immediately following the date of such drawing, in an amount in same day funds
equal to the excess of the amount of such drawing over the amount of such
Revolving Loans, if any, which are so received, plus accrued interest on such
amount at the rate set forth in Section 4.1.
SECTION II.6 PAYMENT BY LENDERS. In the event that the
Borrowers do not reimburse Agent for the amount of any drawing pursuant to
Section 3.5, the Agent shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective participation therein.
Each Lender shall make available to the Agent an amount equal to its respective
participation in same day funds, at the office of the Agent specified in such
notice, not later than 1:00 p.m. (New York City time) on the first Business Day
after the date notified by the Agent. In the event that any Lender fails to make
available to the Agent the amount of such Lender's participation in such Letter
of Credit as provided in this Section 3.6, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Federal Funds Rate for three (3) Business Days and thereafter at the Prime
Lending Rate. The Agent shall distribute to each Lender which has paid all
amounts payable by it under this Section 3.6 with respect to any Letter of
Credit such Lender's Proportionate Share of all payments subsequently received
by the Agent from the Borrowers in reimbursement of drawings honored under such
Letter of Credit when such payments are received.
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SECTION II.7 NATURE OF AGENT'S DUTIES. As among the Borrowers,
the Agent and each Lender, each of the Borrowers assumes all risks of the acts
and omissions of the Agent and the issuing bank or misuse of the Letters of
Credit by the respective beneficiaries of such Letters of Credit. In furtherance
and not in limitation of the foregoing, neither the Agent nor any of the Lenders
shall be responsible (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of or any drawing honored under
such Letters of Credit even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit, or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason, (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher, (v) for errors
in interpretation of technical terms, (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit, or of the proceeds thereof, (vii) for the
misapplication by the beneficiary of any such Letter of Credit, of the proceeds
of any drawing honored under such Letter of Credit, and (viii) for any
consequences arising from causes beyond the control of the issuing bank, the
Agent or the Lenders. None of the above shall affect, impair, or prevent the
vesting of any of the Agent's rights or powers hereunder. Any action taken or
omitted to be taken by the Agent under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create any liability of the Agent to the Borrower or any
Lender.
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SECTION II.8 OBLIGATIONS ABSOLUTE. The joint and several
obligations of the Borrowers to reimburse the Agent for drawings honored under
the Letters of Credit and the obligations of the Lenders under Section 3.6 shall
be unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Credit Agreement under all circumstances including, without
limitation, the following circumstances: (i) any lack of validity or
enforceability of this Credit Agreement, any Letter of Credit, any Letter of
Credit Agreement or any other agreement or instrument relating thereto (the
"LETTER OF CREDIT RELATED DOCUMENTS"); (ii) the existence of any claim, setoff,
defense or other right which the Borrowers or any Affiliate of the Borrowers may
have at any time against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such beneficiary or transferee may be
acting), the Agent, any Lender or any other Person, whether in connection with
this Credit Agreement, the other Credit Documents, the transactions contemplated
herein or therein or any unrelated transaction; (iii) any draft, demand,
certificate or any other documents presented under any Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) the surrender
or impairment of any security for the performance or observance of any of the
terms of any of the Credit Documents; (v) payment by the issuing bank under any
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit; (vi)
failure of any drawing under a Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of any drawing; or (vii) the
fact that a Default or Event of Default shall have occurred and be continuing;
PROVIDED, HOWEVER, that the Borrowers shall have no obligation to reimburse the
Issuing Bank in the event of the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with the terms of such Letter of Credit, as determined by a court of
competent jurisdiction in a final, nonappealable judgment.
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ARTICLE III
INTEREST, FEES AND EXPENSES
SECTION III.1 INTEREST ON PRIME RATE LOANS. The Borrowers
shall, jointly and severally, pay to the Agent for the benefit of the Lenders
interest on Prime Rate Loans two (2) Business Days after the last Business Day
of each month, calculated monthly in arrears at an interest rate per annum equal
to the Prime Lending Rate plus the Applicable Margin on the average net balances
owing to the Agent and the Lenders at the close of business each day during such
month. The rate under this Section 4.1 shall change each day as the Prime
Lending Rate changes.
SECTION III.2 INTEREST ON EURODOLLAR RATE LOANS. The Borrowers
shall, jointly and severally, pay to the Agent for the benefit of the Lenders
interest on each Eurodollar Rate Loan two Business Days after the last Business
Day of each month, calculated monthly in arrears at an interest rate per annum
equal during the Interest Period for such Eurodollar Loan to the Adjusted
Eurodollar Rate for such Interest Period plus the Applicable Margin. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
SECTION III.3 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT
OF DEFAULT. From the date of occurrence of any Event of Default until the
earlier of the date upon which (i) all Obligations shall have been paid and
satisfied in full or (ii) such Event of Default shall have been waived or cured,
interest on the Loans, and Letter of Credit Fees on Letter of Credit
Obligations, shall each be payable on demand at a rate per annum equal to, with
respect to the Loans, the Prime Lending Rate or the Adjusted Eurodollar Rate, as
the case may be, plus two percent (2%) above the Applicable Margin at Level III,
and with respect to the Letter of Credit Obligations, the rate in effect under
the first sentence of Section 4.4(a), plus two percent (2%).
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SECTION III.4 LETTER OF CREDIT FEES.
(a) The Borrowers shall, jointly and
severally, pay to the Agent for the ratable benefit of the Lenders two (2)
Business Days after the last Business Day of each month a fee (the "LETTER OF
CREDIT FEE"), in an amount per annum equal to the Applicable Margin with
respect to Letters of Credit of the daily average amount of Letter of Credit
Obligations outstanding during the immediately preceding month. In addition,
the Borrowers shall, jointly and severally, pay the Agent, for its own
benefit, two (2) Business Days after the last Business Day of each month a
letter of credit facing fee (the "FACING FEE") in an amount equal to .25% per
annum on the undrawn amount of each Letter of Credit.
(b) The Borrowers shall, jointly and
severally, pay to the Agent, on demand, the customary charges, fees and
expenses charged to the Agent by any issuer of a Letter of Credit (without
duplication of the Letter of Credit Fee) for the issuance, administration and
negotiation of each Letter of Credit (the "ISSUING BANK FEES"). Each
determination by the Agent of Letter of Credit Fees and other fees, charges
and expenses under this Section shall be conclusive and binding for all
purposes, absent manifest error.
SECTION III.5 UNUSED LINE FEE; CLOSING FEE; AGENT FEE;
EARLY TERMINATION FEE.
(a) Each Borrower shall, jointly and
severally, pay to the Agent for the ratable benefit of the Lenders two (2)
Business Days after the last Business Day of each month and on the Expiration
Date a fee equal to 0.375% per annum calculated monthly in arrears on the
average unused portion of the total Line of Credit at the close of business
each day during such month or such period prior to the Expiration Date (the
"UNUSED LINE FEE").
(b) The Borrowers shall, jointly and
severally, pay to the Agent for the benefit of the Lenders, on the
effectiveness of this Credit Agreement, a fee (the "CLOSING FEE") in the
amount of $75,000. The Agent shall remit $50,000 of the Closing Fee to The
CIT Group/Business Credit Inc. and $25,000 of the Closing Fee to TBCC.
(c) The Borrowers shall, jointly and
severally, pay to the Agent solely for the account of the Agent, in advance
on the first Business Day of each month, a fee (the "AGENT FEE") in an amount
equal to $7,500 per month.
(d) The Borrowers shall have the right to
terminate this Agreement at any time on 120 days' prior written notice to the
Agent, PROVIDED that on the date of such termination all Obligations,
including all interest and fees
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payable to the date of such termination, shall be paid in full. If the
Borrowers give such notice to terminate or pay the Loans in full or
substantially in full, including as a result of the Lenders terminating the
Commitments pursuant to Section 8.2(b), the Borrowers shall, jointly and
severally, pay a fee to the Agent for the ratable benefit of the Lenders in
an amount equal to $100,000 if such termination occurs prior to the second
anniversary of the Closing Date.
SECTION III.6 OTHER FEES AND EXPENSES. The Borrowers agree,
jointly and severally, to pay fees to the Agent on behalf of the Lenders in the
amounts and at the times set forth herein and shall be obligated to reimburse
the Agent's Expenses promptly upon demand.
SECTION III.7 CALCULATIONS. All calculations of (i) interest
hereunder and (ii) Fees, including, without limitation, Unused Line Fees and
Letter of Credit Fees, shall be made by the Agent, on the basis of a year of 360
days for the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest or Fees
are payable. Each determination by the Agent of an interest rate, Fee or other
payment hereunder shall be conclusive and binding for all purposes, absent
manifest error.
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SECTION III.8 SPECIAL PROVISIONS RELATING TO EURODOLLAR
RATE LOANS.
(a) CONTINUATION. With respect to any
Borrowing consisting of Eurodollar Rate Loans, the Borrowers may (so long as
no Default or Event of Default has occurred and is continuing), subject to
the provisions of Section 4.8(c), elect to maintain such Borrowing or any
portion thereof as consisting of Eurodollar Rate Loans by selecting a new
Interest Period for such Borrowing, which new Interest Period shall commence
on the last day of the immediately preceding Interest Period. Each selection
of a new Interest Period shall be made by notice given not later than 2:00
p.m. (New York City time) on the third Business Day prior to the date of any
such continuation relating to Eurodollar Rate Loans, by the applicable
Borrower to the Agent. Such notice by a Borrower of a continuation (a "NOTICE
OF CONTINUATION") shall be by telephone or facsimile transmission, and if by
telephone, promptly confirmed in writing substantially in the form of Exhibit
D, in each case specifying (i) the date of such continuation, (ii) the Type
of Loans subject to such continuation, (iii) the aggregate amount of Loans
subject to such continuation and (iv) the length of the Interest Period. The
Borrowers may elect to maintain more than one Borrowing consisting of
Eurodollar Rate Loans by combining such Borrowings into one Borrowing and
selecting a new Interest Period pursuant to this Section 4.8(a). If the
Borrowers shall fail to select a new Interest Period for any Borrowing
consisting of Eurodollar Rate Loans in accordance with this Section, such
Revolving Loans will automatically, on the last day of the then existing
Interest Period therefor, convert into Prime Rate Loans. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of each
Notice of Continuation.
(b) CONVERSION. The Borrowers may on any
Business Day (so long as no Default or Event of Default has occurred and is
continuing), upon notice substantially in the form of Exhibit E (each such
notice, a "NOTICE OF CONVERSION") given to the Agent, and subject to the
provisions of Section 4.8(c), convert the entire amount of or a portion of
all Loans of one Type comprising the same Borrowing into Loans of another
Type; PROVIDED, HOWEVER, that any conversion of any Eurodollar Rate Loans
into Loans of another Type shall be made on, and only on, the last day of an
Interest Period for such Eurodollar Rate Loans and, upon conversion of any
Prime Rate Loans into Loans of another Type, the Borrowers shall pay accrued
interest to the date of conversion on the principal amount converted. Each
such Notice of Conversion shall be given not later than 10:00 a.m. (New York
City time) on the Business Day prior to the date of any proposed conversion
into Prime Rate Loans and on the third Business Day prior to the date of any
proposed conversion into Eurodollar Rate Loans. Subject to the restrictions
specified above, each Notice of Conversion shall be
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by telephone or facsimile transmission, and if by telephone, promptly
confirmed by a writing, in each case specifying (i) the requested date of
such conversion, (ii) the Type of Loans to be converted, (iii) the portion of
such Type of Loan to be converted, (iv) the Type of Loan such Loans are to be
converted into and (v) if such Loans are converted into Eurodollar Rate
Loans, the length of the Interest Period with respect thereto. Each
conversion shall be in an aggregate amount for the Loans of all Lenders of
not less than $1,000,000 or an integral multiple of $100,000 in excess
thereof. The Borrowers may elect to convert the entire amount of or a portion
of all Loans of one Type comprising more than one Borrowing into Loans of
another Type by combining such Borrowings into one Borrowing; PROVIDED,
HOWEVER, that if the Borrowings so combined consist of Eurodollar Rate Loans,
such Loans shall have Interest Periods ending on the same date.
(c) CERTAIN LIMITATIONS ON EURODOLLAR RATE
LOANS. The right of the Borrowers to maintain, select, continue or convert
Eurodollar Rate Loans shall be limited as follows:
(i) If the Agent is advised by any Lender that it
is not offering U.S. dollar deposits (in the applicable
amounts) in the London interbank market, or the Agent
determines that adequate and fair means do not otherwise exist
for ascertaining the Eurodollar Rate for Eurodollar Rate Loans
comprising any requested Borrowing, continuation or
conversion, the right of the Borrowers to select or maintain
Eurodollar Rate Loans for such Borrowing or any subsequent
Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least one
(1) Business Day before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the
Eurodollar Rate for Loans comprising such Borrowing will not
adequately reflect the cost to such Lenders of making or
funding their respective Loans for such Borrowing, the right
of the Borrowers to select Eurodollar Rate Loans for such
Borrowing shall be suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances causing such
suspension no longer exist, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent manifest error, be conclusive and
binding on all parties) that the making, continuation or
conversion of any Loan as a Eurodollar Rate Loan has become
unlawful or impermissible by
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reason of compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law or
resulting in costs or penalties), then, and in any such
event, such Lender may give notice of that determination in
writing, to the Borrowers and the Agent and the Agent shall
promptly transmit the notice to each other Lender. Until such
Lender gives notice otherwise, the right of the Borrowers to
select Eurodollar Rate Loans from that Lender shall be
suspended and each Eurodollar Rate Loan outstanding from that
Lender shall automatically and immediately convert to a Prime
Rate Loan.
(iv) There shall not be outstanding at any one
time more than an aggregate of three (3) Borrowings of Loans
which consist of Eurodollar Rate Loans for any one Borrower or
an aggregate of six (6) Borrowings of Loans which consist of
Eurodollar Rate Loans for all of the Borrowers.
(v) No Agent Advance shall be made as a
Eurodollar Rate Loan.
(d) COMPENSATION.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the Borrower
delivering such notice. In the case of any Borrowing,
continuation or conversion that the related Notice of
Borrowing, Notice of Continuation or Notice of Conversion
specifies is to be comprised of Eurodollar Rate Loans, the
Borrowers shall, jointly and severally, indemnify each Lender
against any loss, cost or expense incurred by such Lender as a
result of any failure to fulfill, on or before the date for
such Borrowing, continuation or conversion specified in such
Notice of Borrowing, Notice of Continuation or Notice of
Conversion, the applicable conditions set forth in Article V,
including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the Loan to be made by such
Lender as part of such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion
or continuation of, any Eurodollar Rate Loan is made other
than on the last day of the Interest Period for such Loan as a
result of a payment, prepayment, conversion or continuation of
such Loan or acceleration of the maturity of the Revolving
Notes pursuant to Article VIII or for any other reason, the
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Borrowers shall, upon demand by any Lender (with a copy of
such demand to the Agent), jointly and severally, pay to the
Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other
funds acquired by any Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a
Lender under this Section 4.8(d) shall be made as though such
Lender elected to fund all Eurodollar Rate Loans by purchasing
U.S. dollar deposits in its Eurodollar Lending Office's
interbank eurodollar market.
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SECTION III.9 INDEMNIFICATION IN CERTAIN EVENTS. If after
the Closing Date, either (i) any change in or in the interpretation of any
law or regulation is introduced, including, without limitation, with respect
to reserve requirements, applicable to the Agent or to any of the Lenders, or
any other banking or financial institution from whom any of the Lenders
borrows funds or obtains credit (a "FUNDING BANK"), or (ii) the Agent, a
Funding Bank or any of the Lenders complies with any future guideline or
request from any central bank or other Governmental Authority or (iii) the
Agent, a Funding Bank or any of the Lenders determines 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 has or would have the effect
described below, or the Agent, a Funding Bank or any of the Lenders complies
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, and in the case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any of the Lenders' capital as a
consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Agent's or such Funding Bank's or Lender's
policies as the case may be with respect to capital adequacy) by an amount
deemed by such Lender to be material, and any of the foregoing events
described in clauses (i), (ii) or (iii) increases the cost to the Agent or
any of the Lenders of (A) funding or maintaining the total Commitments or (B)
causing the issuance of any Letter of Credit or of purchasing or maintaining
any participation therein, or reduces the amount receivable in respect
thereof by the Agent or any Lender, then the Borrowers shall upon demand by
the Agent, jointly and severally, pay to the Agent, for the account of each
applicable Lender or, as applicable, a Funding Bank, additional amounts
sufficient to indemnify the Lenders against such increase in cost or
reduction in amount receivable. A certificate as to the amount of such
increased cost and setting forth in reasonable detail the calculation thereof
shall be submitted to the Borrowers by the Agent, or the applicable Lender or
Funding Bank, not later than the earlier of (a) 180 days after the event
giving rise to such increased costs and (b) 45 days after the Person
submitting such certificate has knowledge of such event, and shall be
conclusive absent manifest error. Prior to making any such demand, each of
the Lenders, the Agent, Funding Bank or other such party shall use reasonable
efforts to designate a different Lending Office if such a designation could
reduce or eliminate any such payment.
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SECTION III.10 NET PAYMENTS.
(a) Any and all payments by the Borrowers
hereunder, under the Revolving Loans or under the Letters of Credit to or for
the benefit of any Lender or the Agent shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and penalties, interests and all other
liabilities with respect thereto ("TAXES"), including any Taxes imposed under
Section 7701(l) of the Internal Revenue Code, excluding, (i) in the case of
each such Lender or the Agent, taxes imposed on its net income (including,
without limitation, any taxes imposed on branch profits) and franchise taxes
imposed on it by the jurisdiction under the laws of which such Lender, or the
Agent (as the case may be) is organized or any political subdivision thereof,
(ii) in the case of each Lender, taxes imposed on its net income (including,
without limitation, any taxes imposed on branch profits), and franchise taxes
imposed on it, by the jurisdiction of such Lender's applicable Lending Office
or any political subdivision thereof, (iii) in the case of each such Lender
and the Agent, any Taxes that are in effect and that would apply to a payment
to such Lender or the Agent, as applicable, as of the Closing Date (other
than any Taxes imposed under Section 7701(l) of the Internal Revenue Code),
and (iv) if any Person acquires any interest in this Credit Agreement, any
Revolving Loan or Letter of Credit pursuant to the provisions hereof, or a
Foreign Lender or the Agent changes the office in which the Borrowing is
made, accounted for or booked (any such person, or such Foreign Lender or the
Agent in that event, being referred to as a "TAX TRANSFEREE"), any Taxes
(other than Taxes imposed under Section 7701(l) of the Internal Revenue Code)
to the extent that they are in effect and would apply to a payment to such
Tax Transferee as of the date of the acquisition of such interest or change
in office, as the case may be (all such nonexcluded Taxes being hereinafter
referred to as "COVERED TAXES"). If the Borrowers shall be required by law to
deduct any Covered Taxes from or in respect of any sum payable hereunder,
under any Revolving Loan or under any Letter of Credit to or for the benefit
of any Lender or the Agent or any Tax Transferee, (A) the sum payable shall
be increased as may be necessary so that after making all required deductions
of Covered Taxes (including deductions of Covered Taxes applicable to
additional sums payable under this Section 4.10) such Lender, the Agent or
such Tax Transferee, as the case may be, receives an amount equal to the sum
it would have received had no such deductions been made, (B) the Borrowers
shall make such deductions and (C) the Borrowers shall, jointly and
severally, pay the full amount so deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrowers agree, jointly
and severally, to pay any present or future stamp, documentary,
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excise, privilege, intangible or similar levies that arise at any time or
from time to time (i) from any payment made under any and all Credit
Documents, (ii) from the transfer of the rights of the Lender under any
Credit Documents to any transferee, or (iii) from the execution or delivery
by the Borrowers of, or from the filing or recording or maintenance of, or
otherwise with respect to the exercise by the Agent or the Lenders of their
rights under, any and all Credit Documents (hereinafter referred to as "OTHER
TAXES").
(c) The Borrowers, jointly and severally,
indemnify each Lender, the Agent and any Tax Transferee for the full amount
of (i) Covered Taxes imposed on or with respect to amounts payable hereunder,
(ii) Other Taxes, and (iii) any Taxes (other than Covered Taxes imposed by
any jurisdiction on amounts payable under this Section 4.10) paid by such
Lender, or the Agent or such Tax Transferee, as the case may be, and any
liability (including penalties, interest and expenses) arising solely
therefrom or with respect thereto. Payment of this indemnification shall be
made within 30 days from the date such Lender, the Agent or such Tax
Transferee certifies and sets forth in reasonable detail the calculation
thereof as to the amount and type of such Taxes. Any such certificate
submitted by a Lender, the Agent or a Tax Transferee in good faith to the
Borrowers shall, absent manifest error, be final, conclusive and binding on
all parties.
(d) Within 30 days after having received a receipt
of Covered Taxes or Other Taxes, the Borrowers will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) On or before the Closing Date, each Foreign
Lender shall deliver to the Agent and the Borrowers (i) two valid, duly
completed copies of IRS Form 1001 or 4224 or successor applicable form, as
the case may be, and any other required form, certifying in each case that
such Foreign Lender is entitled to receive payments under this Credit
Agreement or the Revolving Loans payable to it without deduction or
withholding of any United States federal income taxes or with such
withholding imposed at a reduced rate (the "REDUCED RATE"), and (ii) a valid,
duly completed IRS Form W-8 or W-9 or successor applicable form, as the case
may be, to establish an exemption from United States backup withholding tax.
Each such Foreign Lender shall also deliver to the Agent and the Borrowers
two further copies of said Form 1001 or 4224 and W-8 or W-9, or successor
applicable forms, or other manner of required certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an
exemption from a required withholding of United States federal income tax or
entitlement to having such withholding imposed at the Reduced Rate or after
the occurrence of any event requiring a change in
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the most recent form previously delivered by it to the Borrowers and the
Agent, and such extensions or renewals thereof as may reasonably be requested
by the Borrowers and the Agent, certifying (i) in the case of a Form 1001 or
4224 that such Foreign Lender is entitled to receive payments under this
Credit Agreement or the Revolving Notes payable to it without deduction or
withholding of any United States federal income taxes, unless in any such
case any change in a tax treaty to which the United States is a party, or any
change in law or regulation of the United States or official interpretation
thereof has occurred after the Closing Date and prior to the date on which
any such delivery would otherwise be required that renders all such forms
inapplicable or that would prevent such Foreign Lender from duly completing
and delivering any such form with respect to it, and such Foreign Lender
advises the Borrowers and the Agent that it is not capable of receiving
payments without any deduction or withholding at the Reduced Rate, or (ii) in
the case of a Form W-8 or W-9, establishing an exemption from United States
backup withholding tax.
(f) If a Tax Transferee that is organized under
the laws of a jurisdiction outside of the United States acquires an interest
in this Credit Agreement or any Revolving Loan or a Foreign Lender changes
the office through which Loans are made, accounted for or booked, the
transferor, or the applicable Foreign Lender, in the case of a change of
office, shall cause such Tax Transferee to agree that, on or prior to the
effective date of such acquisition or change, as the case may be, it will
deliver to the Borrowers and the Agent (i) two valid, duly completed copies
of IRS Form 1001 or 4224 or successor applicable form, as the case may be,
and any other required form, certifying in each case that such Tax Transferee
is entitled to receive payments under this Credit Agreement and the Revolving
Notes payable to it without deduction or withholding of United States federal
income tax or with such withholding imposed at a Reduced Rate; and (ii) a
valid, duly completed IRS Form W-8 or W-9 or successor applicable form, as
the case may be, to establish an exemption from United States backup
withholding tax. Each Tax Transferee that delivers to the Borrowers and the
Agent a Form 1001 or 4224, and Form W-8 or W-9 and any other required form,
pursuant to the next preceding sentence, further undertakes to deliver two
further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of required certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to
obtaining an exemption from a required withholding of United States federal
income tax or entitlement to having such withholding imposed at the Reduced
Rate or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers and the Agent, and
such extensions or renewals thereof as may reasonably be requested by the
Borrowers and the Agent, certifying (i) in the case of a Form 1001 or 4224
that such Tax
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Transferee is entitled to receive payments under this Restated Agreement
without deduction or withholding of any United States federal income taxes or
with such withholding imposed at the Reduced Rate, unless any change in
treaty, law or regulation or official interpretation thereof has occurred
after the effective date of such acquisition or change and prior to the date
on which any such delivery would otherwise be required that renders all such
forms inapplicable or that would prevent such Tax Transferee from duly
completing and delivering any such form with respect to it, and such Tax
Transferee advises the Borrowers and the Agent that it is not capable of
receiving payments (a) without any deduction or withholding of United States
federal income tax or (b) with such withholding at the Reduced Rate, as the
case may be, or (ii) in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(g) If any Taxes for which the Borrowers would be
required to make payment under this Section 4.10 are imposed, each Lender or
the Agent, as the case may be, shall use its reasonable best efforts to avoid
or reduce such Taxes by taking any appropriate action (including, without
limitation, assigning its rights hereunder to a related entity or a different
office) which would not in the sole opinion of such Lender or Agent be
otherwise disadvantageous to such Lender or the Agent, as the case may be.
(h) Without prejudice to the survival of any
other agreement of the Borrowers hereunder, the agreements and obligations of
the Borrowers contained in this Section 4.10 shall survive the payment in
full of the Obligations.
SECTION III.11 AFFECTED LENDERS. If the Borrowers are
obligated to pay to any Lender any amount under Sections 4.9 or 4.10
materially in excess of any such amounts payable to the other Lenders, the
Borrowers may, if no Default or Event of Default then exists, replace such
Lender with another lender acceptable to the Agent, and such Lender hereby
agrees to be so replaced subject to the following:
(a) The obligations of the Borrowers
hereunder to the Lender to be replaced (including such increased or
additional costs incurred from the date of notice to the Borrowers of such
increase or additional costs through the date such Lender is replaced
hereunder) shall be paid in full to the Agent for the account of such Lender
concurrently with such replacement;
(b) The replacement Lender shall be a bank or
other financial institution that is not subject to the increased costs
arising under Section 4.9 which may have effectuated the Borrowers' election
to replace any Lender hereunder, and each such replacement Lender shall
execute and deliver to the Agent such documentation satisfactory to the Agent
pursuant to which
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such replacement Lender is to become a party hereto, conforming to the
provisions of Section 11.8, with a Commitment equal to that of the Lender
being replaced (before giving effect to Section 0) and shall make a Loan or
Loans in the aggregate principal amount equal to the aggregate outstanding
principal amount of the Loan or Loans of the Lender being replaced (or Loans
that should have been made but for a Defaulting Lender's failure to lend);
(c) Upon such execution of such documents
referred to in clause (b) and repayment of the amounts referred to in clause
(a), the replacement lender shall be a "Lender" with a Commitment as
specified hereinabove and the Lender being replaced shall cease to be a
"Lender" hereunder, except with respect to indemnification provisions under
this Credit Agreement, which shall survive as to such replaced Lender;
(d) The Agent shall reasonably cooperate in
effectuating the replacement of any Lender under this Section 4.11, but at no
time shall the Agent be obligated to initiate any such replacement; and
(e) Any Lender replaced under this Section
4.11 shall be replaced at the Borrowers' sole cost and expense and at no cost
or expense to the Agent or any of the Lenders (other than a Defaulting
Lender).
ARTICLE IV
CONDITIONS PRECEDENT
SECTION IV.1 CONDITIONS TO INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender to fund its Proportionate Share of the
initial Loan and the obligation of the Agent to cause to be issued the
initial Letter of Credit is subject to the satisfaction of the following
conditions precedent:
(a) There shall be no pending or, to the best
knowledge of the Credit Parties, litigation threatened in writing,
proceeding, inquiry or other action seeking an injunction or other
restraining order, damages or other relief with respect to the transactions
contemplated by this Credit Agreement, the other Credit Documents, the
Purchase Documents or the Credit Parties' other business activities, except
where such litigation, proceeding, inquiry or other action could not have a
Material Adverse Effect.
(b) The Borrowers shall have paid all accrued fees
and expenses of the Agent and the Lenders in connection with the negotiation,
preparation, execution and delivery of the
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Credit Documents (including, without limitation, the reasonable accrued fees
and expenses of counsel to the Agent).
(c) The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals, consents,
certificates and other documents set forth on the Closing Document List
attached hereto as Schedule 5.1(c).
(d) All documentation relating to the
transactions contemplated hereby (including, without limitation, the Purchase
Documents and the Credit Documents) shall be in form and substance
satisfactory to the Agent and the Lenders.
(e) All Existing Indebtedness shall be on
terms and conditions (including, without limitation, amount, pricing,
amortization, intercreditor arrangements and extent of subordination)
satisfactory to the Agent.
(f) The Credit Parties shall have been released
from all obligations under the Existing Credit Agreement pursuant to a
release in form and substance satisfactory to the Agent and all liens and
security interests related thereto shall have been released or terminated.
(g) Except for (i) the filing of UCC
financing statements under the Code and the Intellectual Property Security
Agreement with the United States Patent and Trademark Office, (ii) consents
or authorizations which have been obtained or filings which have been made,
and which in either case are in full force and effect or (iii) consents or
authorizations the failure to obtain or filings the failure to make could not
have a Material Adverse Effect, no consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the Borrowings hereunder, the grant of
the Liens pursuant to the Credit Documents, the consummation of the
transactions contemplated by the Purchase Documents or the continuing
operations of the Guarantor and its Subsidiaries following such consummation
or with the execution, delivery, performance, validity or enforceability of
this Credit Agreement, the Revolving Notes, the Letters of Credit, the other
Credit Documents, the Purchase Documents, the Senior Notes or other documents
executed in connection with the Senior Notes to which a Credit Party is a
party (the Senior Notes and such other documents, the "SENIOR NOTE
DOCUMENTS").
(h) (i) No change, occurrence, event or
development or event involving a prospective change that could have a
Material Adverse Effect shall have occurred and be continuing since December
31, 1998, or (ii) there shall not have occurred a substantial impairment of
the financial markets generally that is reasonably likely to materially and
adversely affect the transactions contemplated hereby, in each case as
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determined by the Agent and each Lender in its sole discretion.
(i) There shall be established cash
management systems for the Borrowers on terms and conditions satisfactory to
the Agent including, without limitation, establishment of the Lockboxes with
the Lockbox Banks, and the Agent shall have received three separate Lockbox
Agreements, duly executed by a Borrower and a Lockbox Bank.
(j) Counsel to the Agent shall have performed
a legal review satisfactory to the Agent of all of each Credit Party's
material contracts and tax, litigation, environmental and other potential
contingent liabilities, and of the corporate and capital structure of the
Guarantor and its Subsidiaries.
(k) Each Credit Party shall be in compliance
with the Indenture and all other material indentures or agreements to which
it is a party.
(l) The Borrowing Base shall be appropriate,
in the Agent's sole discretion, for the Borrowers' overall business and
working capital requirements, and the Agent shall have performed an
examination satisfactory to it of the working capital assets of the Credit
Parties.
(m) The Liens and all other security
interests in favor of the Agent, for the benefit of the Lenders, shall have
been duly perfected and shall constitute first and prior Liens, except as
otherwise permitted in the Credit Documents.
(n) The Agent shall have received evidence
satisfactory to it that there will be Unused Availability in an amount
satisfactory to it after giving effect to the Revolving Loans to be borrowed
and the Letters of Credit to be issued on the Closing Date.
(o) The Agent shall have received evidence
satisfactory to it that (i) the transactions contemplated by each Purchase
Agreement have been consummated in accordance with its terms, (ii) the
Guarantor has received Central Proceeds of at least $80,000,000 in
immediately available funds and (iii) the Guarantor has applied at least
$35,000,000 of the Central Proceeds to repay amounts owing under the Existing
Credit Agreement.
(p) The Agent shall be satisfied that each of the
Credit Parties is and will be Year 2000 Compliant, (B) there are no
reasonably foreseeable consequences of any programming errors or systems
failures related to the year 2000 relating to the information systems of each
of the Credit Parties and (C) each of the Credit Parties has reviewed and
assessed all areas within its business and operations that could be adversely
affected by the failure of such Credit Party or its products to be Year 2000
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Compliant.
(q) The Agent shall have received such other
approvals, opinions or documents as any Lender may reasonably request.
SECTION IV.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS
OF CREDIT. The obligation of each Lender to fund its Proportionate Share of
any requested Loan or of the Agent to cause to be issued any requested Letter
of Credit is subject to the conditions precedent set forth below. Each Notice
of Borrowing and each Letter of Credit Request shall constitute a
representation and warranty that such conditions are satisfied.
(a) All representations and warranties
contained in this Credit Agreement and the other Credit Documents shall be
true and correct on and as of the date of such Notice of Borrowing or Letter
of Credit Request, as if then made, other than representations and warranties
that relate solely to an earlier date;
(b) No Default or Event of Default shall have
occurred, or would result from the making of the requested Revolving Loan or
the issuance of the requested Letter of Credit, which has not been waived or
cured; and
(c) No event has occurred since December 31, 1998
which has had or could have a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION V.1 REPRESENTATIONS AND WARRANTIES OF THE CREDIT
PARTIES. Each Credit Party represents and warrants as follows:
(a) ORGANIZATION AND QUALIFICATION. Such
Credit Party and each of its Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation, (ii) has the power and authority to own its properties
and assets and to transact the businesses in which it presently is, or
proposes to be, engaged and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where it presently is,
or proposes to be, engaged in business, except where the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
Schedule 6.1(a) lists all jurisdictions in which such Credit Party and each
of its Subsidiaries are qualified to do business as foreign corporations as
of the Closing Date.
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(b) AUTHORITY. Such Credit Party has the
requisite corporate power and authority to execute, deliver and perform each
of the Credit Documents and Purchase Documents to which it is a party. All
corporate action necessary for the execution, delivery and performance of any
of the Credit Documents and the Purchase Documents has been taken.
(c) ENFORCEABILITY. This Credit Agreement is
and, when executed and delivered and each other Credit Document and Purchase
Document is and, when executed, and delivered, will be the legal, valid and
binding obligation of such Credit Party which is a party thereto, enforceable
in accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally, and (ii) general principles of equity.
(d) NO CONFLICT. The execution, delivery and
performance by each Credit Party of each Credit Document and Purchase
Document to which it is a party does not, and the application of the Central
Proceeds do not and will not, contravene (i) the Governing Documents of such
Credit Party, or (ii) any Requirement of Law (including, without limitation,
any Acquisition Notification Laws) or (iii) any franchise, license, permit,
indenture, contract, lease, agreement, instrument or other commitment to
which it is a party or by which it or any of its properties are bound
(including, without limitation, the Indenture and the SDW Subordinated Note),
and will not, except as contemplated herein, result in the imposition of any
material Liens upon any of its properties.
(e) CONSENTS AND FILINGS. No consent,
authorization, approval or filing is required in connection with the
execution, delivery and performance of this Credit Agreement or any Credit
Document, or the continuing operations of such Credit Party except: (i) those
that have been obtained or made; (ii) filings necessary to create, perfect or
retain the perfection of Liens against the Collateral; and (iii) in the case
of the continuing operations of such Credit Party, those the failure to
obtain could not have a Material Adverse Effect. All applicable waiting
periods under the Acquisition Notification Laws have expired or been
terminated.
(f) GOVERNMENT REGULATION. Such Credit Party
is not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940, or any other Requirement of Law that limits its ability
to incur indebtedness or its ability to consummate the transactions
contemplated in the Purchase Documents, this Credit Agreement and the other
Credit Documents.
(g) SOLVENCY. The fair saleable value of the
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assets of the Guarantor and its Restricted Subsidiaries (including
contribution rights) on a consolidated basis and of each Credit Party on an
individual basis exceeds all its probable liabilities, including those to be
incurred pursuant to the Senior Note Documents, this Credit Agreement and the
other Credit Documents. No Credit Party (i) has unreasonably small capital in
relation to the business in which it is or proposes to be engaged and (ii)
has incurred, or believes that it will incur, after giving effect to the
transactions contemplated by the Purchase Documents, this Credit Agreement
and the other Credit Documents, debts beyond its ability to pay as such debts
become due.
(h) RIGHTS IN COLLATERAL; PRIORITY OF LIENS.
All property consisting of Collateral is owned or leased by such Credit
Party, free and clear of any and all Liens in favor of third parties, other
than Permitted Liens. Upon the proper filing of the UCC financing statements
and the filing of the Intellectual Property Security Agreement with the
United States Patent and Trademark Office, the security interests granted
pursuant to the Credit Documents constitute valid and enforceable first
(except for Permitted Liens and other liens permitted hereunder), prior and
perfected Liens on the Collateral to the extent such Liens can be perfected
by the filing of such financing statements and the filing of such Agreement.
(i) FINANCIAL DATA. The Guarantor and its
Restricted Subsidiaries have provided to the Agent and each of the Lenders
complete and accurate copies of its annual audited Financial Statements for
the fiscal year ended December 31, 1998 reported on by Ernst & Young L.L.P.
and its unaudited Financial Statements for the fiscal period ended June 30,
1999. Such Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved and fairly present the
respective financial positions, results of operations and cash flows of the
Guarantor and its Restricted Subsidiaries for each of the periods covered.
Neither the Guarantor nor any of its Subsidiaries has any Contingent
Obligation, or liability for taxes or long-term leases, which is not
reflected in such Financial Statements or the footnotes thereto. During the
period from January 1, 1999 to and including the Closing Date there has been
no sale, transfer or other disposition by the Guarantor or any of its
Restricted Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the consolidated
financial condition of the Guarantor and its Subsidiaries at December 31,
1998, except for the Central Sale and the Electrical Tape Sale. Since
December 31, 1998 (a) there has been no change, occurrence, development or
event which has had or could have a Material Adverse Effect and (b) no
dividends or other returns of capital or other distributions have been
declared, paid or made upon the capital stock of any Credit Party, nor has
any of the capital stock of such Credit Party been redeemed, retired,
purchased or
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otherwise acquired for value by such Credit Party or any of its Subsidiaries.
(j) CASH FLOW STATEMENTS. The forecasted
cash flow statements and other financial statements of each Borrower
individually and the Guarantor and its Restricted Subsidiaries on a
consolidated basis delivered to the Lenders were prepared in good faith on
the basis of assumptions which were fair in light of the conditions existing
at the time of delivery of such forecasts, and represented, at the time of
delivery, such Credit Party's best estimate of its and its Restricted
Subsidiaries' future financial performance.
(k) LOCATIONS OF OFFICES, RECORDS AND
COLLATERAL. The address of the principal place of business and chief
executive office of each Credit Party is set forth on Schedule 6.1(k). The
books and records of each Credit Party, and all of its chattel paper and
records of Accounts, are (or will be) maintained exclusively at the locations
for such Credit Party set forth on such Schedule. There is no jurisdiction in
which any Credit Party has any Collateral (except for vehicles and Inventory
in transit for processing) other than those jurisdictions with respect to
such Credit Party identified on Schedule 6.1(k). A complete list of the legal
name and address of each premises at which any Credit Party's Inventory is
located is set forth on Schedule 6.1(k). Schedule 6.1(k) indicates whether
each premises listed thereon is leased or owned by such Credit Party. None of
the receipts received and to be received by any Credit Party from any
warehouseman state that any Credit Party's Inventory covered thereby is to be
delivered to bearer or to the order of a named person or to a named person
and such named person's assigns.
(l) SUBSIDIARIES; OWNERSHIP OF STOCK. The
only direct or indirect Subsidiaries of such Credit Party are those listed on
Schedule 6.1(l). Such Credit Party is the record and beneficial owner of all
of the shares of capital stock of each of the Subsidiaries listed on Schedule
6.1(l). There are no proxies, irrevocable or otherwise, with respect to the
shares of capital stock of the Borrowers or any of their Subsidiaries, and no
equity securities of any of the Borrowers or any of their Subsidiaries are or
may become required to be issued by reason of any options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Borrower or any of their Subsidiaries and
there are no contracts, commitments, understandings or arrangements by which
any Borrower or any of its Subsidiaries is or may become bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by such Credit
Party are owned by such Credit Party free and clear of any Liens, except for
the Liens permitted by Section 7.2(a)(vii). As of the
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Closing Date there are no Unrestricted Subsidiaries other than Electrical
Tape.
(m) NO JUDGMENTS OR LITIGATION. Except as
set forth on Schedule 6.1(m), no judgments, orders, writs or decrees are
outstanding against the Credit Parties or any of their Subsidiaries nor is
there now pending or, to the best of such Credit Party's knowledge after
diligent inquiry, threatened any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against any of the Credit
Parties or any of their Subsidiaries that (i) could individually or in the
aggregate, have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of the Senior Note Documents, this
Agreement, any Note or any other Loan Document or the consummation of the
transactions contemplated hereby or thereby.
(n) LICENSES AND PERMITS. Such Credit Party has
obtained and holds in full force and effect, all franchises, licenses,
leases, permits, certificates, authorizations, qualifications, easements,
rights of way and other rights and approvals which, to the best of such
Credit Party's knowledge, are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted.
(o) NO DEFAULTS. None of the Credit Parties
nor any of their Subsidiaries is in default under any term of any indenture,
contract, lease, agreement, instrument or other commitment to which any of
them is a party or by which any of them is bound which could, individually or
in the aggregate, have a Material Adverse Effect. Such Credit Party knows of
no dispute regarding any such indenture, contract, lease, agreement,
instrument or other commitment which could, individually or in the aggregate,
have a Material Adverse Effect.
(p) LABOR MATTERS. Schedule 6.1(p)
accurately sets forth all labor contracts, collective bargaining agreements
or other agreements with labor organizations to which a Credit Party or any
of its Subsidiaries is a party as of the Closing Date, and their dates of
expiration. There are no existing or threatened strikes, lockouts or other
disputes relating to any collective bargaining or similar agreement to which
a Credit Party or any of its Subsidiaries is a party which could,
individually or in the aggregate, have a Material Adverse Effect.
(q) COMPLIANCE WITH LAW. None of the Credit
Parties nor any of its Subsidiaries has violated or failed to comply with any
Requirement of Law, which violation or failure to comply could, individually
or in the aggregate, have a Material Adverse Effect. The transactions
contemplated by the Senior Note Documents have been consummated in accordance
with all applicable laws.
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(r) ERISA.
(i) None of the Credit Parties or any of its
Subsidiaries or any ERISA Affiliate maintains or contributes
to any Plan, other than those listed on Schedule 6.1(r).
(ii) The Credit Parties, each of their
Subsidiaries and each ERISA Affiliate have fulfilled all
contribution obligations for each Plan (including obligations
related to the minimum funding standards of ERISA and the
Internal Revenue Code).
(iii) No Termination Event has occurred nor has
any other event occurred that is likely to result in a
Termination Event, except for the Specified Plan Withdrawal.
The Specified Plan Withdrawal has not resulted and will not
result in any liability to the Credit Parties, any of their
subsidiaries or any ERISA Affiliate.
(iv) None of the Credit Parties or any of their
Subsidiaries or any ERISA Affiliate is required to or
reasonably expects to be required to provide security to any
Plan under Section 401(a)(29) of the Internal Revenue Code.
(v) The Credit Parties, each of their
Subsidiaries and each ERISA Affiliate are in compliance in all
material respects with any applicable provisions of ERISA with
respect to all Plans. There has been no prohibited transaction
as defined in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code (a "PROHIBITED TRANSACTION") with
respect to any Plan or, to the best knowledge of such Credit
Party, with respect to any Multiemployer Plan, which could
result in any material liability to such Credit Party, its
Subsidiaries or any other ERISA Affiliates. The Credit
Parties, each of their Subsidiaries and each ERISA Affiliate
have made when due any and all payments required to be made
under any agreement relating to a Multiemployer Plan or any
Requirement of Law pertaining thereto. With respect to each
Plan and Multiemployer Plan, each Credit Party, each of their
Subsidiaries and each ERISA Affiliate have not incurred nor do
any of them expect to incur any liability to the PBGC and have
not had asserted against them any penalty for failure to
fulfill the minimum funding requirements of ERISA.
(vi) To such Credit Party's best knowledge, any
Multiemployer Plan to which a Credit Party, any of its
Subsidiaries or any ERISA Affiliate contributes is able to pay
benefits under each Multiemployer Plan when
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due.
(vii) None of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate has instituted or intends
to institute proceedings to terminate any Plan.
(viii) The aggregate actuarial present value of all
accumulated benefit obligations (whether or not vested) under
each Plan, determined on an on-going plan basis using the
actuarial assumptions employed by the Plan's actuary for
expense purposes, as disclosed in, and as of December 31,
1998, the most recent actuarial report for such Plan, does not
exceed the aggregate fair market value of the assets of such
Plan by more than $1,300,000.
(ix) None of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate has incurred or reasonably
expects to incur any material withdrawal liability under ERISA
to any Multiemployer Plan.
(x) To the extent that any Plan is insured, the
Credit Parties, their Subsidiaries and all ERISA Affiliates
have paid when due all premiums required to be paid for all
periods through and including the Closing Date. To the extent
that any Plan is funded other than with insurance, the Credit
Parties, their Subsidiaries and all ERISA Affiliates have made
when due all contributions required to be paid for all periods
through and including the Closing Date.
(s) BUSINESS AND PROPERTIES. Neither the
business nor the properties of the Credit Parties or any of their
Subsidiaries is affected by any fire, explosion, accident, strike, lockout or
other labor dispute, drought, storm, hail, earthquake, embargo, act of God or
of the public enemy or other casualty (whether or not covered by insurance)
that could have a Material Adverse Effect.
(t) INVESTMENT COMPANY. No Credit Party is
an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the making
of any Loans, nor the issuance of any Letters of Credit, nor the application
of the proceeds or repayment thereof by such Borrower, nor the consummation
of the other transactions contemplated by this Credit Agreement, the other
Credit Documents or the Senior Note Documents, will violate any provision of
such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder.
(u) COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except as set forth on Schedule 6.1(u), (i) to the best knowledge of the
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Credit Parties, none of the Credit Parties or any of their Subsidiaries is
the subject of a judicial or administrative proceeding or investigation
relating to the violation of any Environmental Laws, or asserting potential
liability arising from the release or disposal by any Person of any Hazardous
Materials which individually or in the aggregate could have a Material
Adverse Effect, (ii) none of the Credit Parties or any of their Subsidiaries
has filed or received any notice under any Environmental Laws concerning the
treatment, storage, disposal, spill or release or threatened release of any
Hazardous Materials at, on, beneath or adjacent to property owned or leased
by a Credit Party or any of its Subsidiaries, or the release or threatened
release at any other location of any Hazardous Material generated, used,
stored, treated, transported or released by or on behalf of a Credit Party or
any of its Subsidiaries which individually or in the aggregate could have a
Material Adverse Effect; and (iii) none of the Credit Parties or any of their
Subsidiaries has knowledge of any contingent liability for any release of any
Hazardous Materials, in each case which individually or in the aggregate
could have a Material Adverse Effect.
(v) YEAR 2000 COMPLIANCE. (i) Such Credit
Party has reviewed and assessed all areas within its business that could be
materially adversely affected by the failure of it or its products to be Year
2000 Compliant and (ii) there are no reasonably foreseeable consequences of
any programming errors or systems failures related to the year 2000 relating
to its information systems.
(w) REAL PROPERTY. Except as set forth on
Schedule 6.1(w), no Credit Party either owns or leases any real property.
Schedule 6.1(w) indicates whether such real property is leased or owned by
each Credit Party.
(x) MATERIAL CONTRACTS. Set forth on
Schedule 6.1(x) is a complete and accurate list of all Material Contracts,
showing as of the date hereof the parties, subject matter and term thereof.
Each such contract has been duly authorized, executed and delivered by each
Credit Party that is a party thereto, and, to such Credit Party's best
knowledge, each other party thereto. Except as described on Schedule 6.1(x),
none of the Material Contracts contains any burdensome restrictions on a
Credit Party or any of its Restricted Subsidiaries or any of their respective
properties, and each Material Contract is in full force and effect and is
binding upon and enforceable against each Credit Party thereto in accordance
with its terms, and there exists no default under such contract by any party
thereto.
(y) INTELLECTUAL PROPERTY. Set forth on
Schedule 6.1(y) hereto is a complete and accurate list of all patents,
trademarks, trade names, service marks and copyrights, and all applications
therefor and licenses thereof, of each Credit Party
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that are material to the financial condition or operation of its business,
showing as of the date hereof the jurisdiction in which registered, the
registration number, the date of registration and the expiration date. Each
Credit Party owns or licenses all material patents, trademarks,
service-marks, logos, tradenames, trade secrets, know-how, copyrights, or
licenses and other rights with respect to any of foregoing, which are
necessary or advisable for the operation of its business as presently
conducted or proposed to be conducted. To the best of such Credit Party's
knowledge, no Credit Party has infringed any patent, trademark, service-xxxx,
tradename, copyright, license or other right owned by any other Person by the
sale or employment of any product, process, method, substance, part or other
material presently contemplated to be sold or employed, where such sale or
employment could have a Material Adverse Effect on such Credit Party and no
claim or litigation is pending, or to the best of such Credit Party's
knowledge, threatened against or affecting any Credit Party that contests its
right to sell or use any such product, process, method, substance, part or
other material.
(z) TAXES AND TAX RETURNS.
(i) The Credit Parties and each of their
Subsidiaries has properly completed and timely filed, without
request for extension, all income tax returns they are
required to file. The information filed is complete and
accurate in all material respects. All deductions taken in
such income tax returns are appropriate and in accordance with
applicable laws and regulations, except deductions that may
have been disallowed but are being challenged in good faith
and for which adequate reserves have been made in accordance
with GAAP.
(ii) All taxes, assessments, fees and other
governmental charges for periods beginning prior to the date
hereof have been timely paid (or, if not yet due, adequate
reserves therefor have been established) and none of the
Credit Parties or any of their Subsidiaries has any material
liability for taxes in excess of the amounts so paid or
reserves so established.
(iii) No deficiencies for taxes have been claimed,
proposed or assessed by any taxing or other Governmental
Authority against any Credit Party or any of its Subsidiaries
and no tax liens have been filed. There are no pending or
threatened audits, investigations or claims for or relating to
any liability for taxes and there are no matters under
discussion with any Governmental Authority which could result
in a material additional liability for taxes. Either the
federal income tax returns of such Credit
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Party have been audited by the Internal Revenue Service and
such audits have been closed, or the period during which
any assessments may be made by the Internal Revenue Service
has expired without waiver or extension for all years up to
and including the fiscal year of such Credit Party ended
December 31, 1993. No extension of a statute of limitations
relating to taxes, assessments, fees or other governmental
charges is in effect with respect to any of the Credit
Parties or any of their Subsidiaries.
(iv) None of the Credit Parties or any of their
Subsidiaries is a party to or has any obligation under any
written tax sharing agreement or agreement regarding payments
in lieu of taxes except as described on Schedule 6.1(w).
(v) The Guarantor and its Subsidiaries will not
be liable to pay more than $2,000,000 of cash taxes on account
of any taxable gain from the consummation of the Central Sale
and the Electrical Tape Sale.
(aa) CORPORATE AND TRADE NAME. During the
past five years, no Credit Party has been known by or used any other
corporate or fictitious name.
(bb) TITLE TO PROPERTY. Each Credit Party and
its Restricted Subsidiaries has (i) good and indefeasible fee simple title to
or valid leasehold interests in all of its real property and (ii) good and
marketable title to all of its other property (including, without limitation,
all real and other property in each case as reflected in the Financial
Statements of the Guarantor and its Restricted Subsidiaries delivered to the
Agent hereunder), other than, with respect to properties described in clause
(ii) above, properties disposed of in the ordinary course of business or in
any manner otherwise permitted under this Credit Agreement since the date of
the most recent audited consolidated balance sheet of the Guarantor and its
Subsidiaries, and in each case subject to no Liens other than those Liens
that are permitted by Section 7.2(a).
(cc) ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information heretofore, contemporaneously or hereafter furnished
by or on behalf of a Credit Party or any of its Subsidiaries in writing to
the Agent, any Lender, or the Auditors for purposes of or in connection with
this Credit Agreement or any Credit Documents, or any transaction
contemplated hereby or thereby is or will be true and accurate in all
material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information not misleading at such time. There are no facts now
known to any officer of such Credit Party which individually or in the
aggregate could
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have a Material Adverse Effect and which have not been set forth herein, in
the Financial Statements of the Guarantor and its Restricted Subsidiaries, or
any certificate, opinion or other written statement made or furnished by such
Credit Party to the Agent.
(dd) AFFILIATE TRANSACTIONS. Except as set
forth on Schedule 6.1(ad), none of the Credit Parties or any of their
Subsidiaries is a party to or bound by any agreement or arrangement (whether
oral or written) to which any Affiliate of any of the Credit Parties or any
of its Subsidiaries is a party except (i) in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's or such
Subsidiary's business and (ii) upon fair and reasonable terms no less
favorable to the Credit Party or such Subsidiary than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
(ee) NO OTHER INDEBTEDNESS. After giving
effect to the closing of this Credit Agreement and the transactions
contemplated hereby, none of the Credit Parties or any of their Restricted
Subsidiaries has any Indebtedness other than Indebtedness that is permitted
under Section 7.2(b).
(ff) NO CHANGE OF CONTROL. The consummation
of the transactions contemplated by the Purchase Agreements does not and will
not constitute or trigger (i) a "Change of Control" as such term is defined
in the Indenture or (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Guarantor and its Restricted
Subsidiaries (determined on a consolidated basis for the Guarantor and its
Restricted Subsidiaries taken as a whole).
(gg) SENIOR INDEBTEDNESS. All of the
Obligations (including, without limitation, outstanding Loans in the
principal amount of up to $40,000,000) do and at all times will constitute
"Senior Indebtedness" as such term is defined in the SDW Subordinated Note.
(hh) CENTRAL SALE. (i) All of the conditions
set forth in Section 4.11 of the Indenture have been satisfied with respect
to the Central Sale, (ii) the Guarantor has executed and delivered an
officer's certificate and Xxxxxx & Xxxxx has executed and delivered an
opinion (collectively, the "TRUSTEE CERTIFICATIONS") to that effect to the
trustee under the Indenture, (iii) the trustee under the Indenture has (A)
released Central Products Company as a guarantor under the Indenture in
accordance with Section 10.06 of the Indenture and (B) released its Lien on
the capital stock of Central Products in accordance with Section 11.13(b) of
the Indenture, (iv) the transactions contemplated by each Purchase Agreement
have been consummated in accordance with its terms, (v) none of the proceeds
from the Central Sale or any other "Asset Sale" (as such term is defined
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in the Indenture) have been or will be applied to permanently reduce any
Indebtedness permitted under Section 4.09(b)(i) of the Indenture, (vi) after
giving effect to the application of all of the Central Proceeds, Section
4.09(b)(i) of the Indenture permits and will permit the Borrowers to incur at
least $40,000,000 of outstanding Loans under this Credit Agreement and (vii)
the application by the Guarantor on the Effective Date of approximately
$35,000,000 of the proceeds from the Central Sale to repay Indebtedness owing
under the Existing Credit Agreement (A) is permitted to be deducted from the
gross proceeds received from the Central Sale under the definition of "Net
Proceeds" set forth in the Indenture and (B) is not a prepayment of
Indebtedness under Section 4.11(b)(ii) of the Indenture.
(ii) SURVIVAL OF REPRESENTATIONS. All
representations made by such Credit Party in this Credit Agreement and in any
other Credit Document executed and delivered in connection herewith shall
survive the execution and delivery hereof and thereof and the closing of the
transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE CREDIT PARTIES
SECTION VI.1 AFFIRMATIVE COVENANTS. Until termination of this
Credit Agreement and all outstanding Letters of Credit and payment and
satisfaction of all Obligations due hereunder:
(a) FINANCIAL REPORTING. The Credit Parties
shall timely deliver to each Lender the following information:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 90 days after the end of each
fiscal year, beginning with the fiscal year ending December
31, 1999: (A) an annual audited consolidated Financial
Statement of the Guarantor and its Restricted Subsidiaries and
the annual unaudited consolidating statements of the
Guarantor's Restricted Subsidiaries; (B) a comparison in
reasonable detail to the prior year audited consolidated
Financial Statements of the Guarantor and the consolidating
statements of its Restricted Subsidiaries; (C) the Auditors'
unqualified opinion, "Management Letter" and a statement
indicating that the Auditors have not obtained knowledge of
the existence of any Default or Event of Default during their
audit; (D) a narrative discussion of the Guarantor's
consolidated and consolidating financial condition and results
of operations and the consolidated liquidity and capital
resources for such fiscal year, prepared by an Authorized
Officer of the
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Guarantor; and (E) a compliance certificate signed by an
Authorized Officer, substantially in the form of Exhibit M
(a "COMPLIANCE CERTIFICATE"), with an attached schedule of
calculations demonstrating compliance with the financial
covenants in Section 7.2. To the extent that the Guarantor's
annual report on Form 10-K contains any of the foregoing
items, the Agent will accept the Agent's Form 10-K in lieu
of such items.
(ii) PROJECTIONS. Not later than 45 days after
each fiscal year end, beginning with the fiscal year ended
December 31, 1999, projections of the Credit Parties' and
Restricted Subsidiaries' financial condition and results of
operations (on a consolidated and consolidating basis) for the
next five (5) years prepared in good faith and based upon
reasonable assumptions, containing projected consolidating
balance sheets, statements of operations, a consolidated
statement of cash flows and a calculation of EBITDA for the
Guarantor and its Restricted Subsidiaries reconciled to Net
Income and statements of changes in shareholders equity on a
monthly basis for the first year and annually thereafter. The
projections provided pursuant to this Section will not be
construed by the Agent or the Lenders as a guaranty of results
or performance in the future.
(iii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, but not later than 45 days after the end of each of
the first three fiscal quarters, beginning with the fiscal
quarter ending June 30, 1999: (A) the Financial Statements of
the Guarantor and its Restricted Subsidiaries as of the fiscal
quarter then ended, and for the fiscal year to date; (B) a
comparison in reasonable detail to the Financial Statements of
the Guarantor and its Restricted Subsidiaries for the
corresponding periods of the prior fiscal year; (C) the
certification of an Authorized Officer of the Guarantor that
such Financial Statements have been prepared in accordance
with GAAP (subject to year-end audit adjustments); (D) a
narrative discussion of the Guarantor's consolidated and
consolidating financial condition and results of operations
and the consolidated and consolidating liquidity and capital
resources for such fiscal quarter and fiscal year to date,
prepared by an Authorized Officer of the Guarantor; and (E) a
Compliance Certificate signed by an Authorized Officer of the
Guarantor with an attached schedule of calculations
demonstrating compliance with the financial covenants in
Section 7.2. To the extent that the Guarantor's quarterly
report on Form 10-Q contains any of the foregoing items, the
Agent will
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accept the Guarantor's Form 10-Q in lieu of such items.
(iv) MONTHLY FINANCIAL STATEMENTS. As soon as
available, but not later than thirty (30) days after the end
of each month other than December, commencing with the month
of June 30, 1999, and 45 days after the end of each fiscal
year of the Guarantor: (A) a consolidated and consolidating
balance sheet for the Guarantor and its Restricted
Subsidiaries as at the end of such month and for the fiscal
year to date, consolidated and consolidating statements of
operations for such month and for the fiscal year to date and
a calculation of EBITDA and Capital Expenditures for the
Guarantor and its Restricted Subsidiaries for such month and
for the fiscal year to date; (B) a comparison to the balance
sheet, statement of operations, EBITDA and Capital
Expenditures for the same periods in the prior year; (C) a
certification by an Authorized Officer of the Guarantor that
such balance sheets, statements of operations and statement of
cash flows have been prepared in accordance with GAAP (subject
to year-end audit adjustments); and (D) a Compliance
Certificate signed by an Authorized Officer of the Guarantor
with an attached schedule of calculations demonstrating
compliance with the financial covenants in Section 7.2.
(v) MONTHLY COMPARISON TO PRIOR PROJECTIONS. As
soon as available, but not later than 30 days after the end of
each month other than December, commencing with the month of
June, 1999, and 45 days after the end of each fiscal year of
the Guarantor, a comparison of actual results of operations
and capital expenditures for the Guarantor and its Restricted
Subsidiaries for such month and for the period from the
beginning of the current fiscal year through the end of such
month with amounts previously projected for those periods and
with actual results for corresponding periods in the previous
fiscal year.
(vi) PUBLIC FILINGS. As soon as available, copies
of all 00-Xx, 00-Xx, 0-Xx, proxy statements, annual reports,
quarterly reports, registration statements and any other
filings or other communications made by the Credit Parties to
their stockholders or the Securities Exchange Commission from
time to time pursuant to the Securities Exchange Act of 1934,
as amended, or the Securities Act of 1933, as amended.
(vii) OTHER FINANCIAL INFORMATION. Promptly after
the request by the Agent therefor, such additional financial
statements and other related data
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and information as to the business, prospects, operations,
results of operations, assets, liabilities or condition
(financial or otherwise) of any Borrower or other Credit
Party, as the Agent may from time to time reasonably request.
(b) COLLATERAL REPORTING. The Credit Parties
shall timely deliver to the Agent the following certificates and reports:
(i) WEEKLY AND MONTHLY BORROWING BASE
CERTIFICATES. Weekly, before 12:00 noon on the second Business
Day of each week (except the last week of each month);
monthly, within five (5) Business Days after the last Business
day of each month, and at any other time requested by the
Agent in its reasonable discretion, a borrowing base
certificate (the "BORROWING BASE CERTIFICATE"), which shall
be: (A) completed substantially in the form of Exhibit B,
detailing each Borrower's Eligible Accounts Receivable and
each Borrower's Eligible Inventory as of each Friday of the
immediately preceding week and as of the last day of each
month, as applicable (or as of such other date as the Agent
may request); (B) prepared by or under the supervision of each
Borrower's Authorized Officer and certified by such officer
subject only to adjustment upon completion of the normal
year-end audit of physical inventory; and (C) attached to such
additional schedules and other information as the Agent may
reasonably request.
(ii) APPRAISALS. When requested by the Agent but
no more than once in any fiscal year (unless a Default or an
Event of Default has occurred and is continuing), a report of
Inventory, based upon a physical count, which shall describe
each Credit Party's Inventory by category and by item (in
reasonable detail) and report the then appraised value (at
lower of cost or market) of such Inventory. The right to an
appraisal set forth in this subsection shall be in addition to
and not in lieu of the Agent's rights under Section 7.1(e).
(iii) WEEKLY AND MONTHLY INDENTURE BORROWING BASE
CERTIFICATES. Weekly, before 12:00 noon on the second Business
Day of each week (except the last week of each month),
monthly, within five (5) Business Days after the last Business
Day of each month, and at any other time requested by the
Agent in its reasonable discretion, a borrowing base
certificate (an "INDENTURE BORROWING BASE CERTIFICATE"), which
shall be: (A) completed substantially in the form of Exhibit
O, detailing the Indenture Borrowing Base as of each
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Friday of the immediately preceding week and as of the last
day of each month, as applicable (or as of such other date as
the Agent may request); (B) prepared by or under the
supervision of an Authorized Officer of the Guarantor and
certified by such officer subject only to adjustment upon
completion of the normal year-end audit of physical
inventory; and (C) attached to such additional schedules and
other information as the Agent may reasonably request.
(iv) FURTHER ASSURANCES. When requested by the
Agent, any further information regarding the Collateral,
business affairs and financial condition of the Credit Parties
or any of their Subsidiaries.
(c) NOTIFICATION REQUIREMENTS. The Borrowers
shall timely give the Agent and each of the Lenders the following notices:
(i) NOTICE OF DEFAULTS. Promptly, and in any
event within three (3) Business Days after becoming aware of
the occurrence of a Default or Event of Default, a certificate
of an Authorized Officer of the Guarantor or a Borrower
specifying the nature thereof and the Guarantor's and
Borrowers' proposed response thereto, each in reasonable
detail.
(ii) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and
in any event within five (5) Business Days after a Credit
Party becomes aware of (A) any proceeding being instituted or
threatened to be instituted by or against a Credit Party or
any of its Restricted Subsidiaries in any federal, state,
local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) involving a
sum in excess of $1,000,000, (B) any order, judgment or decree
in excess of $1,000,000 being entered against a Credit Party
or any of its Restricted Subsidiaries or any of their
respective properties or assets or (C) any actual or
prospective change, development or event which has had or
could have a Material Adverse Effect, a written statement
describing such proceeding, order, judgment, decree, change,
development or event and any action being taken with respect
thereto by a Credit Party or any such Subsidiary.
(iii) ERISA NOTICES.
(A) Promptly, and in any event within ten
(10) Business Days after a Credit Party, any of its
Subsidiaries or any ERISA Affiliate knows or has
reason to know that a Termination Event has
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occurred, a written statement of an Authorized
Officer of a Credit Party describing such
Termination Event and any action that is being taken
with respect thereto by a Credit Party, any such
Subsidiary or ERISA Affiliate, and any action taken
or threatened with respect thereto by the Internal
Revenue Service, Department of Labor or PBGC. The
Credit Parties, their Subsidiaries and the ERISA
Affiliate shall be deemed to know all facts known by
the administrator of any Benefit Plan of which it is
the plan sponsor;
(B) promptly, and in any event within three
(3) Business Days after a Credit Party, any of its
Subsidiaries of any ERISA Affiliate knows or has
reason to know of the filing thereof with the
Internal Revenue Service, a copy of each funding
waiver request filed with respect to any Benefit Plan
and all communications received by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate with
respect to such request;
(C) promptly, and in any event within three
(3) Business Days after receipt by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate, of
the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(D) promptly, and in any event within three
(3) Business Days after receipt by any Credit Party,
any of its Subsidiaries or any ERISA Affiliate, of
notice (including the nature of the event and, when
known, any action taken or threatened by the Internal
Revenue Service or the PBGC with respect thereto) of:
(1) any Prohibited Transaction which
could subject a Credit Party, any of its
Subsidiaries or any ERISA Affiliate to a
material civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code in
connection with any Plan, or any trust
created thereunder,
(2) any cessation of operations by a
Credit Party, any of its Subsidiaries or any
ERISA Affiliate at a facility in the
circumstances described in Section 4062(e)
of ERISA,
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(3) a failure by a Credit Party, any
of its Subsidiaries or any ERISA Affiliate
to make a payment to a Plan required to
avoid imposition of a lien under Section
302(f) of ERISA,
(4) the adoption of an amendment to
a Plan requiring the provision of security
to such Plan pursuant to Section 307 of
ERISA, or
(5) any change in the actuarial
assumptions or funding methods used for any
Benefit Plan, where the effect of such
change is to materially increase or
materially reduce the unfunded benefit
liability or obligation to make periodic
contributions;
(E) promptly upon the request of the Agent
or any Lender, each annual report (IRS Form 5500
series) and all accompanying schedules, the most
recent actuarial reports, the most recent financial
information concerning the financial status of each
Plan administered or maintained by a Credit Party,
any of its Subsidiaries or any ERISA Affiliate, and
schedules showing the amounts contributed to each
such Plan by or on behalf of such Credit Party,
Subsidiary or ERISA Affiliate in which any of their
personnel participate or from which such personnel
may derive a benefit, and each Schedule B (Actuarial
Information) to the annual report filed by such
Credit Party, Subsidiary or ERISA Affiliate with the
Internal Revenue Service with respect to each such
Plan; and
(F) Promptly upon the filing thereof, copies
of any Form 5310, or any successor or equivalent form
to Form 5310, filed with the PBGC in connection with
the termination of any Benefit Plan.
(iv) MATERIAL CONTRACTS. Promptly, and in any
event within ten (10) Business Days after any Material
Contract of a Credit Party or any of its Restricted
Subsidiaries is terminated prior to its scheduled termination
or a material modification, amendment or waiver of such
Material Contract is entered into or any new Material Contract
is entered into, a written statement describing such event,
with copies of amendments or new contracts, and an explanation
of any actions being taken with respect thereto.
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(v) COLLATERAL MATTERS. At least twenty (20)
Business Days prior written notice to the Agent of any change
in the location of any Collateral or in the location of the
chief executive office or place of business of any Credit
Party from the locations specified in Schedule 6.1(k). At
least ten (10) Business Days prior to any such change, the
Credit Parties shall cause to be executed and delivered to the
Agent any financing statements, Collateral Access Agreements
or other documents reasonably required by the Agent, all in
form and substance reasonably satisfactory to the Agent.
(d) CORPORATE EXISTENCE. Except as permitted
by Section 7.2(d), the Credit Parties shall, and shall cause each of their
Restricted Subsidiaries to, (i) maintain its corporate existence, (ii)
maintain in full force and effect all material licenses, bonds, franchises,
leases, trademarks and qualifications to do business, and all material
patents, contracts and other rights necessary or advisable to the profitable
conduct of their businesses, and (iii) continue in, and limit their
operations to, the same general lines of business as presently conducted by
them.
(e) BOOKS AND RECORDS; INSPECTIONS. The
Credit Parties agree to maintain, and cause each of their Restricted
Subsidiaries to maintain, books and records (including computer records and
programs) of account pertaining to the COLLATERAL in such detail, form and
scope as is consistent with good business practice. The Credit Parties agree
that the Agent and its agents may enter upon the premises of each Credit
Party and its Restricted Subsidiaries at any time and from time to time,
during normal business hours and upon reasonable notice under the
circumstances, and at any time after the occurrence and during the
continuance of a Default or Event of Default, for the purposes of (i)
inspecting and verifying the Collateral, (ii) inspecting and copying (at the
Credit Parties' expense) any and all records pertaining thereto, and (iii)
discussing the affairs, finances and business of any Credit Party with any
officer or director of any Credit Party or with the Auditors, all of whom are
hereby authorized to disclose to the Agent all financial statements, work
papers, and other information relating to such affairs, finances or business.
The Credit Parties shall jointly and severally reimburse the Agent for the
reasonable travel and related out-of-pocket expenses of the Agent's employees
or, at the Agent's option, of such outside accountants or examiners as may be
retained by the Agent to verify or inspect Collateral, records or documents
of a Credit Party on a regular basis or for a special inspection if the Agent
deems the same appropriate (but not more than four times per year unless an
Event of Default has occurred and is continuing). If the Agent's own
employees are used, the Credit Parties shall also jointly and
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severally pay a PER DIEM allowance of $400 per day per employee, or, if
outside examiners or accountants are used, the Credit Parties shall also
jointly and severally pay the Agent such sum as the Agent may be obligated to
pay as fees therefor. All such Obligations may be charged to the Loan Account
or any other account of any of the Credit Parties with the Agent, any Lender
or any of their affiliates. The Credit Parties hereby authorize the Agent,
upon prior notice to the Credit Parties, to communicate directly with the
Auditors to disclose to the Agent any and all financial information regarding
any of the Credit Parties including, without limitation, matters relating to
any audit and copies of any letters, memoranda or other correspondence
related to the business, financial condition or other affairs of any of the
Credit Parties. Upon notice to the Credit Parties that the Agent intends to
conduct verifications of Accounts of the Credit Parties (but without any
requirement that the Lender specify which Accounts are to be verified), the
Agent may from time to time contact account debtors and take such other
action as the Agent deems necessary to verify Accounts.
(f) INSURANCE. The Credit Parties agree to
maintain, and to cause each of their Restricted Subsidiaries to maintain,
public liability insurance, business interruption insurance, third party
property damage insurance and replacement value insurance on their assets
(including the Collateral) under such policies of insurance, with such
insurance companies, in such amounts and covering such risks as are at all
times satisfactory to the Agent in its commercially reasonable judgment. All
policies covering the Collateral are to name the Agent for the benefit of the
Lenders as an additional insured and the loss payee in case of loss, and are
to contain such other provisions as the Agent may reasonably require to fully
protect the interest of the Agent for the benefit of the Lenders in the
Collateral and to any payments to be made under such policies.
(g) CASUALTY LOSS. The Credit Parties shall
provide written notice to the Agent and the Lenders of the occurrence of any
of the following events within five (5) Business Days after the occurrence of
such event: any asset or property owned or used by any Credit Party is (i)
damaged or destroyed, or suffers any material loss, or (ii) condemned,
confiscated or otherwise taken, in whole or in part, or the use thereof is
otherwise diminished so as to render impracticable or unreasonable the use of
such asset or property for the purposes to which such asset or property were
used immediately prior to such condemnation, confiscation or taking, by
exercise of the powers of condemnation or eminent domain or otherwise, and in
either case the amount of the damage, destruction, loss or diminution in
value is in excess of $1,000,000 (collectively, a "CASUALTY LOSS"). The
Credit Parties shall diligently file and prosecute their claim or claims for
any award or payment in connection with a Casualty Loss.
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(h) TAXES. The Credit Parties agree, jointly and
severally, to pay, when due, and to cause each of their Subsidiaries to pay
when due, all taxes lawfully levied or assessed against the Credit Parties,
any of their Subsidiaries or any of the Collateral before any penalty or
interest accrues thereon; PROVIDED, HOWEVER, that, unless such taxes have
become a federal tax or ERISA Lien on any of the assets of the Credit Parties
or any of their Subsidiaries, no such tax need be paid if the same is being
contested, in good faith, by appropriate proceedings promptly instituted and
diligently conducted and if an adequate reserve or other appropriate
provision shall have been made therefor as required in order to be in
conformity with GAAP.
(i) COMPLIANCE WITH LAWS. The Credit Parties
agree to comply, and to cause each of their Subsidiaries to comply, with all
Requirements of Law applicable to the Collateral or any part thereof, or to
the operation of their businesses or their assets generally, unless the
Credit Parties or their Subsidiaries contest any such Requirements of Law in
a reasonable manner and in good faith. other than those Requirements of Law
the non-compliance with which would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(j) USE OF PROCEEDS. The Revolving Loans and
Letters of Credit made to the Borrowers hereunder shall be used by the
Borrowers (i) together with approximately $35,000,000 of the Central
Proceeds, to refinance the Existing Indebtedness owed under the Existing
Credit Agreement and (ii) for the Borrowers' general corporate purposes. The
Borrowers shall not use any portion of the proceeds of any Revolving Loans
for the purpose of purchasing or carrying any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) in any
manner which violates the provisions of Regulation T, U or X of said Board of
Governors or for any other purpose in violation of any applicable statute or
regulation, or of the terms and conditions of this Credit Agreement.
(k) FISCAL YEAR. Each Credit Party agrees to
maintain, and to cause each of its Subsidiaries to maintain, its fiscal year
as a year ending December 31.
(l) MAINTENANCE OF PROPERTY. Except as
permitted by Section 7.2(e), the Credit Parties agree to keep, and to cause
each of their Restricted Subsidiaries to keep, all property useful and
necessary to their respective businesses in good working order and condition
(ordinary wear and tear excepted) in accordance with their past operating
practices and not to commit or suffer any material waste with respect to any
of their properties.
(m) ERISA DOCUMENTS. The Credit Parties will
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cause to be delivered to the Agent, upon the Agent's request, each of the
following: (i) a copy of each Plan (and if applicable, related trust
agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have
been distributed to employees or former employees of the Credit Parties or
their Subsidiaries; (ii) the most recent determination letter issued by the
Internal Revenue Service with respect to each Plan; (iii) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Plan; (iv) all actuarial reports
prepared for the last three plan years for each Plan; (v) a listing of each
Plan, with the aggregate amount of the most recent annual contributions
required to be made by the Credit Parties, any of their Subsidiaries or any
ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to the Credit Parties, any of their Subsidiaries or any ERISA
Affiliate regarding withdrawal liability under any Multiemployer Plan; and
(vii) information relating to the aggregate amount of the most recent annual
payments made to former employees of the Credit Parties, any of their
Subsidiaries or any ERISA Affiliate under any Retiree Health Plan.
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(n) ENVIRONMENTAL AND OTHER MATTERS.
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(i) The Credit Parties and their Subsidiaries
will conduct their businesses so as to comply in all material
respects with all applicable Environmental Laws, in all
jurisdictions in which any of them is doing business,
including, without limitation, compliance in all material
respects with the terms and conditions of all permits and
governmental authorizations, except to the extent that the
Credit Parties or any of their Subsidiaries are contesting, in
good faith by appropriate legal proceedings, any such
Environmental Law or interpretation thereof or application
thereof; PROVIDED, FURTHER, that the Credit Parties and each
of their Subsidiaries shall comply in all material respects
with the applicable order of any court or other governmental
agency relating to such Environmental Laws unless a Credit
Party or any Subsidiary shall currently be prosecuting an
appeal or proceedings for review and shall have secured a stay
of enforcement or execution or other arrangement postponing
enforcement or execution pending such appeal or proceedings
for review. If a Credit Party or any of its Subsidiaries shall
(A) receive written notice that any material violation of any
Environmental Law may have been committed or is about to be
committed by such Credit Party or any of its Subsidiaries, (B)
receive written notice that any administrative or judicial
complaint or order has been filed or is about to be filed
against such Credit Party or any of its Subsidiaries alleging
material violations of any Environmental Law, or requiring
such Credit Party or any of its Subsidiaries to take any
action in connection with the release of Hazardous Materials
into the environment or (C) receive any written notice from a
federal, state, or local governmental agency or private party
alleging that such Credit Party or any of its Subsidiaries may
be liable or responsible for material costs associated with a
response to or cleanup of a release of Hazardous Materials
into the environment or any damages caused thereby, such
Credit Party shall provide the Agent and the Lenders with a
copy of such notice within ten (10) days after the receipt
thereof by such Credit Party or any of its Subsidiaries.
Within ten (10) days after a Credit Party learns of the
enactment or promulgation of any Environmental Law, which
could have a Material Adverse Effect, such Credit Party shall
provide the Agent and the Lenders with notice thereof. Each
Credit Party shall promptly take all reasonable actions
necessary to prevent the imposition of any Liens on any of its
properties arising out of or related to any environmental
matters. At the request of the Agent, the Credit Party shall
provide the Agent with any
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additional information relating to environmental matters and
any potential related liability resulting therefrom as the
Agent may reasonably request.
(ii) For purposes of this Section 7.1(n),
"material" means any noncompliance or basis of liability that
would reasonably be expected to subject the Credit Parties or
any of their Subsidiaries to liability in excess of $500,000.
(o) SECURITY INTERESTS. The Credit Parties
will defend the Collateral against all claims and demands of all Persons at
any time claiming the same or any interest therein, other than claims
relating to Liens permitted by the Credit Documents. The Credit Parties agree
to comply with the requirements of all state and federal laws in order to
grant to the Lenders valid and perfected first priority security interests in
the Collateral, except as otherwise permitted by the Credit Documents. The
Agent is hereby authorized by the Credit Parties to file any financing
statements covering the Collateral whether or not the Credit Parties'
signatures appear thereon. The Credit Parties agree to do whatever the Agent
may reasonably request, from time to time, by way of: filing notices of
liens, financing statements, and amendments, renewals and continuations
thereof; cooperating with the Agent's representatives; keeping stock records;
paying claims which could, if unpaid, become a Lien on the Collateral; and
performing such further acts as the Agent may reasonably require in order to
effect the purposes of this Credit Agreement and the other Credit Documents.
Any and all fees, costs and expenses incurred in connection with the actions
contemplated by this Section 7.1(o) shall be jointly and severally borne and
paid by the Credit Parties. If same are not promptly paid by the Credit
Parties, the Agent may pay same on the Credit Parties' behalf, and the amount
thereof shall be an Obligation secured hereby and due to the Agent on demand.
(p) TRADEMARKS. The Credit Parties shall do
and cause to be done all things necessary to preserve and keep in full force
and effect all of their and their Restricted Subsidiaries' material
registrations of trademarks, service marks and other marks, trade names or
other trade rights.
(q) YEAR 2000 COMPLIANCE. Each Credit Party will,
and will cause each of its Subsidiaries to, be Year 2000 Compliant at all
times.
(r) MORTGAGES, ETC. Not later than September 30,
1999, the Credit Parties shall deliver or cause to be delivered to the Agent
the following:
(i) a mortgage or deed of trust, in form and
substance satisfactory to the Agent (each as amended,
supplemented or otherwise modified from time to time, a
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"MORTGAGE"), encumbering each Mortgaged Property, duly
executed by the Borrower that owns such Mortgaged Property;
(ii) a mortgagee's title policy for each Mortgage
(A) dated on or about the date of such Mortgage in an amount
reasonably satisfactory to the Agent; (B) insuring that such
Mortgage creates a valid first Lien on the Mortgaged Property,
free and clear of all Liens except Liens permitted under this
Credit Agreement; (C) naming the Agent as the insured
thereunder; (D) in the form of ALTA Loan Policy-1992 or such
other form as is acceptable to the Agent; and (E) containing
such endorsements and affirmative coverages as the Agent may
reasonably request, together with evidence that all premiums
in respect of each such policy have been paid by or on behalf
of the Borrowers;
(iii) a survey of each Mortgaged Property, in form
and substance satisfactory to the Agent and certified within
45 days prior to the date of the related Mortgage by an
independent public surveyor reasonably satisfactory to the
Agent, meeting the minimum standard detail requirements for
ALTA/ACSM surveys, and showing (A) the exact location and
dimensions of such Mortgaged Property and the improvements
thereon, (B) the exact location of all lot and street lines,
required height and setback lines, all means of access to and
all easements relating to such Mortgaged Property, (C) the
names of all streets and alleys abutting such Mortgaged
Property and (D) the absence of any encroachments,
rights-of-way or easements on such Mortgaged Property or any
encroachments by the improvements thereon on adjoining
property, or any other defects except Liens permitted under
this Credit Agreement, together with a surveyor's certificate
reasonably satisfactory to the Agent;
(iv) a copy of an appraisal of each Mortgaged
Property conducted in accordance with sound appraisal
standards by independent appraisers acceptable to, and in form
and substance satisfactory to, the Agent, showing the fair
market value of such Mortgaged Property as of a recent date;
and
(v) an environmental indemnity agreement, in form
and substance satisfactory to the Agent (as amended,
supplemented or otherwise modified from time to time, the
"ENVIRONMENTAL INDEMNITY AGREEMENT") made by the Credit
Parties in favor of the Agent for the benefit of the Lenders.
(s) PATENTS AND TRADEMARKS. Each Credit Party
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shall use its best efforts to, on or before December 9, 1999, (i) cause
each patent and trademark listed on Schedule 6.1(y) opposite its name to be
registered in the United States Patent and Trademark under the name of such
Credit Party and (ii) execute and deliver such amendments to the Intellectual
Property Security Agreement as the Agent shall request to perfect the Agent's
Lien on all of such Credit Party's right, title and interest in such patents
and trademarks.
(t) FURTHER ASSURANCES. The Credit Parties
shall take, and shall cause each of their Subsidiaries to take, all such
further actions and execute all such further documents and instruments as the
Agent may at any time reasonably determine in its sole discretion to be
necessary or desirable to further carry out and consummate the transactions
contemplated by the Credit Documents, to cause the execution, delivery and
performance of the Credit Documents to be duly authorized and to perfect or
protect the Liens (and the priority status thereof) of the Agent for the
benefit of the Lenders on the Collateral.
SECTION VI.2 NEGATIVE COVENANTS. Until termination of this
Credit Agreement and all outstanding Letters of Credit and payment and
satisfaction of all Obligations due hereunder:
(a) LIENS, ETC. The Credit Parties will not,
nor will they permit any of their Restricted Subsidiaries to, directly or
indirectly at any time create, incur, assume or suffer to exist any Lien on
or with respect to any of their properties of any character (including,
without limitation, Accounts) whether now owned or hereafter acquired, except:
(i) Liens created by the Collateral
Documents;
(ii) Permitted Liens;
(iii) the Liens existing on the date
hereof and described on Schedule 7.2(a);
(iv) Purchase Money Liens or Liens securing
capital leases permitted under Section 7.2(b)(x);
(v) cash deposits for bids and other performance
obligations under contracts entered into in the ordinary
course of business;
(vi) the replacement, extension or renewal of any
Lien permitted by clauses (iii), (iv) or (v) above upon or in
the same property theretofore subject thereto or the
replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor) of the
Indebtedness secured
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thereby;
(vii) Liens granted by the Guarantor on the shares
of stock of the Borrowers, any of their Restricted
Subsidiaries or any other Restricted Subsidiary of the
Guarantor and the proceeds thereof to secure the Senior Notes;
(viii) leases or subleases of real estate granted by
a Credit Party to other Persons in the ordinary course of
business and not materially interfering with the conduct of
the business of such Credit Party and cash security deposits
made pursuant to real estate leases in customary amounts; and
(ix) Liens granted by the Guarantor on up to
$600,000 of cash collateral which secure the Existing Letters
of Credit.
(b) INDEBTEDNESS. The Credit Parties will not, nor
will they permit any of their Restricted Subsidiaries to, directly or
indirectly, at any time create, incur, assume or suffer to exist, any
Indebtedness other than:
(i) Indebtedness under the Credit Documents;
(ii) Indebtedness secured by Liens permitted
by Section 7.2(a)(iii);
(iii) the Existing Indebtedness;
(iv) indorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business;
(v) Indebtedness of a Borrower or its Restricted
Subsidiaries secured by purchase money liens on equipment
acquired after the date of this Credit Agreement not to exceed
$1,250,000 in the aggregate outstanding at any one time
("PURCHASE MONEY LIENS") so long as such Indebtedness shall be
from parties and on terms and conditions satisfactory to the
Agent. Each Purchase Money Lien shall attach only to the
property to be acquired, a description shall have been
furnished to the Agent for any item of equipment for which the
purchase price is greater than $250,000, and the debt incurred
shall not exceed one hundred percent (100%) of the purchase
price of the item or items of equipment purchased;
(vi) Indebtedness constituting Contingent
Obligations otherwise permitted by Section 7.2(v);
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(vii) Indebtedness evidenced by the Intercompany
Subordinated Notes owing by one Borrower or the Guarantor to
another Borrower or the Guarantor; PROVIDED that (A) such
Indebtedness is used only for general corporate purposes, (B)
such Indebtedness is evidenced by one or more promissory notes
subordinated to the payment of the Obligations and otherwise
in form and substance satisfactory to the Agent, (C) such
promissory notes are pledged to the Agent for the ratable
benefit of the Lenders pursuant to documentation in form and
substance satisfactory to the Agent and (D) such notes are
delivered to the Agent with note powers executed in blank;
(viii) (A) the Senior Notes and (B) the
SDW Subordinated Note;
(ix) Indebtedness under the Senior
Note Guaranty;
(x) Indebtedness for capital leases
not to exceed $3,500,000; and
(xi) Indebtedness under the Existing Letters of
Credit in an aggregate amount not to exceed $543,000.
(c) LEASE OBLIGATIONS. The Credit Parties
will not, nor will they permit any of their Restricted Subsidiaries to, at
any time create, incur or assume any obligations as lessee for the rental or
hire of other real or personal property of any kind under leases or
agreements to lease other than operating leases existing on the Closing Date,
leases entered into by any of the Credit Parties or their Restricted
Subsidiaries in the ordinary course of their business and capital leases
permitted under this Agreement.
(d) CORPORATE CHANGES, ETC. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, directly or indirectly, at any time merge or consolidate or otherwise
alter or modify the Credit Parties' or any such Restricted Subsidiary's
Governing Documents, corporate names, mailing addresses, principal places of
business, structure, status or existence, or liquidate or dissolve itself (or
suffer any liquidation or dissolution), except, provided the Agent receives
five (5) Business Days' prior written notice thereof, for the merger of any
Borrower with and into another Borrower or the merger of a Borrower's
Restricted Subsidiary with another Restricted Subsidiary or with a Borrower.
(e) SALES, ETC. OF ASSETS. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, directly or indirectly, at any time make any
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Asset Sale other than, subject to Section 2.9(d):
(i) sales of Inventory and obsolete equipment
in the ordinary course of its business;
(ii) the sale of any other assets that do not
constitute Collateral (other than the capital stock of the
Borrowers), PROVIDED that (A) such sales are for fair value,
(B) at least eighty percent (80%) of the aggregate
consideration is paid in full in cash at the time of sale and
(C) the aggregate amount of all such sales does not exceed
$1,000,000 in the aggregate for any fiscal year;
(iii) so long as no Event of Default shall occur
and be continuing, the grant of any option or other right to
purchase any asset in a transaction which would be permitted
under the provisions of the immediately preceding clause (ii);
(iv) Asset Sales by a Credit Party or one of its
Subsidiaries to another Credit Party to the extent permitted
by Section 7.2(g);
(v) the Central Sale; PROVIDED that the Central
Proceeds (A) shall not be less than $80,000,000 in immediately
available funds and (B) shall be applied on the Closing Date
in accordance with Section 5.1(o); and
(vi) the Ivex Sale.
(f) INVESTMENTS IN OTHER PERSONS. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, directly or indirectly, at any time make or hold any Investment in any
Person (whether in cash, securities or other property of any kind) other than:
(i) Investments in Cash Equivalents
so long as the Agent has a perfected, first priority Lien
on such Cash Equivalents;
(ii) Advances or loans made in the ordinary course
of business not to exceed $250,000 outstanding at any one time
to any one Person and $1,000,000 in the aggregate outstanding
at any one time;
(iii) Investments between the Credit Parties and
their Restricted Subsidiaries in existence as of the date
hereof and described on Schedule 7.2(f);
(iv) the endorsement of instruments for
collection or deposit in the ordinary course of
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business;
(v) stock or obligations issued to a Credit Party
by any Person (or the representative of such Person) in
respect of Indebtedness of such Person owing to such Credit
Party in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition
or readjustment of the debts of such Person; PROVIDED, THAT,
the original of any such stock or instrument evidencing such
obligations and issued to a Credit Party or any of its
Restricted Subsidiaries shall be promptly delivered to the
Agent, upon the Agent's request, together with such stock
power, assignment or endorsement by such Credit Party or
Subsidiary as the Agent may request;
(vi) Investments in existence on the date
hereof and described on Schedule 7.2(f);
(vii) Investments of up to $60,000,000 of the
Central Proceeds in the Designated Accounts, pending
application of such proceeds in accordance with the second
sentence of Section 2.9(d);
(viii) So long as no Default or Event of Default has
occurred and is continuing or would result therefrom, upon the
Agent's receipt of a certificate from an Authorized Officer of
the Guarantor in reasonable detail certifying that the
Guarantor will promptly apply a specified amount of funds in
the Designated Accounts toward one of the permitted uses set
forth in clauses (x), (y) or (z) of Section 2.9(d) and a legal
opinion reasonably satisfactory to the Agent that such
application will not violate the Indenture, then the Guarantor
may apply such amount in accordance with such clauses;
(ix) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom and the
Unused Availability is at least $10,000,000 after giving
effect thereto, upon prior written notice to the Agent and the
Lenders, Permitted Acquisitions; PROVIDED, HOWEVER, that (A)
prior to any such Permitted Acquisition the Credit Parties
shall deliver to the Agent and the Lenders good faith
projections in form and substance acceptable to the Agent and
the Lenders which demonstrate that the Credit Parties will
remain in compliance with the covenants in this Credit
Agreement after giving effect to such Acquisition and (B) the
Net Debt to Adjusted EBITDA Ratio of the Guarantor and its
Restricted Subsidiaries calculated on a pro forma basis
satisfactory to the Majority Lenders after giving effect to
such Permitted
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Acquisition and the Central Sale is not greater than 6.5:1.0;
(x) such other Investments as the Agent and the
Majority Lenders may approve in writing in their sole
discretion; and
(xi) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom and the
Consolidated Interest Coverage Ratio is at least 1.6:1.00 for
the most recently ended fiscal quarter, upon prior written
notice to the Agent and the Lenders, Acquisitions in an
Unrestricted Subsidiary with Capital Stock of the Guarantor.
(g) AFFILIATE TRANSACTIONS. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, at any time enter into, directly or indirectly, any transaction with
(including, without limitation, the purchase, sale or exchange of property or
the rendering of any service to) any Affiliate of the Credit Parties without
the consent of the Majority Lenders unless such transaction is in the
ordinary course of and pursuant to the reasonable requirements of such Credit
Party's or such Restricted Subsidiary's business, as the case may be, and
upon fair and reasonable terms no less favorable to such Credit Party or such
Restricted Subsidiary than could be obtained in a comparable arm's-length
transaction with an unaffiliated Person and such transaction or series of
transactions does not involve aggregate payments in excess of $250,000;
PROVIDED HOWEVER that the foregoing shall not prohibit (i) any employment
agreement entered into by a Credit Party in the ordinary course of business
and consistent with the past practices of the Credit Party, (ii) transactions
between or among a Credit Party (other than the Guarantor) and another Credit
Party (other than the Guarantor), (iii) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, payments
pursuant to agreements or contracts with, or for the benefit of, any
Affiliate, which exists on the date of this Agreement and which are listed on
Schedule 6.1(ad), (iv) transactions permitted by, and complying with, Section
7.2(h) and (v) the payment by the Guarantor to Xxxxx Corporation of
management fees of up to $100,000 per year. The Credit Parties will not, nor
will they permit any of their Restricted Subsidiaries to, sell any goods or
render any services to Electrical Tape on credit terms (it being understood
that Electrical Tape shall pay for any such goods or services immediately
upon its receipt thereof).
(h) DIVIDENDS, EXCHANGE, ETC. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, directly or indirectly, declare or pay any dividends (other than solely
in shares of stock) on, or make any payment on account of, or set apart
assets for a sinking or other
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analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of its capital stock or any warrants,
options or rights to purchase any such capital stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof
(including, without limitation, any payment on account of the Contingent
Rights), either directly or indirectly, whether in cash or property or in
obligations of the Credit Parties or any of their Restricted Subsidiaries,
except that (A) Subsidiaries of the Borrowers may pay dividends to the
Borrowers, (B) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the Borrowers may pay dividends to the
Guarantor (i) to the extent (and only to the extent) required to enable the
Guarantor to pay accrued and unpaid interest on the Senior Notes, (ii) to pay
taxes pursuant to the Tax Sharing Agreement, (iii) to make payments in the
ordinary course of business pursuant to the Overhead Allocation Agreement and
(iv) to enable the Guarantor to make Permitted Acquisitions, in each case to
the extent such payments are actually made by the Guarantor and (C) with the
prior written consent of the Majority Lenders, the Guarantor may make cash
payments on account of the Contingent Rights.
(i) CHANGE IN NATURE OF BUSINESS. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, at any time make any material change in the lines of their business as
carried on at the date hereof.
(j) CHARTER AMENDMENTS, ETC. The Credit
Parties will not, nor will they permit any of their Restricted Subsidiaries
to, at any time amend their certificates of incorporation.
(k) ACCOUNTING CHANGES. The Credit Parties
will not, nor will they permit any of their Restricted Subsidiaries to, at
any time make or permit any change in accounting policies or reporting
practices, except as required by GAAP.
(l) PREPAYMENTS AND MATERIAL AMENDMENTS OF
MATERIAL CONTRACTS. The Credit Parties will not, nor will they permit any of
their Restricted Subsidiaries to, at any time (i) prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness, other than the prepayment of the Loans in accordance with the
terms of this Credit Agreement or the prepayment or redemption of the Senior
Notes with the Net Cash Proceeds from the Central Sale to the extent provided
in the second sentence of Section 2.9(d), (ii) amend, modify, cancel or
terminate or permit the amendment, modification, cancellation or termination
of, any of the Material Contracts, except in the event that such amendments
or modifications could not have a Material Adverse Effect or (iii) amend,
modify, cancel or
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terminate or permit the amendment, modification, cancellation or termination
of the Tax Sharing Agreement or the Overhead Allocation Agreement. Without
limiting the generality of the foregoing, the Credit Parties shall not, and
shall not permit any of their Restricted Subsidiaries to, amend, modify or
change, or consent or agree to any amendment, modification or change, to any
of the terms of the Senior Notes, the Intercompany Subordinated Notes, the
SDW Subordinated Note, the SDW Subordinated Guaranty and any other
Indebtedness subordinated to the payment of the Obligations (A) if the effect
of such amendment, modification or change is to (directly or indirectly) (i)
increase the amount of any payment of principal thereof, (ii) increase the
interest rate or premium payable thereon, (iii) increase the amount of fees
or any other amounts payable with respect thereto, (iv) shorten the scheduled
amortization or average weighted life thereof, (v) shorten the date for
payment of interest or principal thereon, (vi) shorten the final maturity
thereof or (vii) change any covenant or any event of default or condition to
an event of default thereunder, or (B) if such amendment, modification or
change would, together with all other amendments, modifications or changes
made, increase materially the obligations of such Credit Party or any such
Restricted Subsidiary or confer additional material rights on the holder of
the Intercompany Subordinated Notes, the SDW Subordinated Note, the Senior
Notes or such other Indebtedness subordinated to the payment of the
Obligations. The Credit Parties will not, nor will they permit any of their
Restricted Subsidiaries, to make any cash payments on account of the SDW
Subordinated Note at any time, except (i) prepayments of the SDW Subordinated
Note to the extent expressly permitted by the last sentence of Section
2.9(d), (ii) so long as, both before and after giving effect thereto, no
Event of Default has occurred and is continuing and Unused Availability is at
least $15,000,000 after giving effect thereto, mandatory prepayments of
principal of the SDW Subordinated Note in accordance with the terms thereof
as in effect on March 17, 1998 and (iii) so long as, both before and after
giving effect thereto, no Event of Default has occurred and is continuing and
the Credit Parties would be in compliance with Section 7.2(u) on a pro forma
basis, regularly scheduled payments of interest on the SDW Subordinated Note
in accordance with the terms thereof as in effect on March 17, 1998.
(m) NEGATIVE PLEDGE. The Credit Parties will
not, nor will they permit any of their Restricted Subsidiaries to, at any
time enter into or suffer to exist, any agreement prohibiting or conditioning
the creation or assumption of any Lien upon any of their property or assets
other than (i) in favor of the Agent and the Lenders, (ii) in connection with
Liens described in Section 7.2(a)(iv), but solely with respect to the
property so acquired, or (iii) in favor of the trustee for the benefit of the
holders of the Senior Notes so long as there is no restriction on the liens
granted under this Agreement.
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(n) LIMITATION ON SALES AND LEASEBACKS. The
Credit Parties will not, nor will they permit any of their Restricted
Subsidiaries to, at any time enter into any arrangement with any Person
providing for the leasing by such Credit Party or such Subsidiary of real or
personal property which has been or is to be sold or transferred by such
Credit Party or such Subsidiary to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of such Credit Party or such Subsidiary.
(o) PARTNERSHIPS; RESTRICTED SUBSIDIARIES;
JOINT VENTURES. The Credit Parties will not, nor will they permit any of
their Restricted Subsidiaries to, at any time create any direct or indirect
subsidiary, enter into any joint venture or similar arrangement or become a
partner in any general or limited partnership except as otherwise permitted
by Section 7.2(f) and except for the joint venture created with Ivex
Packaging Corporation as a result of the Ivex Sale; provided that a Credit
Party may, subject to Section 7.2(f), create or acquire a Restricted
Subsidiary if the following conditions are met: (i) such new Subsidiary shall
promptly guarantee the Obligations and grant the Agent liens and security
interests in all of its Accounts, Inventory, Equipment and other assets for
the benefit of the Lenders pursuant to documentation in form and substance
satisfactory to the Agent; and (ii) the Credit Parties shall take and shall
cause such Subsidiary to take, all such further actions and execute all such
further documents and instruments as the Agent reasonably determines in its
sole discretion to be necessary or desirable to cause the execution, delivery
and performance of such documentation to be duly authorized and to perfect,
protect or enforce the security interests and Liens (and the priority status
thereof) granted to the Agent.
(p) ADDITIONAL BANK ACCOUNTS. The Borrowers
and the Guarantor will not at any time open, maintain or otherwise have or
permit their Restricted Subsidiaries to enter into or otherwise have any
checking, savings or other accounts at any bank or other financial
institution, or any other account where money is or may be deposited or
maintained with any Person, other than the Collection Accounts, the
Designated Accounts, the operating account of the Guarantor at Comerica
Bank-Texas (the "GUARANTOR ACCOUNT") or as otherwise agreed to in writing by
the Agent except those accounts listed on Schedule 7.2(p).
(q) EXCESS CASH. Each Borrower and
Restricted Subsidiary will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, maintain in the aggregate in all
deposit accounts of the Borrowers, and their Restricted Subsidiaries (other
than payroll accounts) total cash balances and Investments permitted by
Section 7.2(f)(i) in excess of $25,000 at any time during which any Revolving
Loans are outstanding, the Guarantor will not maintain in excess of
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$500,000 in the Guarantor Account and the Guarantor will not maintain any
amounts in the Designated Accounts other than a portion of the Central
Proceeds and interest thereon.
(r) CAPITAL EXPENDITURES. The Credit Parties
and their Restricted Subsidiaries will not at any time make or commit to make
any payments for Capital Expenditures other than Capital Expenditures which
are directly related to the business conducted by the Borrowers and their
Restricted Subsidiaries on the Closing Date:
(i) in the aggregate not exceeding the amount
(the "BASE AMOUNT") for each six month period (or portion
thereof) set forth below:
Period Amount
------ ------
July 1, 1999 through December 31, 1999 $1,400,000
January 1, 2000 through June 30, 2000 $1,600,000
July 1, 2000 through December 31, 2000 $1,700,000
Each six month period ended each June 30 $1,700,000
and December 31 thereafter
PROVIDED, HOWEVER, that for any six month period commencing
with the six month period ending December 31, 1999, the Base
Amount set forth above may be increased by carrying over to
any such six month period any portion of the Base Amount not
spent in the immediately preceding six month period (but not
in any period prior thereto); PROVIDED, FURTHER, THAT the
Borrower may, with the prior written consent of the Agent,
apply up to $5,000,000 of the Central Proceeds to make Capital
Expenditures to purchase a short-run coater machine; and
(ii) at any time in an aggregate amount equal to
the Equity Proceeds Amount at such time (which Capital
Expenditures will not be included in any determination under
clause (i) above).
(s) SECURITIES ACCOUNTS. The Credit Parties
will not, and will not permit any of their Restricted Subsidiaries to, (i)
establish or maintain any Securities Account unless the Agent shall have
received a Control Agreement in respect of such Securities Account, duly
executed by the Credit Party and the securities intermediary parties thereto
that is in full force and effect, or (ii) transfer any financial assets from
any Securities Account; PROVIDED, HOWEVER, that, so long as no Event of
Default has occurred and is continuing or would result therefrom, the
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Credit Parties and their Restricted Subsidiaries may (A) use such assets to
the extent permitted by this Credit Agreement, or (B) sell or trade such
assets in the ordinary course of business so long as the proceeds of such
sales or trades are deposited in a Collection Account or a Securities Account
in respect of which the Agent has received a Control Agreement duly executed
by the Credit Party and the securities intermediary or depository party
thereto and that otherwise is in full force and effect.
(t) MINIMUM CONSOLIDATED NET WORTH. The
Credit Parties will not permit the Consolidated Net Worth, at any time during
each fiscal period set forth below, to be less than (i) 100% of the aggregate
Net Cash Proceeds received by a Credit Party from any Person (other than a
Subsidiary of a Credit Party) from the issuance or sale of capital stock of
any Credit Party from the Closing Date through the last day of such fiscal
period, PLUS (ii) the amount set forth below opposite such period:
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Period Consolidated
------ Net Worth
------------
July 1, 1999 through September 30, 1999 $10,900,000
October 1, 1999 through December 31, 1999 $10,000,000
January 1, 2000 through March 31, 2000 $8,800,000
April 1, 2000 through June 30, 2000 $6,700,000
July 1, 2000 through September 30, 2000 $6,000,000
At all times thereafter $5,500,000
PROVIDED, that with respect to all periods in which Senior Notes are prepaid
or redeemed with the Net Cash Proceeds from the Central Sale, Consolidated
Net Worth shall be adjusted for extraordinary gains or losses and finance
charges related to such prepayment or redemption and the interest expense
(net of taxes) on the Senior Notes so prepaid or redeemed.
(u) MINIMUM CONSOLIDATED FIXED CHARGE
COVERAGE RATIO. The Credit Parties will not permit Consolidated Fixed Charge
Coverage Ratio, for each fiscal period set forth below, to be less than the
ratio set forth below opposite such period:
Period Ratio
------ -----
July 1, 1999 through September 30, 1999 .50:1.00
July 1, 1999 through December 31, 1999 .75:1.00
July 1, 1999 through March 31, 2000 .85:1.00
July 1, 1999 through June 30, 2000 .85:1.00
October 1, 1999 through September 30, 2000 .95:1.00
January 1, 2000 through December 31, 2000 .95:1.00
Four fiscal quarters ended each March 31, 1.00:1.00
June 30, September 30 and December 31
thereafter
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(v) CONTINGENT OBLIGATIONS. The Credit
Parties shall not, and shall not permit any of their Restricted Subsidiaries
to, directly or indirectly incur, assume, or suffer to exist any Contingent
Obligation, excluding (i) indemnities given in connection with the sale of
Inventory or other asset dispositions permitted hereunder, (ii) Contingent
Obligations for Indebtedness permitted to be incurred under Section 7.2(b)
(excluding Section 7.2(b)(viii)(B)), (iii) the SDW Subordinated Guaranty and
(iv) guaranties, substantially in the form of the SDW Subordinated Guaranty,
made by Restricted Subsidiaries pursuant to Section 6.4 of the SDW
Subordinated Note as in effect on March 17, 1998.
(w) NO PROHIBITED TRANSACTIONS UNDER ERISA.
The Credit Parties shall not, and shall not permit any of the Subsidiaries
to, directly or indirectly:
(i) engage in any prohibited transaction which
could reasonably be expected to result in a material civil
penalty or excise tax described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or
class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;
(ii) permit to exist with respect to any Plan any
accumulated funding deficiency (as defined in Sections 302 of
ERISA and 412 of the Internal Revenue Code), whether or not
waived;
(iii) fail to pay timely required contributions or
annual installments due with respect to any waived funding
deficiency to any Benefit Plan, which failure could be
reasonably expected to have a Material Adverse Effect or
result in any material liability of a Credit Party, any of its
Subsidiaries or any ERISA Affiliate;
(iv) terminate any Benefit Plan where such event
would result in any material liability of a Credit Party, any
of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA;
(v) fail to make any required contribution
or payment to any Multiemployer Plan;
(vi) fail to pay any required installment or any
other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or
other payment, which failure could be reasonably expected to
have a Material Adverse Effect or result in any material
liability of a Credit Party, any of its Subsidiaries or any
ERISA Affiliate;
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(vii) amend a Plan resulting in an increase in
current liability for the plan year such that either of a
Credit Party, any of its Subsidiaries or any ERISA Affiliate
is required to provide security to such Plan under Section
401(a)(29) of the Internal Revenue Code; or
(viii) withdraw from any Multiemployer Plan where
such withdrawal is reasonably likely to result in any material
liability of any such entity under Title IV of ERISA.
(x) HEDGING TRANSACTIONS. The Credit Parties
shall not, and shall not permit any of their Restricted Subsidiaries to,
engage in any speculative hedging or similar transactions.
(y) USE OF CENTRAL PROCEEDS. The Guarantor
shall not, and shall not permit any of its Subsidiaries to, use any of the
Central Proceeds for any purpose, except (i) up to $36,000,000 of the Central
Proceeds may be used to repay Existing Indebtedness owed under the Existing
Credit Agreement and (ii) the balance of the Central Proceeds may be used
either (A) to prepay the Loans and permanently reduce the Commitments and the
Line of Credit or (B) for one of the permitted uses set forth in clauses (x),
(y) or (z) of Section 2.9(d).
ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an "EVENT OF DEFAULT":
(a) the Borrowers shall fail to pay (i) any
interest, Fees, Expenses or other Obligations (other than principal) when due
or within three (3) Business Days of when due, whether at stated maturity, by
acceleration, or otherwise or (ii) any principal when due, whether at stated
maturity, by acceleration or otherwise; or
(b) any representation or warranty made by
any Credit Party under or in connection with any Credit Document shall prove
to have been incorrect in any material respect when made or deemed made; or
(c) a Credit Party shall fail to perform or
observe any term, covenant or agreement contained in Section 7.1(b), (c), (e)
and (f) and 7.2 of this Credit Agreement,
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Section 4(b), (d) or (e) of the Security Agreement, or Section 2(h) of the
Intellectual Property Security Agreement; or
(d) any Credit Party shall fail to perform or
observe any term, covenant or agreement contained in any Credit Document
(other than as set forth in Sections 8.1(a) and (c)) on its part to be
performed or observed or a Credit Party or any of its Restricted Subsidiaries
shall fail to comply with any provisions contained in any Material Contract
to which it is a party if such failure shall remain unremedied for the lesser
of thirty (30) days after its occurrence or ten (10) days after notice from
the Agent to such Credit Party; or
(e) a Credit Party or any of its Restricted
Subsidiaries (i) shall fail to pay any Indebtedness or any interest or
premium thereon, when due (whether at scheduled maturity or by required
prepayment, acceleration, demand or otherwise), or (ii) shall otherwise be in
breach or default in any of its obligations under any agreement with respect
to any such Indebtedness, if the effect of such failure to pay, breach or
default is to cause such Indebtedness to become due or redeemed or permit the
holder or holders of Indebtedness in an amount in excess of $1,000,000 (or a
trustee or agent on behalf of such holder or holders) to declare such
Indebtedness due or require such Indebtedness to be redeemed prior to its
stated maturity; or
(f) any Credit Party shall dissolve, wind up
or otherwise cease its business; or
(g) a Credit Party or any of its Restricted
Subsidiaries shall become the subject of (i) an Insolvency Event as set forth
in clause (e) of the definition of Insolvency Event that is not resolved or
dismissed within sixty (60) days or (ii) any Insolvency Event except as set
forth in clause (e) of the definition of Insolvency Event; or
(h) any judgment or order for the payment of
money in excess of $1,000,000 shall be rendered against any Credit Party or
any of its Restricted Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(i) any non-monetary judgment or order shall
be rendered against a Credit Party or any of its Restricted Subsidiaries that
could have a Material Adverse Effect, and there shall be any period of thirty
(30) consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
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(j) any covenant, agreement or obligation of
any Credit Party contained in or evidenced by any of the Credit Documents or
any of the subordination provisions in any Intercompany Subordinated Note, in
the SDW Subordinated Note or in the SDW Subordinated Guaranty, shall cease to
be enforceable, or shall be determined to be unenforceable, in accordance
with its terms; any Credit Party shall deny or disaffirm its obligations
under any of the Credit Documents or any Liens granted in connection
therewith; or any Liens granted in any of the Collateral shall be determined
to be void, voidable or invalid, are subordinated or are not given the
priority contemplated by this Credit Agreement; or
(k) a Collateral Document shall for any
reason (other than pursuant to the terms thereof) cease to create a valid
and, except as otherwise permitted under Section 7.2(a), perfected first
priority Lien on the Collateral purported to be covered thereby; or
(l) a Change in Control shall have occurred;
or
(m) the President or Chief Executive Officer
of the Guarantor shall at any time for any reason cease to be employed by the
Guarantor and shall not be replaced to the satisfaction of the Agent within
90 days thereof and such event, in the reasonable determination of the
Majority Lenders, has a Material Adverse Effect; or
(n) the occurrence of any event or condition
that, in the reasonable judgment of the Majority Lenders, could be reasonably
expected to have a Material Adverse Effect.
SECTION VII.2 ACCELERATION, TERMINATION AND CASH
COLLATERALIZATION. Upon the occurrence and during the continuance of an Event of
Default, the Agent may take any or all of the following actions, without
prejudice to the rights of the Agent or any Lender to enforce its claims against
the Credit Parties:
(a) ACCELERATION. Upon the written request
of the Required Lenders, and by delivery of written notice to the Borrowers
from the Agent, all Obligations shall be declared to be immediately due and
payable (except with respect to any Event of Default with respect to a Credit
Party set forth in Section 8.1(g) hereof, in which case all Obligations shall
automatically become immediately due and payable without the necessity of any
request of the Required Lenders or notice or other demand to the Borrowers)
without presentment, demand, protest or any other action or obligation of the
Agent or any Lender.
(b) TERMINATION OF COMMITMENTS. Upon the
written request of the Required Lenders, and by delivery of written
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notice to the Borrowers from the Agent, the Commitments and the Line of
Credit shall be immediately terminated, the Agent shall have no obligation to
use its best efforts to cause a bank to issue Letters of Credit and, at all
times thereafter, all Revolving Loans made by any Lender pursuant to this
Credit Agreement shall be at such Lender's sole discretion, unless such Event
of Default is cured or waived in accordance with Section 11.11.
(c) CASH COLLATERALIZATION. On demand of the
Agent or the Required Lenders the Borrowers shall immediately deposit with
the Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 105% of the greatest amount drawable
thereunder.
SECTION VII.3 RESCISSION OF ACCELERATION. After
acceleration of the maturity of the Revolving Loans, if the Borrowers pay all
accrued interest and all principal due (other than by reason of the
acceleration) and all Defaults and Events of Default are otherwise remedied
or waived in accordance with Section 11.11, the Required Lenders may elect in
their sole discretion, to rescind the acceleration and return any cash
collateral. (This Section is intended only to bind all of the Lenders to a
decision of the Required Lenders and not to confer any right on the
Borrowers, even if the described conditions for the Required Lenders'
election may be met.)
SECTION VII.4 REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, the Agent and the Lenders shall have all
rights and remedies with respect to the Obligations under the Credit Documents
and the Collateral available to it as creditors under applicable law and the
Credit Documents and the Agent may do any or all of the following:
(a) remove for copying all documents,
instruments, files and records (including the copying of any computer
records) relating to the Accounts or use (at the joint and several expense of
the Borrowers) such supplies or space of any Credit Party at such Credit
Party's place of business necessary to properly administer and collect the
Accounts thereon;
(b) accelerate or extend the time of payment,
compromise, issue credits, or bring suit on the Accounts (in the name of the
Borrowers or the Lenders) and otherwise administer and collect the Accounts;
(c) sell, assign and deliver the Accounts and
any returned, reclaimed or repossessed merchandise, with or without
advertisement, at public or private sale, for cash, on credit or otherwise,
subject to applicable law; and
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(d) foreclose the security interests created
pursuant to the Credit Documents by any available procedure, or take
possession of any or all of the Collateral without judicial process and enter
any premises where any Collateral may be located for the purpose of taking
possession of or removing the same.
Any Lender may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by the Credit Parties. If notice
of intended disposition of any Collateral is required by law, it is agreed
that ten (10) Business Days notice shall constitute reasonable notification.
The Credit Parties will assemble the Collateral and make it available to the
Agent at such locations as the Agent may specify, whether at the premises of
such Credit Party or elsewhere, and will make available to the Agent the
premises and facilities of such Credit Party for the purpose of the Agent's
taking possession of, removing or putting the Collateral in saleable form.
SECTION VII.5 RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender may have under applicable
law, upon the occurrence of any Event of Default, and whether or not any Lender
has made any demand or the Obligations of any Credit Party have matured, each
Lender shall have the right to appropriate and apply to the payment of the
Obligations of a Credit Party all deposits and other obligations then or
thereafter owing by such Lender to such Credit Party. Each Lender exercising
such rights shall notify the Agent thereof (and the Agent shall promptly notify
the Borrowers thereof) and any amount received as a result of the exercise of
such rights shall be shared in accordance with Section 2.7.
SECTION VII.6 LICENSE FOR USE OF SOFTWARE AND OTHER
INTELLECTUAL PROPERTY. Unless expressly prohibited by the licensor thereof, if
any, the Agent is hereby granted a license to use all computer software
programs, data bases, processes, assets and materials used by the Credit Parties
and their Subsidiaries in connection with their businesses or in connection with
the Collateral. The Agent agrees not to use any such license prior to the
occurrence of an Event of Default without giving the Borrowers prior notice.
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SECTION VII.7 NO MARSHALING; DEFICIENCIES; REMEDIES
CUMULATIVE. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights to liquidate all or substantially all of the Collateral
(after deducting all of the Agent's Expenses related thereto) shall be applied
by the Agent to the payment of the Obligations to the Agent and the Lenders,
whether due or to become due, in such order as the Agent may elect. The Credit
Parties shall remain jointly and severally liable to the Agent and the Lenders
for any deficiencies, and the Agent and the Lenders in turn agree to remit to
the Credit Parties or their respective successors or assigns, any surplus
resulting therefrom. The foregoing remedies are not intended to be exhaustive
and the full or partial exercise of any of them shall not preclude the full or
partial exercise of any other available remedy under this Credit Agreement,
under any other Credit Document, at equity or at law.
ARTICLE VIII
CROSS GUARANTIES
SECTION VIII.1 GUARANTEE. Each of the Borrowers, jointly
and severally, unconditionally and irrevocably guarantees to the Agent, for
the benefit of the Lenders the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations. Each of
the Borrowers hereby further agrees, jointly and severally, to pay any and
all expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be paid or incurred by the Agent in
enforcing, or obtaining advice of counsel in respect of, any rights with
respect to, or collecting, any or all of the Obligations and enforcing any
rights with respect to, or collecting against, the Borrowers under this
Article IX.
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SECTION VIII.2 OBLIGATIONS UNCONDITIONAL. The obligations
of each of the Borrowers under Section 9.1 are continuing, absolute and
unconditional, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligations of the other Borrowers under this
Agreement or any other agreement or instrument referred to herein or therein,
or any substitution, release or exchange of any other guarantee of or
security for any of the Obligations or any other collateral security therefor
or guaranty or right of offset with respect thereto at any time or from time
to time held by the Agent or the Lenders, and, to the fullest extent
permitted by applicable law irrespective of any other circumstance whatsoever
(with or without notice to or knowledge of the Borrowers) that might
otherwise constitute, or might be construed to constitute, a legal or
equitable discharge or defense, setoff or counterclaim of the other Borrowers
for the Obligations, or the Borrowers under this Article IX, in bankruptcy or
in any other instance, it being the intent of this Section 9.2 that the
obligations of each of the Borrowers under this Article IX shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not alter or impair the liability of each of the
Borrowers under this Article IX which shall remain absolute and unconditional
as described above:
(i) at any time or from time to time, without
notice to the Borrowers, the time for any performance of or
compliance with any of the Obligations shall be extended, or
such performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the
provisions of this Agreement or any other agreement or
instrument referred to herein or therein shall be done or
omitted;
(iii) the maturity of any of the Obligations shall
be accelerated, or any of the Obligations shall be modified,
supplemented or amended in any respect, or any right under
this Credit Agreement or any other Credit Document or
agreement or instrument referred to herein or therein shall be
waived or any other guarantee of any of the Obligations or any
security therefor shall be released or exchanged in whole or
in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or
in favor of, the Agent or any Lender as security for any of
the Obligations shall fail to be perfected.
Each of the Borrowers waives any and all notice of the creation,
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renewal, extension or accrual of any of the Obligations and notice of or
proof of reliance by any Lender upon this cross guaranty or acceptance of
this cross guaranty; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this cross guaranty; and all dealings
between any of the Borrowers, on the one hand, and the Agent and the Lenders,
on the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon this cross guaranty. Each of the Borrowers
hereby expressly waives diligence, presentment, demand of payment, protest
and all notices whatsoever, and any requirement that the Agent or any Lender
exhaust any right, power or remedy or proceed against any Borrower under this
Credit Agreement or any other Credit Document or agreement or instrument
referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Obligations. When pursuing its
rights and remedies under this Article IX against a Borrower, the Agent and
each Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the other Borrowers or any other Person or
against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Agent or any Lender to
pursue such other rights or remedies or to collect any payments from the
other Borrowers or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of setoff, or
any release of the other Borrowers or any such other Person or of any such
collateral security, guarantee or right of setoff, shall not relieve the
Borrowers of any liability under this Article IX, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Agent and the Lenders against the Borrowers.
SECTION VIII.3 REINSTATEMENT. The obligations of each of
the Borrowers under this Article IX shall be automatically reinstated if and
to the extent that for any reason any payment by or on behalf of the
Borrowers in respect of the Obligations is rescinded or must be otherwise
restored by the Agent or any Lender, whether as a result of any proceedings
in bankruptcy or reorganization or otherwise.
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ARTICLE IX
THE AGENT
SECTION IX.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates TBCC as its
Agent and irrevocably authorizes the Agent to take action on such Lender's
behalf under the Credit Documents and to exercise the powers and to perform
the duties described therein and to exercise such other powers as are
reasonably incidental thereto. The Agent may perform any of its duties by or
through its agents or employees.
(b) Other than the Borrowers' rights under Section
10.9, the provisions of this Article X are solely for the benefit of the
Agent and the Lenders, and none of the Credit Parties shall have any rights
as a third party beneficiary of any of the provisions hereof. The Agent shall
act solely as agent of the Lenders and assumes no obligation toward or
relationship of agency or trust with or for any Credit Party.
SECTION IX.2 NATURE OF DUTIES OF AGENT. The Agent shall not
have any duties or responsibilities except those expressly set forth in the
Credit Documents. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature. The Agent shall not have a fiduciary relationship
in respect of any Lender or any participant of any Lender.
SECTION IX.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon
the Agent, each Lender, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
or other condition and affairs of each Credit Party in connection with the
taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of each Credit Party, and, except as
expressly provided in this Credit Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter.
(b) The Agent shall not be responsible to any
Lender for any recitals, statements, information, representations
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or warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Credit Agreement or the Revolving Notes or the financial
or other condition of any Credit Party. The Agent shall not be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Credit Agreement or the Revolving
Notes, or the financial condition of any Credit Party, or the existence or
possible existence of any Default or Event of Default, unless specifically
requested to do so in writing by any Lender.
SECTION IX.4 CERTAIN RIGHTS OF THE AGENT. The Agent may
request instructions from the Majority Lenders at any time. If the Agent
requests instructions from the Majority Lenders with respect to any action or
inaction, the Agent shall be entitled to await instructions from the Majority
Lenders before such action or inaction. No Lender shall have any right of action
based upon the Agent's action or inaction in response to instructions from the
Majority Lenders.
SECTION IX.5 RELIANCE BY AGENT. The Agent may rely upon
written or telephonic communication it believes to be genuine and to have been
signed, sent or made by the proper person. The Agent may obtain the advice of
legal counsel (including counsel for the Borrowers with respect to matters
concerning the Borrowers), independent public accountants and other experts
selected by it and shall have no liability for any action or inaction taken or
omitted to be taken by it in good faith based upon such advice.
SECTION IX.6 INDEMNIFICATION OF AGENT. To the extent the
Agent is not reimbursed and indemnified by the Borrowers, each Lender will
reimburse and indemnify the Agent to the extent of its Proportionate Share
for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever (including
all Expenses) which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder or otherwise relating to the Credit
Documents unless resulting from the Agent's gross negligence or willful
misconduct. The agreements contained in this Section shall survive any
termination of this Credit Agreement and the other Credit Documents and the
payment in full of the Obligations.
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SECTION IX.7 THE AGENT IN ITS INDIVIDUAL CAPACITY. In its
individual capacity, the Agent shall have the same rights and powers hereunder
as any other Lender or holder of a Revolving Note or participation interests and
may exercise the same as though it was not performing the duties specified
herein. The terms "Lenders," "Majority Lenders," "holders of Revolving Notes,"
or any similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The Agent and its Affiliates may
accept deposits from, lend money to, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory or other business with
the Borrowers or any Affiliate of the Borrowers as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrowers for services in connection with this Credit Agreement and otherwise
without having to account for the same to the Lenders.
SECTION IX.8 HOLDERS OF REVOLVING NOTES. The Agent may deem
and treat the payee of any Revolving Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Revolving Note, shall be conclusive and binding on
any subsequent holder, transferee or assignee of such Revolving Note or of any
Revolving Note or Revolving Notes issued in exchange therefor.
SECTION IX.9 SUCCESSOR AGENT.
(a) The Agent may, upon ten (10) Business
Days' notice to the Lenders and the Borrowers, resign by giving written
notice thereof to the Lenders and the Borrowers. The Agent's resignation
shall be effective upon the appointment of a successor Agent.
(b) Upon receipt of the Agent's resignation,
the Majority Lenders may appoint a successor Agent which shall also be a
Lender. Unless an Event of Default shall have occurred and be continuing at
the time of such appointment, the successor Agent shall be subject to
approval by the Borrowers, which approval shall not be unreasonably withheld
and shall be delivered to the Majority Lenders within ten (10) Business Days
after the Borrowers' receipt of notice of a proposed successor Agent. If a
successor Agent has not accepted its appointment within fifteen (15) Business
Days, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent.
(c) Upon its acceptance of the agency
hereunder, such successor Agent shall succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent,
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and the retiring Agent shall be discharged from its duties and obligations
under this Credit Agreement. The retiring Agent shall continue to have the
benefit of this Article X for any action or inaction while it was Agent.
SECTION IX.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the
Agent to enter into the Collateral Documents for the benefit of the Lenders.
Except as otherwise set forth herein, any action or exercise of powers by the
Majority Lenders under the Credit Documents, together with such other powers
as are reasonably incidental thereto, shall be authorized and binding upon
all of the Lenders. Prior to an Event of Default, without notice to or
consent from any Lender, the Agent may take any action necessary or advisable
to perfect and maintain the perfection of the Liens upon the Collateral.
(b) The Agent is authorized to release any
Lien granted to or held by the Agent upon any Collateral (i) upon termination
of the Commitments and all outstanding Letters of Credit and payment and
satisfaction of all of the Obligations, (ii) required to be delivered from
permitted sales of Collateral hereunder, if any, upon receipt of the proceeds
or (iii) if the release can be and is approved by the Majority Lenders. The
Agent may request and the Lenders will provide confirmation of the Agent's
authority to release particular types or items of Collateral.
(c) Upon any sale and transfer of Collateral
which is expressly permitted pursuant to the terms of this Credit Agreement,
or consented to in writing by the Majority Lenders or all of the Lenders, as
applicable, and upon at least five (5) Business Days' prior written request
by the Borrowers, the Agent shall (and is hereby irrevocably authorized by
the Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of the Lenders
herein or pursuant hereto upon the Collateral that was sold or transferred;
PROVIDED that (i) the Agent shall not be required to execute any such
document on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
Liens upon (or obligations of the Credit Parties or any Subsidiary in respect
of) all interests retained by the Credit Parties or any Subsidiary, including
(without limitation) the proceeds of the sale, all of which shall continue to
constitute part of the Collateral. In the event of any sale or transfer of
Collateral, or any foreclosure with respect to any of the Collateral, the
Agent shall be authorized to deduct all of the Expenses reasonably incurred
by the Agent from the proceeds of any such sale, transfer or foreclosure.
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(d) The Agent shall have no obligation to assure
that the Collateral exists or is owned by the Credit Parties or any
Subsidiary, that such Collateral is cared for, protected or insured, or that
the Liens in the Collateral have been created, perfected, or have any
particular priority. With respect to the Collateral, the Agent may act in any
manner it may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and it shall have no duty or
liability whatsoever to the Lenders, except for its gross negligence or
willful misconduct.
SECTION IX.11 ACTIONS WITH RESPECT TO DEFAULTS. In
addition to the Agent's right to take actions on its own accord as permitted
under this Credit Agreement, the Agent shall take such action with respect to
a Default or Event of Default as shall be directed by the Majority Lenders.
Until the Agent shall have received such directions, the Agent may act or not
act as it deems advisable and in the best interests of the Lenders.
SECTION IX.12 DELIVERY OF INFORMATION. The Agent shall not be
required to deliver to any Lender originals or copies of any documents,
instruments, notices, communications or other information received by the Agent
from the Borrowers, any Subsidiary, the Majority Lenders, any Lender or any
other Person under or in connection with this Credit Agreement or any other
Credit Document except (i) as specifically provided in this Credit Agreement or
any other Credit Document and (ii) as specifically requested from time to time
in writing by any Lender with respect to a specific document, instrument, notice
or other written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE X
MISCELLANEOUS
SECTION X.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE
CREDIT DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS
OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS
OF THE STATE OF NEW YORK.
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SECTION X.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE
CREDIT PARTIES AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF), WHETHER
SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE
AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF
THE LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE CREDIT PARTIES OR THEIR PROPERTY IN ANY LOCATION REASONABLY
SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT.
THE CREDIT PARTIES AGREE THAT THEY WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. THE CREDIT
PARTIES WAIVE ANY OBJECTION THAT THEY MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
SECTION X.3 SERVICE OF PROCESS. THE CREDIT PARTIES HEREBY
IRREVOCABLY DESIGNATE CT CORPORATION SYSTEM, 0000 XXXXXXXX, XXX XXXX, XXX XXXX
00000 AS THE DESIGNEE, APPOINTEE AND AGENT OF THE CREDIT PARTIES TO RECEIVE, FOR
AND ON BEHALF OF THE CREDIT PARTIES, SERVICE OF PROCESS IN SUCH RESPECTIVE
JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT. IT IS UNDERSTOOD THAT COPIES OF SUCH
PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL
TO THE CREDIT PARTIES, BUT FAILURE OF THE CREDIT PARTIES TO RECEIVE SUCH COPIES
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
SECTION X.4 JURY TRIAL. THE CREDIT PARTIES, THE AGENT AND
THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
SECTION X.5 LIMITATION OF LIABILITY. NEITHER THE AGENT NOR ANY
LENDER SHALL HAVE ANY LIABILITY TO THE CREDIT PARTIES (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE CREDIT PARTIES IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS CREDIT AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY SUCH LENDER, THAT THE LOSSES
WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THE CREDIT PARTIES HEREBY WAIVE ALL FUTURE CLAIMS AGAINST THE AGENT
AND EACH LENDER FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES UNLESS
RESULTING FROM THE GROSS NEGLIGENCE OF SUCH PERSON OR SUCH PERSON'S KNOWING
VIOLATION OF THE LAW.
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SECTION X.6 DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder
shall impair any such right or operate as a waiver thereof. No single or partial
exercise by the Agent or the Lenders of any right or remedy shall preclude any
other or further exercise thereof, or preclude any other right or remedy.
SECTION X.7 NOTICES. Except as otherwise provided herein, all
notices and correspondences hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, or any of the Lenders, then to
Transamerica Business Credit Corporation, at 0000 Xxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xx. Xxxxxx X. Xxxxx, with a copy to
Transamerica Business Credit Corporation, 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000, Attention: General Counsel, and if to a Credit Party,
to such Credit Party at Spinnaker Industries, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: President, or if by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent or any of the Lenders, at (000) 000-0000, with a copy to (000) 000-0000,
and if to a Credit Party, at (000) 000-0000. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three (3)
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is refused
and (iii) if sent by telex or facsimile transmission, when receipt of such
transmission is acknowledged.
SECTION X.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. The Borrowers shall
not assign this Credit Agreement or any rights or obligations hereunder,
without the prior written consent of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents, with the consent of the Agent (not to be unreasonably
withheld), and provided that no Default or Event of Default has occurred and
is continuing with the consent of the Borrowers (not to be unreasonably
withheld), and upon execution and delivery to the Agent, for its acceptance
and recording in the Register, of an agreement in substantially the form of
Exhibit N (an "ASSIGNMENT AND ASSUMPTION AGREEMENT"), together with surrender
of any Revolving Note or Revolving Notes subject to such assignment and a
processing and recordation fee of $3,500.00, PROVIDED, that each such
assignment shall be of a uniform, and not a varying, percentage of all rights
and
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obligations under this Credit Agreement, the Revolving Notes and the other
Credit Documents. No such assignment shall be for less than $5,000,000 of the
Commitments unless it is to another Lender. Upon such execution and delivery
of the Assignment and Assumption Agreement to the Agent and the payment to
the Agent of such processing and recordation fee, from and after the date
specified as the effective date in the Assignment and Assumption Agreement
(the "ACCEPTANCE DATE"), (x) the assignee thereunder shall be a party hereto,
and, to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Assignment and Assumption Agreement, such assignee
shall have the rights and obligations of a Lender hereunder and (y) the
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Assumption
Agreement, relinquish its rights (other than any rights it may have pursuant
to Section 11.10 which will survive) and be released from its obligations
under this Credit Agreement (and, in the case of an Assignment and Assumption
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Credit Agreement, such Lender shall cease
to be a party hereto). (This Section does not apply to branches and
Affiliates of a Lender, it being understood that a Lender may make, carry or
transfer Revolving Loans at or for the account of any of its branch offices
or Affiliates without consent of the Borrowers, the Agent or any Lender.)
By executing and delivering an Assignment and Assumption
Agreement, the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Assumption Agreement, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement,
the Revolving Notes or any other instrument or document furnished pursuant
hereto, (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any other Credit Parties or the performance or observance by the
Borrowers or any other Credit Parties of any of their obligations under this
Credit Agreement or any other instrument or document furnished pursuant
hereto, (iii) such assignee confirms that it is an Eligible Assignee and has
received a copy of this Credit Agreement, together with copies of the
Financial Statements referred to in Section 6.1(i), the Financial Statements
delivered pursuant to Section 7.1(a), if any, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption Agreement, (iv) such
assignee will, independently and without reliance upon the Agent, such
assigning Lender 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
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action under this Credit Agreement, (v) such assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such
powers under this Credit Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement are
required to be performed by it as a Lender.
(c) AGENT'S REGISTER. The Agent shall
maintain a register of the names and addresses of the Lenders, their
Commitments, and the principal amount of their Revolving Loans (the
"REGISTER"). The Agent shall also maintain a copy of each Assignment and
Assumption Agreement delivered to and accepted by it and modify the Register
to give effect to each Assignment and Assumption Agreement. The entries in
the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register and copies of each Assignment
and Assumption Agreement shall be available for inspection by the Borrowers
or any Lender at any reasonable time and from time to time upon reasonable
prior notice. Upon its receipt of each Assignment and Assumption Agreement
and surrender of the affected Revolving Note or Revolving Notes subject to
such assignment, the Agent will give prompt notice thereof to the Borrowers.
Within five (5) Business Days after its receipt of such notice, the Borrowers
shall execute and deliver to the Agent a new Revolving Note or Revolving
Notes to the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the Commitment
or Commitments retained by it, if any. Such new Revolving Note or Revolving
Notes shall re-evidence the indebtedness outstanding under the surrendered
Revolving Note or Revolving Notes and shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Revolving
Note or Revolving Notes, shall be dated as of the Closing Date. The Agent
shall be entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder.
(d) LENDER PARTICIPATIONS. Each Lender may
sell participations (without the consent of the Agent, the Borrowers or any
other Lender) to one or more parties (other than any Person in competition
with any of the Credit Parties in the same or a similar business as a Credit
Party) in or to all or a portion of its rights and obligations under this
Credit Agreement, the Revolving Notes and the other Credit Documents.
Notwithstanding a Lender's sale of a participation interest, such Lender's
obligations hereunder shall remain unchanged. The Borrowers, the Agent, and
the other Lenders shall continue to deal solely and directly with such
Lender. No participant shall have rights to approve any amendment or waiver
of this Credit
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Agreement except to the extent such amendment or waiver would (i) increase
the Commitment of the Lender from whom the participant purchased its
participation interest; (ii) reduce the principal of, or rate or amount of
interest on the Revolving Loans subject to such participation; (iii) postpone
any date fixed for any payment of principal of, or interest on, the Revolving
Loans subject to the participation interest; or (iv) release all or a
substantial portion of the Collateral, other than in each case when otherwise
permitted hereunder.
Each Lender agrees that, without the prior written consent
of the Borrowers and the Agent, it will not make any assignment hereunder in
any manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan, Revolving Note or other
Obligation under the securities laws of the United States or of any
jurisdiction.
(e) CONFIDENTIALITY. In connection with
their efforts to assign its rights or obligations or sell participations
pursuant to Sections 11.8(b) and (d) hereof, the Agent or the Lenders may
disclose any information they have, now or in the future, with respect to the
business of the Borrowers to prospective assignees or purchasers, provided
that such disclosure is subject to confidentiality arrangements substantially
similar to those entered into by TBCC and the Borrowers in connection with
the transactions contemplated by this Credit Agreement.
SECTION X.9 CONFIDENTIALITY. Except as provided in Section
11.8(e), each Lender agrees that it will not disclose, without the prior consent
of the Borrowers, any information with respect to the Borrowers or any of their
Subsidiaries which is furnished pursuant to this Credit Agreement and which is
designated by the Borrowers to the Lenders in writing as confidential (the
information delivered pursuant to Sections 7.1(a)(ii), (iv) and (v), 7.1(b), (c)
and (e) and 8.4(a) being hereby so designated), PROVIDED, THAT any Lender may
disclose any such information (a) to its Affiliates, employees, auditors, or
counsel, or to another Lender if the disclosing Lender or such disclosing
Lender's holding or parent company in its reasonable discretion determines that
any such party should have access to such information provided that each such
person will be advised of the confidential nature of such information, (b) as
has become generally available to the public, (c) as may be required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender, (d) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation and (e) in order to comply with any Requirement
of Law.
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SECTION X.10 INDEMNIFICATION; REIMBURSEMENT OF EXPENSES OF
COLLECTION.
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(a) The Borrowers hereby, jointly and
severally, indemnify and agree to defend and hold harmless the Agent and each
of the Lenders and their respective directors, officers, agents, employees
and counsel (each, an "INDEMNIFIED PARTY") from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of (i) any litigations,
investigations, claims or proceedings which arise out of or are in any way
related to (A) this Credit Agreement, any other Credit Document or the
transactions contemplated hereby or thereby including, without limitation,
the transactions contemplated by the Senior Note Documents, (B) the issuance
of the Letters of Credit, (C) the failure of any issuer of Letters of Credit
to honor a drawing under any Letter of Credit, as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority, (D) any actual or proposed use
by the Borrowers of the proceeds of the Revolving Loans or (E) the Agent's or
the Lenders' entering into this Credit Agreement, the other Credit Documents
or any other agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and the reasonable fees
and disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with
any of the foregoing and (ii) any remedial or other action taken by the
Borrowers, the Agent or any of the Lenders in connection with compliance by
the Borrowers or any of the Subsidiaries, or any of their respective
properties, with any federal, state or local Environmental Laws. In addition,
the Borrowers shall, upon demand, jointly and severally, pay to the Agent all
costs and expenses incurred by the Agent (including the reasonable fees and
disbursements of counsel and other professionals) in connection with the
preparation, execution, delivery, administration, modification and amendment
of the Credit Documents, all costs and expenses incurred by it in connection
with collateral audits and inspections, and pay to the Agent and any Lender
all costs and expenses (including the reasonable fees and disbursements of
counsel and other professionals) paid or incurred by the Agent or such Lender
in (A) enforcing or defending its rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now
or hereafter executed and delivered in connection herewith, (B) in collecting
the Obligations, (C) in foreclosing or otherwise collecting upon the
Collateral or any part thereof and (D) obtaining any legal, accounting or
other advice in connection with any of the foregoing. If and to the extent
that the Obligations of the Borrowers hereunder are unenforceable for any
reason, the Borrowers hereby agree to make the maximum contribution to the
payment and satisfaction of such Obligations which is permissible under
applicable law.
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(b) The Borrowers' Obligations under Sections 4.9,
4.10, 10.6 and this Section 11.10 shall survive any termination of this
Credit Agreement and the other Credit Documents and the payment in full of
the Obligations, and are in addition to, and not in substitution of, any
other of their Obligations set forth in this Credit Agreement.
SECTION X.11 AMENDMENTS AND WAIVERS.
(a) No amendment or waiver of any provision
of this Credit Agreement or any other Credit Document shall be effective
unless in writing and signed by the Majority Lenders (or by the Agent on
their behalf) and the Credit Parties, except that:
(i) the consent of all the Lenders is required to
(A) reduce the principal of, or interest on, the Revolving
Notes, any Letter of Credit reimbursement obligations or any
Fees hereunder (other than Fees that are exclusively for the
account of the Agent), (B) postpone the final scheduled date
of maturity of the Revolving Notes or any date fixed for any
payment in respect of interest on the Revolving Notes, any
Letter of Credit reimbursement obligations or any Fees
hereunder, (C) change any minimum requirement necessary for
the Lenders or Majority Lenders to take any action hereunder
or the percentage of Commitments necessary to take any such
action, (D) amend or waive this Section 11.11(a), or change
the definition of Majority Lenders, (E) release any Liens in
favor of the Lenders on all or substantially all of the
Collateral, except as otherwise expressly provided in this
Credit Agreement, and other than in connection with the
financing, refinancing, sale or other disposition of any asset
of the Credit Parties permitted under this Credit Agreement,
(F) increase any of the advance rates from those set forth in
any of the definitions of SCM Accounts Borrowing Base, SCM
Inventory Borrowing Base, Coating Accounts Borrowing Base,
Coating Inventory Borrowing Base, Entoleter Accounts Borrowing
Base or Entoleter Inventory Borrowing Base, or (G) consent to
the assignment or transfer by the Borrowers of any of their
rights and obligations under this Credit Agreement;
(ii) the consent of the Required Lenders is
required to (A) change the definition of Required Lenders or
(B) amend or waive Section 7.2(f)(ix), (r), (t) or (u), 8.2 or
8.3.
(iii) no such amendment or waiver shall increase
the Commitment of any Lender over the amount thereof then in
effect without the consent of such
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Lender (it being understood that amendments or waivers of
conditions precedent, covenants, Defaults or Events of
Default shall not constitute an increase in the Commitment
of any Lender, and that an increase in the available portion
of any Commitment of any Lender shall not constitute an\
increase in the Commitment of such Lender);
(iv) the consent of the Agent shall be required
for any amendment, waiver or consent affecting the rights or
duties of the Agent under any Credit Document, in addition to
the consent of the Lenders otherwise required by this Section
11.11; and
(v) the consent of the Borrowers shall not be
required for any amendment, modification or waiver of the
provisions of Article X (other than Section 10.9).
(b) The Borrowers and the Lenders hereby authorize
the Agent to modify this Credit Agreement by unilaterally amending or
supplementing Annex I to reflect assignments of the Commitments.
(c) Notwithstanding the foregoing, the
Borrowers may amend Schedule 6.1(a) without the consent of the Majority
Lenders; provided that, except as contemplated by Section 8.1, no amendment
to any such Schedule shall be permitted to cure any Default or Event of
Default which would otherwise have existed in the absence of such amendment.
(d) If, in connection with any proposed
amendment or waiver of any of the provisions of this Credit Agreement as
contemplated by Section 11.11(a)(i), the consent of the Majority Lenders is
obtained but the consent of one or more of such other Lenders whose consent
is required is not obtained, then the Borrowers shall have the right to
replace each such non-consenting Lender or Lenders (so long as all
non-consenting Lenders are so replaced) with one or more replacement Lenders
pursuant to Section 4.11 so long as at the time of such replacement, each
such replacement Lender consents to the proposed amendment or waiver;
provided that the Borrowers shall not have the right to replace a Lender
solely as a result of the exercise of such Lender's rights (and the
withholding of any required consent by such Lender) pursuant to Section
11.11(a)(ii).
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SECTION X.12 NONLIABILITY OF AGENT AND LENDERS. The
relationship between the Borrowers and the Lenders or the Agent shall be solely
that of borrower and lender. Neither the Agent nor any Lender shall have any
fiduciary responsibilities to the Credit Parties. Neither the Agent nor any
Lender undertakes any responsibility to the Credit Parties to review or inform
the Credit Parties of any matter in connection with any phase of the Credit
Parties' business or operations.
SECTION X.13 INDEPENDENT NATURE OF LENDERS' RIGHTS. The
amounts payable at any time hereunder to each Lender under such Lender's
Revolving Note or Notes shall be a separate and independent debt.
SECTION X.14 COUNTERPARTS. This Credit Agreement and any
waiver or amendment hereto may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
SECTION X.15 EFFECTIVENESS. This Credit Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Agent, or, in the case of the Lenders, shall have given to the Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
SECTION X.16 SEVERABILITY. In case any provision in or
obligation under this Credit Agreement or the Revolving Notes or the other
Credit Documents shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
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SECTION X.17 MAXIMUM RATE. Notwithstanding anything to the
contrary contained elsewhere in this Credit Agreement or in any other Credit
Document, the Borrowers, the Agent and the Lenders hereby agree that all
agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the Agent or any Lender for the use,
forbearance, or detention of the money loaned to the Borrowers and evidenced
hereby or thereby or for the performance or payment of any covenant or
obligation contained herein or therein, exceed the Highest Lawful Rate. If due
to any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrowers.
All sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness, until payment in full thereof, so that the actual
rate of interest on account of all such indebtedness does not exceed the Highest
Lawful Rate throughout the entire term of such indebtedness. The terms and
provisions of this Section shall control every other provision of this Credit
Agreement and all agreements among the Credit Parties, the Agent and the
Lenders.
SECTION X.18 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This
Credit Agreement and the other Credit Documents constitute the entire agreement
among the Credit Parties, the Agent and the Lenders with respect to the subject
matter hereof, supersedes any prior agreements among them, and shall bind and
benefit the Credit Parties, the Agent and the Lenders and their respective
successors and permitted assigns.
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SECTION X.19 RELEASE OF ENTOLETER. If (a) Entoleter terminates
the Entoleter Line of Credit and the credit facility under Section 2.1(a)(ii),
(b) Entoleter repays the outstanding principal amount of all Revolving Loans
made to it, all unpaid interest thereon and other Obligations owing by
Entoleter, (c) all Letters of Credit issued for the account of Entoleter have
terminated, expired or been cash collateralized in a manner acceptable to the
Agent, (d) Entoleter repays all of its Indebtedness and other liabilities owing
to any Credit Party, and (e) no Event of Default has occurred and is continuing
or would result therefrom, then the Agent shall (and is hereby authorized by the
Lenders to) execute such documents as may be necessary to release Entoleter from
its obligations under the Credit Documents and release the Liens granted by
Entoleter to the Agent on the Collateral of Entoleter.
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IN WITNESS WHEREOF, the parties hereto have caused
this Credit Agreement to be executed by their proper and duly authorized
officers as of the date set forth above.
BORROWERS
SPINNAKER COATING, INC.,
formerly known as
Xxxxx-Bridge Industries, Inc.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
SPINNAKER COATING-MAINE, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
ENTOLETER, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
GUARANTOR
SPINNAKER INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
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AGENT
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
LENDERS
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Xxxxxx Xxxxx
----------------------------
Name: Xxxxxx Xxxxx
Title: Senior Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
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SCHEDULE 1
LENDERS, LENDING OFFICES AND COMMITMENTS
Domestic and Eurodollar
Lender Lending office Commitment
------ ----------------------- ----------
Transamerica Business 0000 Xxxx Xxxxxxx Xxxx
Credit Corporation Suite 600 $30,000,000
Xxxxxxxx, Xxxxxxxx 00000
The CIT Group/Business 5420 LBJ Freeway 10,000,000
Credit, Inc. Xxxxx 000
Xxxxxx, Xxxxx 00000
-----------
-----------
Total Commitments $40,000,000
