$75,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
PRIMESOURCE CORPORATION
-and-
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
and
PNC CAPITAL MARKETS, INC., as Lead Arranger
Dated March 8, 2001
TABLE OF CONTENTS
Section Page
- vii -
1. CERTAIN DEFINITIONS.........................................................................................1
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1.1 Certain Definitions.............................................................................1
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1.2 Construction...................................................................................22
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1.2.1 Number; Inclusion.....................................................................22
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1.2.2 Determination.........................................................................22
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1.2.3 Agent's Discretion and Consent........................................................22
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1.2.4 Documents Taken as a Whole............................................................22
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1.2.5 Headings..............................................................................22
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1.2.6 Implied References to this Agreement..................................................23
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1.2.7 Persons...............................................................................23
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1.2.8 Modifications to Documents............................................................23
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1.2.9 From, To and Through..................................................................23
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1.2.10 Shall; Will...........................................................................23
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1.3 Accounting Principles..........................................................................23
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1.4 UCC Terms......................................................................................24
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1.5 Concerning Corporate Terms.....................................................................24
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2. REVOLVING CREDIT FACILITY..................................................................................24
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2.1 Commitments....................................................................................24
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2.1.1 Commitment............................................................................24
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2.1.2 Voluntary Reduction of Commitment.....................................................24
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2.1.3 Extension by Banks of the Expiration Date.............................................25
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2.2 Nature of Banks' Obligations with Respect to Loans.............................................25
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2.3 Commitment Fee.................................................................................25
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2.4 Underwriting Fees..............................................................................26
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2.5 Loan Requests..................................................................................26
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2.6 Making Loans...................................................................................27
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2.7 Notes..........................................................................................27
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2.8 Use of Proceeds................................................................................27
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2.9 Letter of Credit Subfacility...................................................................27
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2.9.1 Issuance of Letters of Credit.........................................................27
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2.9.2 Letter of Credit Fees.................................................................28
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2.9.3 Disbursements, Reimbursement..........................................................28
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2.9.4 Repayment of Participation Advances...................................................29
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2.9.5 Documentation.........................................................................30
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2.9.6 Determinations to Honor Drawing Requests..............................................30
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2.9.7 Nature of Participation and Reimbursement Obligations.................................30
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2.9.8 Indemnity.............................................................................31
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2.9.9 Liability for Acts and Omissions......................................................32
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2.10 Borrowings to Repay Swing Line Loans...........................................................32
3. [RESERVED].................................................................................................33
4. INTEREST RATES.............................................................................................33
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4.1 Interest Rate Options..........................................................................33
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4.1.1 Revolving Credit Interest Rate Options................................................33
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4.1.2 Rate Quotations.......................................................................34
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4.2 Interest Periods...............................................................................34
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4.2.1 Ending Date and Business Day..........................................................34
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4.2.2 Amount of Borrowing Tranche...........................................................34
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4.2.3 Termination Before Expiration Date....................................................34
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4.2.4 Renewals..............................................................................34
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4.3 Interest After Default.........................................................................35
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4.3.1 Letter of Credit Fees, Interest Rate..................................................35
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4.3.2 Other Obligations.....................................................................35
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4.3.3 Acknowledgment........................................................................35
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4.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.................35
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4.4.1 Unascertainable.......................................................................35
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4.4.2 Illegality; Increased Costs; Deposits Not Available...................................35
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4.4.3 Agent's and Bank's Rights.............................................................36
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4.5 Selection of Interest Rate Options.............................................................37
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5. PAYMENTS...................................................................................................37
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5.1 Payments.......................................................................................37
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5.2 Pro Rata Treatment of Banks....................................................................37
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5.3 Interest Payment Dates.........................................................................38
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5.4 Voluntary Prepayments..........................................................................38
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5.4.1 Right to Prepay.......................................................................38
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5.4.2 Replacement of a Bank.................................................................39
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5.4.3 Change of Lending Office..............................................................39
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5.5 Mandatory Prepayments..........................................................................39
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5.6 Additional Compensation in Certain Circumstances...............................................40
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5.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
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Requirements, Expenses, Etc...........................................................40
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5.6.2 Indemnity.............................................................................40
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6. REPRESENTATIONS AND WARRANTIES.............................................................................41
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6.1 Representations and Warranties.................................................................41
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6.1.1 Organization and Qualification........................................................41
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6.1.2 Capitalization and Ownership..........................................................42
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6.1.3 Subsidiaries..........................................................................42
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6.1.4 Power and Authority...................................................................42
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6.1.5 Validity and Binding Effect...........................................................42
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6.1.6 No Conflict...........................................................................43
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6.1.7 Litigation............................................................................43
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6.1.8 Title to Properties...................................................................43
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6.1.9 Financial Statements..................................................................43
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6.1.10 Use of Proceeds; Margin Stock.........................................................44
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6.1.11 Full Disclosure.......................................................................45
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6.1.12 Taxes.................................................................................45
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6.1.13 Consents and Approvals; Landlord Waivers..............................................45
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6.1.14 No Event of Default; Compliance with Instruments......................................45
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6.1.15 Licenses, Etc.........................................................................46
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6.1.16 Status of the Obligations.............................................................46
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6.1.17 Insurance.............................................................................46
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6.1.18 Compliance with Laws..................................................................46
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6.1.19 Investment Companies; Regulated Entities..............................................46
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6.1.20 Plans and Benefit Arrangements........................................................47
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6.1.21 Employment Matters....................................................................48
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6.1.22 Environmental Matters.................................................................48
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6.2 Updates to Schedules...........................................................................49
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7. CONDITIONS OF LENDING......................................................................................50
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7.1 First Loans....................................................................................50
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7.1.1 Officer's Certificate.................................................................50
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7.1.2 Secretary's Certificate...............................................................50
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7.1.3 Delivery of Loan Documents............................................................51
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7.1.4 Opinion of Counsel....................................................................51
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7.1.5 Legal Details.........................................................................51
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7.1.6 Payment of Fees.......................................................................51
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7.1.7 Lien Searches.........................................................................51
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7.1.8 Consents and Landlord Waivers.........................................................51
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7.1.9 Officer's Certificate Regarding MACs and Availability.................................52
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7.1.10 No Violation of Laws..................................................................52
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7.1.11 No Actions or Proceedings.............................................................52
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7.1.12 Insurance Policies....................................................................52
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7.1.13 Existing Lenders Payoff...............................................................52
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7.1.14 Availability..........................................................................52
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7.2 Each Additional Loan...........................................................................53
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8. COVENANTS..................................................................................................53
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8.1 Affirmative Covenants..........................................................................53
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8.1.1 Preservation of Existence, Etc........................................................53
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8.1.2 Payment of Liabilities, Including Taxes, Etc..........................................53
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8.1.3 Maintenance of Insurance..............................................................54
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8.1.4 Maintenance of Properties and Leases..................................................54
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8.1.5 Maintenance...........................................................................54
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8.1.6 Visitation Rights.....................................................................54
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8.1.7 Keeping of Records and Books of Account...............................................55
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8.1.8 Plans and Benefit Arrangements........................................................55
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8.1.9 Compliance with Laws..................................................................55
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8.1.10 Use of Proceeds.......................................................................55
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8.1.10.1 General......................................................................55
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8.1.10.2 Margin Stock.................................................................55
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8.1.10.3 Section 20 Subsidiaries......................................................56
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8.1.11 Further Assurances....................................................................56
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8.1.12 Subordination of Intercompany Loans...................................................56
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8.1.13 Landlord Waivers......................................................................56
8.2 Negative Covenants.............................................................................56
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8.2.1 Indebtedness..........................................................................56
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8.2.2 Liens.................................................................................57
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8.2.3 Guaranties............................................................................57
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8.2.4 Loans and Investments.................................................................57
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8.2.5 Liquidations, Mergers, Consolidations, Acquisitions...................................58
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8.2.6 Dispositions of Assets or Subsidiaries................................................59
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8.2.7 Affiliate Transactions................................................................60
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8.2.8 Subsidiaries, Partnerships and Joint Ventures.........................................60
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8.2.9 Continuation of or Change in Business.................................................61
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8.2.10 Plans and Benefit Arrangements........................................................61
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8.2.11 Fiscal Year...........................................................................62
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8.2.12 Issuance of Stock.....................................................................62
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8.2.13 Changes in Organizational Documents...................................................62
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8.2.14 Minimum Shareholders' Equity..........................................................62
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8.2.15 Minimum Fixed Charge Coverage Ratio...................................................62
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8.2.16 Maximum Leverage Ratio................................................................62
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8.2.17 Regarding Canopy......................................................................63
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8.3 Reporting Requirements.........................................................................63
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8.3.1 Quarterly Financial Statements........................................................63
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8.3.2 Annual Financial Statements...........................................................63
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8.3.3 Borrowing Base Certificate............................................................64
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8.3.4 Certificate of the Borrowers..........................................................64
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8.3.5 Notice of Default.....................................................................64
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8.3.6 Notice of Litigation..................................................................64
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8.3.7 Certain Events........................................................................65
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8.3.8 Budgets, Forecasts, Other Reports and Information.....................................65
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8.3.9 Notices Regarding Plans and Benefit Arrangements......................................66
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8.3.9.1 Certain Events................................................................66
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8.3.9.2 Notices of Involuntary Termination and Annual Reports.........................67
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8.3.9.3 Notice of Voluntary Termination...............................................67
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9. DEFAULT....................................................................................................67
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9.1 Events of Default..............................................................................67
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9.1.1 Payments Under Loan Documents.........................................................67
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9.1.2 Breach of Warranty....................................................................67
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9.1.3 Breach of Negative Covenants or Visitation Rights.....................................68
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9.1.4 Breach of Other Covenants.............................................................68
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9.1.5 Defaults in Other Agreements or Indebtedness..........................................68
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9.1.6 Final Judgments or Orders.............................................................68
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9.1.7 Loan Document Unenforceable...........................................................68
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9.1.8 Uninsured Losses; Proceedings Against Assets..........................................69
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9.1.9 Notice of Lien or Assessment..........................................................69
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9.1.10 Insolvency............................................................................69
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9.1.11 Events Relating to Plans and Benefit Arrangements.....................................69
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9.1.12 Cessation of Business.................................................................70
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9.1.13 Change of Control.....................................................................70
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9.1.14 Involuntary Proceedings...............................................................70
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9.1.15 Voluntary Proceedings.................................................................70
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9.2 Consequences of Event of Default...............................................................71
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9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.....71
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9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings..................................71
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9.2.3 Set-off...............................................................................71
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9.2.4 Suits, Actions, Proceedings...........................................................72
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9.2.5 Application of Proceeds...............................................................72
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9.2.6 Other Rights and Remedies.............................................................73
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9.3 Notice of Sale.................................................................................73
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10. THE AGENT..................................................................................................73
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10.1 Appointment....................................................................................73
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10.2 Delegation of Duties...........................................................................73
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10.3 Nature of Duties; Independent Credit Investigation.............................................73
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10.4 Actions in Discretion of Agent; Instructions from the Banks....................................74
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10.5 Reimbursement and Indemnification of Agent by the Borrowers....................................74
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10.6 Exculpatory Provisions; Limitation of Liability................................................75
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10.7 Reimbursement and Indemnification of Agent by Banks............................................76
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10.8 Reliance by Agent..............................................................................76
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10.9 Notice of Default..............................................................................77
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10.10 Notices. 77
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10.11 Banks in Their Individual Capacities...........................................................77
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10.12 Holders of Notes...............................................................................77
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10.13 Equalization of Banks..........................................................................78
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10.14 Successor Agent................................................................................78
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10.15 [RESERVED].....................................................................................78
10.16 Availability of Funds..........................................................................78
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10.17 Calculations...................................................................................79
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10.18 Beneficiaries..................................................................................79
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11. MISCELLANEOUS..............................................................................................79
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11.1 Modifications, Amendments or Waivers...........................................................79
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11.1.1 Increase of Commitment; Extension or Expiration Date..................................80
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11.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of
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Payment...............................................................................80
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11.1.3 Miscellaneous.........................................................................80
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11.1.4 Letters of Credit.....................................................................80
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11.1.5 Releases and Waiver...................................................................80
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11.2 No Implied Waivers; Cumulative Remedies; Writing Required......................................80
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11.3 Reimbursement and Indemnification of Banks by the Borrowers; Taxes.............................81
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11.4 Holidays.......................................................................................81
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11.5 Funding by Branch, Subsidiary or Affiliate.....................................................82
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11.5.1 Notional Funding......................................................................82
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11.5.2 Actual Funding........................................................................82
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11.6 Notices. 82
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11.7 Severability...................................................................................83
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11.8 Governing Law..................................................................................83
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11.9 Prior Understanding............................................................................83
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11.10 Duration; Survival.............................................................................83
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11.11 Successors and Assigns.........................................................................84
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11.12 Confidentiality................................................................................85
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11.13 Counterparts...................................................................................85
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11.14 Agent's or Bank's Consent......................................................................85
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11.15 Exceptions.....................................................................................85
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11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.........................................................86
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11.17 Tax Withholding Clause.........................................................................86
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11.18 Joinder Of Borrowers...........................................................................87
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11.19 Borrower Agency................................................................................87
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULE
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 1.1(SC) - SELECTED COLLATERAL LOCATIONS
SCHEDULE 6.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.3 - CAPITALIZATION/SUBSIDIARIES
SCHEDULE 6.1.8 - OWNED & LEASED REAL PROPERTY
SCHEDULE 6.1.20 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.22 - ENVIRONMENTAL MATTERS
SCHEDULE 8.2.1 - PERMITTED INDEBTEDNESS
SCHEDULE 8.2.2 - NEGATIVE PLEDGE EXCEPTION
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(BB) - BORROWING BASE CERTIFICATE
EXHIBIT 1.1(J) - JOINDER
EXHIBIT 1.1(R) - NOTE
EXHIBIT 1.1 (SN) - FORM OF SWING LINE LOAN NOTE
EXHIBIT 1.1 (SW) - SWING LINE PROVISIONS
EXHIBIT 2.5 - LOAN REQUEST
EXHIBIT 8.2.6 - ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.4 - QUARTERLY COMPLIANCE CERTIFICATE
- 88 -
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated February **, 2001 and is made
by and among PRIMESOURCE CORPORATION, a Pennsylvania corporation ("Borrower" and
together with any Person who hereafter become a "Borrower" under this Agreement,
the "Borrowers"), the BANKS (as hereinafter defined), and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks under this Agreement
(hereinafter referred to in such capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrowers have requested the Banks to provide a
revolving credit facility to the Borrowers in an aggregate principal amount not
to exceed $75,000,000; and
WHEREAS, the revolving credit shall be used to refinance
existing indebtedness and for general corporate purposes;
and
WHEREAS, the Banks are willing to provide such credit upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
- ----------------------------
In addition to words and terms defined elsewhere in this
Agreement, including in Exhibit 1.1(SW) with respect to the Swing Line
Provisions, the following words and terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
Account shall mean any account, contract right, general intangible, chattel
paper, instrument or document representing any right to payment for goods sold
or services rendered, whether or not earned by performance and whether or not
evidenced by a contract, instrument or document, which is now owned or hereafter
acquired by a Borrower.
Account Debtor shall mean any person which is or
which may become obligated to a Borrower under, with
respect to, or on account of, an Account.
Affiliate as to any Person shall mean any other
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Person (i) which directly or indirectly controls, is
controlled by, or is under common control with such Person, (ii) which
beneficially owns or holds 8% or more of any class of the voting or other equity
interests of such Person, or (iii) 8% or more of any class of voting interests
or other equity interests of which is beneficially owned or held, directly or
indirectly, by such Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.
Agent shall mean PNC Bank, National Association, and
its successors and assigns.
Agent's Letter shall mean the letter between the
Company and PNC Bank dated December 6, 2000.
Agreement shall mean this Credit Agreement, as the
same may be supplemented or amended from time to time,
including all schedules and exhibits.
Annual Statements shall have the meaning assigned to
that term in Section 6.1.9((i)).
Applicable Margin shall mean with reference to Loans
to which the Base Rate Option or the Euro-Rate Option
applies, an amount in excess of the Base Rate or Euro-Rate, as appropriate,
calculated in respect of the most-recently reported Leverage Ratio commencing
with the fiscal quarter ending September 30, 2000 according to the table set
forth below. Applicable Margin shall change five (5) days after the day
financial statements are due to be delivered pursuant to Sections 8.3.1
[Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements] and if
information necessary to make such determination is not timely delivered
pursuant to such sections, Applicable Margin shall be at "Level II" in the
following table until such information is delivered.
APPLICABLE MARGIN
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Level Leverage Ratio Applicable Margin for Applicable Margin Commitment Fee
Euro-Rate Loans (%) for Base Rate Loans Applicable Margin (%)
(%)
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I greater than 3.5.0-to-1.0 2.25 .75 .55
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II greater than 3.0-to-1.0 but 2.0 .50 .50
less than or equal to 3.5
to 1.0
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III greater than 2.5-to-1.0 but 1.75 .25 .45
less than or equal to
3.0-to-1.0
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IV greater than 2.0-to-1.0 but 1.5 0 .375
less than or equal to
2.5-to-1.0
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V less than or equal to 1.25 0 .30
2.0-to-1.0
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For periods prior to the date in respect of which the Applicable Margin is first
calculated according to the table set forth above, the Applicable Margin shall
be at "Level II" shown on the chart above.
Assignment and Assumption Agreement shall mean an
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Assignment and Assumption Agreement by and among a
Purchasing Bank, a Transferor Bank and the Agent, as Agent and on behalf of the
remaining Banks, substantially in the form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals,
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designated by written notice to the Agent from the
Borrowers, authorized to execute notices, reports and other documents on behalf
of the Borrowers required hereunder. The Borrowers may amend such list of
individuals from time to time by giving written notice of such amendment to the
Agent.
Banks shall mean the financial institutions named on
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Schedule 1.1(B) and their respective successors and
assigns as permitted hereunder, each of which is referred to herein as a Bank.
Base Rate shall mean the greater of (i) the interest
rate per annum announced from time to time by the
Agent at its Principal Office as its then prime rate, which rate may not be the
lowest rate then being charged commercial borrowers by the Agent, or (ii) the
Federal Funds Effective Rate plus 1/2% per annum.
Base Rate Option shall mean the option of the
Borrowers to have Loans bear interest at the rate and under
the terms and conditions set forth in Section 4.1.1((i)).
Benefit Arrangement shall mean at any time an (3)
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"employee benefit plan," within the meaning of Section 3
of ERISA, which is neither a Plan nor a Multiemployer Plan and which is
maintained, sponsored or otherwise contributed to by any member of the ERISA
Group.
Borrower shall mean PrimeSource Corporation, a
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Pennsylvania corporation together with any Person who
hereafter becomes a "Borrower" under this Agreement; all such Persons shall be
from time to time referred to collectively as the "Borrowers." As of the Closing
Date, the Company is the only Borrower.
Borrower Agent shall mean the Company as Borrower
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Agent pursuant to the provision of Section 11.19 and anysuccessor Borrower
Agent.
Borrowing Base shall mean at any time an amount in
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Dollars equal to the sum of (x) fifty percent (50%) of
Qualified Inventory and (y) 80% of Qualified Accounts as any of the foregoing is
modified from time to time pursuant to Section 2.1. Each such advance rate is
subject to periodic review and analysis by the Banks and is therefore subject to
change from time to time or any time.
Borrowing Base Certificate shall mean the Borrowing
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Base Certificate given by the Borrower to the Banks on
the Closing Date and from time to time pursuant to Section 8.3.3 in the form of
Exhibit 1.1(BB).
Borrowing Date shall mean, with respect to any Loan,
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the date for the making thereof or the renewal or
conversion thereof at or to the same or a different Interest Rate Option, which
shall be a Business Day.
Borrowing Tranche shall mean specified portions of
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Loans outstanding as follows: (i) any Loans to which a
Euro-Rate Option applies which become subject to the same Interest Rate Option
under the same Loan Request by the Borrowers and which have the same Interest
Period shall constitute one Borrowing Tranche, and (ii) all Loans to which a
Base Rate Option applies shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday
or Sunday or a legal holiday on which commercial
banks are authorized or required to be closed for business in Philadelphia,
Pennsylvania.
Canopy shall mean Canopy, LLC a Delaware limited
liability company formed by Xeikon as 26% owner and the
Company as 74% owner, as set out in the Canopy, LLC Limited Liability Company
Agreement dated as of July 1, 2000, under which Canopy sells Xeikon products in
North America.
Canopy Acknowledgment shall mean Acknowledgment dated
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the Closing Date by and among the Company Canopy and
the Agent in respect of the Company's obligations to the Agent and the Banks and
the restrictions on payments or loans to, or investments in, Canopy.
Closing Date shall mean the Business Day on which the
first Loan shall be made, which shall be the date
hereof. The closing shall take place at 11:00 a.m. on the Closing Date at the
offices of Buchanan Ingersoll Professional Corporation
in Philadelphia, Pennsylvania, or at such other time and place as the parties
agree.
Collateral shall mean the property described in the
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Security Agreement and the Guaranty Security Agreement
and any other security agreement to which Borrower or Guarantor is party which
property is purported to be subject to a perfected Lien in favor of the Agent.
"Collateral" includes, inter alia, the "Collateral" located at the "Selected
Collateral Locations."
Commercial Letter of Credit shall mean any Letter of
Credit which is a commercial letter of credit issued
in respect of the purchase of goods or services by one or more of the Borrowers
in the ordinary course of their business.
Commitment shall mean, as to any Bank at any time,
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the amount initially set forth opposite its name on
Schedule 1.1(B) in the column labeled "Amount of Commitment for Loans," and
thereafter on Schedule I to the most recent Assignment and Assumption Agreement,
and Commitments shall mean the aggregate Commitments of all of the Banks. With
respect to PNC Bank, Commitment shall also include its "Swing Line Loan
Commitment" referred to on Exhibit 1.1 (SW).
Commitment Fee shall mean a non-refundable fee paid
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to Agent for the account of each Bank computed in accordance with Section 2.3.
Commitment Fee Applicable Margin shall mean the
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percentage shown in the column so labeled in the definitionof Applicable Margin.
Company shall mean PrimeSource Corporation, a
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Pennsylvania corporation which is one of the Borrowers hereunder.
Consideration shall mean with respect to any
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Permitted Acquisition, the aggregate of (i) the cash paid by
any of the Borrowers, directly or indirectly, to the seller in connection
therewith, (ii) the Indebtedness incurred or assumed by the Company, whether in
favor of the seller or otherwise and whether fixed or contingent, (iii) any
Guaranty given or incurred by the Company in connection therewith, and (iv) any
other consideration given or obligation incurred by any of the Company in
connection therewith.
Consignment Inventory shall mean property of the
---------------------
Borrowers (whether Inventory, Equipment, Goods or
otherwise) maintained as inventory to be sold and located at a customer location
in connection with which the Company retains title to the goods until a sale is
deemed to be made, all pursuant to the Company's standard form of consignment
sale agreement.
Dollar, Dollars, U.S. Dollars and the symbol $ shall
----------------------------- -
mean lawful money of the United States of America.
Drawing Date shall have the meaning assigned to that
term in Section 2.9.3.2.
EBITDA shall mean net income before extraordinary or
------
unusual items, depreciation, amortization, interest
expense and income tax expense calculated in respect of the prior four (4)
consecutive fiscal quarters in each case of the Borrowers on a consolidated
basis and determined and consolidated in accordance with GAAP and (x) shall be
calculated to include any business acquired in a Permitted Acquisition if either
(1) the Borrower provide to the Banks audited financial statements of such
business, and such business (if it is a legal entity) becomes a Borrower
contemporaneously with such Permitted Acquisition or (2) Required Banks have
consented to such inclusions and (y) shall be calculated to exclude any portion
of the net earnings of any Subsidiary that is not a Borrower or that, by reason
of any contract or charter restriction or applicable law or regulation, is
unavailable for payment of dividends to any Borrower.
Environmental Complaint shall mean any written
-----------------------
complaint setting forth a cause of action for personal or
property damage or natural resource damage or equitable relief, order, notice of
violation, citation, request for information issued pursuant to any
Environmental Laws by an Official Body, subpoena or other written notice of any
type relating to, arising out of, or issued pursuant to, any of the
Environmental Laws or any Environmental Conditions, as the case may be.
Environmental Conditions shall mean any conditions of
------------------------
the environment, including the workplace, the ocean,
natural resources (including flora or fauna), soil, surface water, groundwater,
any actual or potential drinking water supply sources, substrata or the ambient
air, relating to or arising out of, or caused by, the use, handling, storage,
treatment, recycling, generation, transportation, release, spilling, leaking,
pumping, emptying, discharging, injecting, escaping, leaching, disposal,
dumping, threatened release or other management or mismanagement of Regulated
Substances resulting from the use of, or operations on, any Property.
Environmental Laws shall mean all federal, state,
------------------
local and foreign Laws and regulations, including
permits, licenses, authorizations, bonds, orders, judgments, and consent decrees
issued, or entered into, pursuant thereto, relating to pollution or protection
of human health or the environment or employee safety in the workplace.
ERISA shall mean the Employee Retirement Income
-----
Security Act of 1974, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Borrowers
-----------
and all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
and all other entities which, together with the Borrowers, are treated as a
single employer under Section 414 of the Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans
---------
comprising any Borrowing Tranche to which the Euro-Rate
Option applies for any Interest Period, the interest rate per annum determined
by the Agent by dividing (the resulting quotient rounded upwards, if necessary,
to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by
the Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of the London interbank
offered rates for U.S. Dollars quoted by the British Bankers' Association as set
forth on Dow Jones Markets Service (formerly known as Telerate) (or appropriate
successor or, if the British Bankers' Association or its successor ceases to
provide such quotes, a comparable replacement determined by the Agent) display
page 3750 (or such other display page on the Dow Jones Markets Service system as
may replace display page 3750) two (2) Business Days prior to the first day of
such Interest Period for an amount comparable to such Borrowing Tranche and
having a borrowing date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The
Euro-Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted
by BBA or appropriate successor as shown on
Euro-Rate = Dow Jones Markets Service display page 3750
-------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate
Option applies that is outstanding on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The Agent shall give
prompt notice to the Borrower of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
Euro-Rate Option shall mean the option of the
Borrowers to have Loans bear interest at the rate and under
the terms and conditions set forth in Section 4.1.1(ii).
Euro-Rate Reserve Percentage shall mean as of any day
----------------------------
the maximum percentage in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding.
Event of Default shall mean any of the events
----------------
described in Section 9.1 and referred to therein as an "Eventof Default."
Existing Facility shall mean, collectively (i) the
-----------------
$75,000,000 revolving facility provided to the Company
and certain Subsidiaries pursuant to the Credit Agreement dated November 1, 1996
by and among the Company, such certain Subsidiaries, PNC Bank as Agent and the
Banks party thereto and (ii) the $5,000,000 unsecured working capital line
evidenced by the $5,000,000 Committed Line of Credit Note dated August 3, 1999
payable to the order of PNC Bank.
Expiration Date shall mean February **, 2003 as such
date be extended pursuant to Section 2.1.3.
Facility Usage shall mean at any time the sum of the
Loans outstanding and Letter of Credit Outstandings.
Federal Funds Effective Rate for any day shall mean
the rate per annum (based on a year of 360 days and
actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by
the Federal Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such rate
was announced.
Financial Projections shall have the meaning assigned
to that term in Section 6.1.9(ii).
Financing Statements shall mean the UCC-1 financing
--------------------
statements executed and delivered by the Borrowers and
filed to perfect the security interests granted in the Security Agreement or to
provide notice in respect of Consignment Inventory.
Fixed Charge Coverage Ratio shall mean the ratio of
EBITDA to Fixed Charges.
Fixed Charges shall mean for any period of
-------------
determination the sum of interest expense, income taxes paid,
scheduled principal installments on Indebtedness (as adjusted for prepayments),
capital expenditures and dividends paid, in each case of the Borrowers and their
Subsidiaries for such period determined and consolidated in accordance with
GAAP.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time, subject to the
provisions of Section 1.3, and applied on a consistent basis both as to
classification of items and amounts.
Governmental Acts shall have the meaning assigned to
that term in Section 2.9.8.
Guaranty of any Person shall mean any obligation of
--------
such Person guaranteeing or in effect guaranteeing any
liability or obligation of any other Person in any manner, whether directly or
indirectly, including any agreement to indemnify or hold harmless any other
Person, any performance bond or other suretyship arrangement and any other form
of assurance against loss, except endorsement of negotiable or other instruments
for deposit or collection in the ordinary course of business.
Historical Statements shall have the meaning assigned
to that term in Section 6.1.9(i).
Indebtedness shall mean, as to any Person at any time,
------------
any and all indebtedness, obligations or liabilities
(whether matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, or joint or several) of such Person for or in respect
of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of
any note purchase or acceptance credit facility, (iii) reimbursement obligations
(contingent or otherwise) under any letter of credit, currency SWAP agreement,
interest rate SWAP, cap, collar or floor agreement or other interest rate
management device, (iv) any other transaction (including forward sale or
purchase agreements, capitalized leases and conditional sales agreements) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade payables
and accrued expenses incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), or (v) any Guaranty of Indebtedness
for borrowed money.
Ineligible Security shall mean any security which may
-------------------
not be underwritten or dealt in by member banks of
the Federal Reserve System under Section 16 of the Banking Act of 1933(12 U.S.C.
Section 24, Seventy), as amended.
Insolvency Proceeding shall mean, with respect to any
Person, (a) case, action or proceeding with respect
to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter in
effect, or (ii) for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of any Loan
Party or otherwise relating to liquidation, dissolution, winding-up or relief of
such Person, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of such Person's creditors generally or any substantial portion of
its creditors; undertaken under any Law.
Interest Period shall have the meaning assigned to
such term in Section 4.2.
Interest Rate Option shall mean a Euro-Rate Option or
Base Rate Option.
Interim Statements shall have the meaning assigned to
that term in Section 6.1.9(i).
Internal Revenue Code shall mean the Internal Revenue
---------------------
Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in effect.
Inventory shall mean any and all goods, merchandise
---------
and other personal property, including, without
limitation, goods in transit, wheresoever located and whether now owned or
hereafter acquired by a Borrower which are or may at any time be held as raw
materials, finished goods, work-in-process, supplies or materials used or
consumed in a Borrower's business or held for sale or lease, including, without
limitation, (i) all such property the sale or other disposition of which has
given rise to Accounts and which has been returned to or repossessed or stopped
in transit by a Borrower, and (ii) all packing, shipping and advertising
materials relating to all or any such property.
Joinder shall mean a joinder by a Person as a
Borrower under this Agreement and the other Loan Documents in
the form of Exhibit 1.1(J).
--------------
Labor Contracts shall mean all written employment
---------------
agreements, employment contracts, collective bargaining
agreements and other agreements among any Borrower or Subsidiary of a Borrower
and its employees.
Landlord Waivers shall mean, collectively, the
----------------
waivers, estoppels, consents and acknowledgments delivered
to the Agent in respect of each location (designated by the Agent) at which any
Collateral (including Consignment Inventory) is located, including at customer,
warehouse and storage locations.
Law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance,
opinion, release, ruling, order, injunction, writ, decree or award of any
Official Body.
Letter of Credit shall have the meaning assigned to
that term in Section 2.9.1.
Letter of Credit Borrowing shall mean an extension of
credit resulting from a drawing under any Letter of
Credit which shall not have been reimbursed on the date when made and shall not
have been converted into a Loan under Section 2.9.3.2.
Letter of Credit Fee shall have the meaning assigned
to that term in Section 2.9.2.
Letter of Credit Outstandings shall mean at any time
-----------------------------
the sum of (i) the aggregate undrawn face amount of
outstanding Letters of Credit and (ii) the aggregate amount of all unpaid and
outstanding Reimbursement Obligations.
Leverage Ratio shall mean the ratio of (x)
--------------
consolidated Indebtedness for borrowed money, capital leases,
Guaranties of borrowed money (except for the Guaranties excluded by Section
8.2.3 from the prohibition set forth in Section 8.2.3) and reimbursement
obligations in respect of letters of credit of Borrowers to (y) EBITDA.
Lien shall mean any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance
or security arrangement of any nature whatsoever, whether voluntarily or
involuntarily given, including any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security and any filed financing statement or other notice
of any of the foregoing (whether or not a lien or other encumbrance is created
or exists at the time of the filing).
LLC Interests shall have the meaning given to such
term in Section 6.1.3.
Loan Documents shall mean this Agreement, the
--------------
Security Agreement, , the Canopy Acknowledgment, , the
Financing Statements, the Landlord Waivers, the Agent's Letter, the Notes, the
Swing Line Agreements, and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document shall
mean any of the Loan Documents.
Loan Parties shall mean the Borrower and, after the
------------
date hereof, any borrower or any guarantor of the
Obligations which becomes party to this Agreement.
Loan Request shall have the meaning given to such
term in Section 2.5.
Loans shall mean collectively and Loan shall mean
separately all Loans or any Loan made by the Banks or one
of the Banks to the Borrowers pursuant to Section 2.1 (including Swing Line Loan
pursuant to Schedule 1.1 (SW)) or Section 2.9.3.
Material Adverse Change shall mean any set of
-----------------------
circumstances or events which (a) has or could reasonably be
expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could
reasonably be expected to be material and adverse to the business, properties,
assets, financial condition, results of operations or prospects of the Borrowers
taken as a whole, (c) impairs materially or could reasonably be expected to
impair materially the ability of the Borrowers taken as a whole to duly and
punctually pay or perform its Indebtedness, or (d) impairs materially or could
reasonably be expected to impair materially the ability of the Agent or any of
the Banks, to the extent permitted, to enforce their legal remedies pursuant to
this Agreement or any other Loan Document.
Month, with respect to an Interest Period under the
Euro-Rate Option, shall mean the interval between the
days in consecutive calendar months numerically corresponding to the first day
of such Interest Period. If any Euro-Rate Interest Period begins on a day of a
calendar month for which there is no numerically corresponding day in the month
in which such Interest Period is to end, the final month of such Interest Period
shall be deemed to end on the last Business Day of such final month.
Multiemployer Plan shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA and to which the Borrowers or any member of the
ERISA Group is then making or accruing an obligation to make contributions or,
within the preceding five Plan years, has made or had an obligation to make such
contributions.
Multiple Employer Plan shall mean a Plan which has
----------------------
two or more contributing sponsors (including the
Borrowers or any member of the ERISA Group) at least two of whom are not under
common control, as such a plan is described in Sections 4063 and 4064 of ERISA.
Notes shall mean collectively and Note shall mean
----- ----
separately all the Notes of the Borrowers in the form of
Exhibit 1.1(R) evidencing the Loans together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.
notices shall have the meaning assigned to that term
-------
in Section 11.6.
Obligation shall mean any obligation or liability of
----------
any of the Borrowers to the Agent or any of the Banks,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under or in
connection with this Agreement, the Notes, the Letters of Credit, the Agent's
Letter, the Swing Line Loan Note and Swing Line Agreements, or any other Loan
Document.
Official Body shall mean any national, federal,
state, local or other government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
Participation Advance shall mean, with respect to any
---------------------
Bank, such Bank's payment in respect of its
participation in a Letter of Credit Borrowing according to its Ratable Share
pursuant to Section 2.9.4.
Partnership Interests shall have the meaning given to
such term in Section 6.1.3.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA or any successor.
Permitted Acquisitions shall have the meaning
assigned to such term in Section 8.2.5.
Permitted Investments shall mean:
(i) direct obligations of the United
States of America or any agency or instrumentality
thereof or obligations backed by the full faith and credit of the United States
of America maturing in twelve (12) months or less from the date of acquisition;
(ii) commercial paper maturing in 180
days or less rated not lower than A-1, by Standard &
Poor's or P-1 by Moody's Investors Service, Inc. on the date of acquisition;
(iii) demand deposits, time deposits or
certificates of deposit maturing within one year in
commercial banks whose obligations are rated A-1, A or the equivalent or better
by Standard & Poor's on the date of acquisition; and
(iv) common stock of the Company
purchased by the Company which purchases do not exceed in the
aggregate $1,000,000.
Permitted Liens shall mean
(i) Liens for taxes, assessments, or
similar charges, incurred in the ordinary course of
business and which are not yet due and payable;
(ii) Pledges or deposits made in the
ordinary course of business to secure payment of
workmen's compensation, or to participate in any fund in connection with
workmen's compensation, unemployment insurance, old-age pensions or other social
security programs;
(iii) Liens not in excess of $1,000,000 of
mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
(iv) Encumbrances consisting of zoning
restrictions, easements or other restrictions on the
use of real property, none of which materially impairs the use of such property
or the value thereof, and none of which is violated in any material respect by
existing or proposed structures or land use;
(v) Liens, security interests and
mortgages in favor of the Agent for the benefit of the
Banks;
(vi) Liens on property leased by any Loan
Party or Subsidiary of a Loan Party under capital
and operating leases securing obligations of such Loan Party or Subsidiary to
the lessor under such leases;
(vii) Any Lien existing on the date of
this Agreement and described on Schedule 1.1(P),
provided that (A) no such Lien attaches to any Inventory or Accounts; (B) the
principal amount secured thereby is not hereafter increased and (C) no
additional assets become subject to such Lien;
(viii) Purchase Money Security Interests,
provided that the aggregate amount of loans and
deferred payments secured by such Purchase Money Security Interests shall not
exceed $2,000,000 (excluding for the purpose of this computation any loans or
deferred payments secured by Liens described on Schedule 1.1(P)); and
(ix) The following, (A) if the validity or
amount thereof is being contested in good faith by
appropriate and lawful proceedings diligently conducted so long as levy and
execution thereon have been stayed and continue to be stayed or (B) if a final
judgment is entered and such judgment is discharged within thirty (30) days of
entry, and they do not in the aggregate materially impair the ability of any
Loan Party to perform its Obligations hereunder or under the other Loan
Documents:
(1)......Claims or Liens for taxes, assessments or
charges due and payable and subject to interest or penalty,
provided that the applicable Loan Party maintains such
reserves or other appropriate provisions as shall be required
by GAAP and pays all such taxes, assessments or charges
forthwith upon the commencement of proceedings to foreclose
any such Lien;
(2)......Claims or Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory
nonconsensual Liens; or
(3)......Liens resulting from final judgments or
orders described in Section 9.1.6.
....................................(x) Subleases or assignments of leases
for properties no longer needed in the Loan Party's
business and which are not material to the financial condition
of Borrower.
Person shall mean any individual, corporation,
------
partnership, limited liability company, association,
joint-stock company, trust, unincorporated organization, joint venture,
government or political subdivision or agency thereof, or any other entity.
Plan shall mean at any time an employee pension
benefit plan (including a Multiple Employer Plan, but not a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained by any member of the ERISA Group for employees of any
member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained by any entity which was at such time a member of the ERISA
Group for employees of any entity which was at such time a member of the ERISA
Group.
PNC Bank shall mean PNC Bank, National Association,
its successors and assigns.
Potential Default shall mean any event or condition
which with notice, passage of time or a determination
by the Agent or the Required Banks, or any combination of the foregoing, would
constitute an Event of Default.
Principal Office shall mean the main banking office
of the Agent in Philadelphia, Pennsylvania.
Prohibited Transaction shall mean any prohibited
----------------------
transaction as defined in Section 4975 of the Internal
Revenue Code or Section 406 of ERISA for which neither an individual nor a class
exemption has been issued by the United States Department of Labor.
Property shall mean all real property, both owned and
leased, of any Loan Party or Subsidiary of a Loan
Party.
Purchase Money Security Interest shall mean Liens
upon tangible personal property securing loans to any
Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party
or Subsidiary for the purchase of such tangible personal property.
Purchasing Bank shall mean a Bank which becomes a
party to this Agreement by executing an Assignment and
Assumption Agreement.
Qualified Account shall mean any Account which the
Banks, in their sole discretion, determines to have met
all of the following minimum requirements:
(i) The Account represents a complete bona
fide transaction for goods sold and delivered or
services rendered (but excluding any amount in the nature of a service charge
added to the amount due on an invoice because the invoice has not been paid when
due) which requires no further act under any circumstances on the part of the
Loan Parties to make such Account payable by the Account Debtor; and the Account
arises from an arm's length transaction in the ordinary course of the Loan
Party's business between such a Loan Party and an Account Debtor which is not an
Affiliate, officer, or employee of a Loan Party, or a member of the family of an
Affiliate, officer, or employee of Loan Party;
(ii) The Account shall not (a) be delinquent
more than ninety (90) days, or (b) be payable by an
Account Debtor (1) more than fifty percent (50%) of whose Accounts are
delinquent more than ninety (90) days and is in excess of $200,000, or (2) whose
Accounts constitute, in the Banks' determination, an unduly high percentage of
the aggregate amount of all outstanding Accounts;
(iii) The goods the sale of which gave rise to
the Account were shipped or delivered or provided to
the Account Debtor on an absolute sale basis and not on a bill-and-hold sale
basis, a consignment sale basis, a guaranteed sale basis, a sale-or-return
basis, or on the basis of any other similar understanding, and no part of such
goods has been returned or rejected;
(iv) The Account is not evidenced by chattel
paper or an instrument of any kind;
(v) The Account Debtor with respect to the
Account (a) is not insolvent, (b) is not the subject of
any bankruptcy or insolvency proceedings of any kind or of any other proceeding
or action, threatened or pending, which might have a materially adverse effect
on its business, and (c) is not, in the sole discretion of the Banks, deemed
ineligible for credit for other reasons (including, without limitation,
unsatisfactory past experience of a Loan Party or the Banks with the Account
Debtor or unsatisfactory reputation of the Account Debtor);
(vi) (a) The Account Debtor is not located
outside of the continental United States of America, or
(b) if the Account Debtor is located outside of the continental United States,
the Account is supported by letters of credit or FCIA insurance deemed adequate
and acceptable by the Banks;
(vii) The Account is not in excess of $200,000
and (a) the Account Debtor is not the government of
the United States of America, or any department, agency or instrumentality
thereof, or (b) if the Account Debtor is an entity mentioned in clause (vii)(a),
the Federal Assignment of Claims Act (or applicable similar legislation) has
been fully complied with so as to validly perfect the Banks' prior security
interest to the Banks' satisfaction;
(viii) The Account is a valid, legally
enforceable obligation of the Account Debtor with respect
thereto and is not pursuant to any progress billing or warranty billing
arrangement or subject to any dispute, condition, contingency, offset,
recoupment, reduction, claim for credit, allowance, adjustment, counterclaim or
defense on the part of such Account Debtor, and no facts exist which may provide
a basis for any of the foregoing in the present or future;
(ix) The Account is not subject to any Lien,
claim, encumbrance or security interest whatsoever
other than Permitted Liens and is subject to a fully-perfected, first-priority
Lien in favor of the Agent, subject only to Permitted Liens;
(x) The Account is evidenced by an invoice or
other documentation in form acceptable to the Banks
and arises from a contract which is in form and substance satisfactory to the
Banks;
(xi) The Account is not subject to any provision
prohibiting its assignment or requiring notice of or consent to such assignment;
(xii) The goods giving rise to the Account were
not, at the time of sale thereof, subject to any Lien
or encumbrance except the Banks' prior security interest;
(xiii) The Account is payable in freely
transferable United States Dollars;
(xiv) The Account is not, or should not be,
disqualified for any other reason generally accepted in
the commercial finance business; and
(xv) The Account is not owing by an Account
Debtor to the extent its obligations to a Borrower
exceed 20% of all Qualified Accounts unless such excess is supported by letters
of credit or FCIA insurance deemed adequate and acceptable by the Banks or owing
by an Account Debtor unacceptable to the Banks in their sole discretion.
In addition to the foregoing requirements, Accounts of any Account Debtor which
are otherwise qualified shall be reduced to the extent of any "contra" accounts
or accounts payable (including, without limitation, the Banks' good faith
estimate of any contingent liabilities) by a Borrower to such Account Debtor,
provided that the Banks, in their sole discretion, may determine that none of
the Accounts in respect to such Account Debtor shall be Qualified Accounts in
the event that such contra accounts or accounts payable represent an
unreasonably large amount owing to such Account Debtor. In addition, the Banks
may in their sole discretion exclude Accounts owing to one or more particular
Account Debtors based on the creditworthiness or other characteristics of such
Account Debtor.
Qualified Inventory shall mean any Inventory which
the Banks, in their sole discretion, determines to have
met all of the following minimum requirements:
(i)......the Inventory is either (a) finished goods,
(b) completed components or (c) raw materials other
than shipping and packing supplies and racking, but excluding in all cases any
work in process and any goods which have been shipped, delivered, provided to,
purchased or sold by a Loan Party on a bill-and-hold sale, consignment sale,
guaranteed sale, or sale-or-return basis, or any other similar basis or
understanding other than an absolute sale except that with respect to
consignment sales, Inventory which is the subject of an enforceable consignment
agreement with the consignee protecting a Loan Party's exclusive rights in such
Inventory and with respect to which there are filed UCC-1 financing statements
providing notice of such Loan Party's interests therein and, commencing with all
such financing statements filed by or on behalf of such Loan Party after
February 1, 2001, also providing notice of the Agent's interests (as assignee)
therein shall not be excluded from Qualified Inventory by virtue of the
exclusion in this item (i);
(ii).....the Inventory is of new, good and
merchantable quality and which is of a type (determined by SKU)
which has been purchased by a Loan Party within the prior twelve (12) months;
(iii)....the Inventory is not stored with a bailee,
warehouseman, or similar party unless the Banks has
given their prior written consent and a Loan Party has caused such bailee,
warehouseman, consignee or similar party to issue and deliver to the Banks, in
form and substance acceptable to the Banks, warehouse receipts or similar type
of documentation therefor in the Banks' name;
(iv).....the Inventory is intended for sale or lease
by a Loan Party in the ordinary course of business at
regular prices;
(v)......the Inventory is otherwise acceptable to the
Banks in their sole discretion;
(vi).....the Inventory is not subject to any Lien,
claim, encumbrance or security interest whatsoever other
than Permitted Liens and is subject to a fully-perfected, first-priority Lien
in favor of the Agent, subject only to Permitted Liens;
and
(vii)....the Inventory has not been manufactured in
violation of any federal minimum wage or overtime laws,
including, without limitation, the Fair Labor Standards Act, 29 U.S.C.ss. 215(a)
(1).
Ratable Share shall mean the proportion that a Bank's
-------------
Commitment bears to the Commitments of all of the
Banks. For purposes of this definition, the undertaking to provide Swing Line
Loans shall not be considered in calculating
Commitments or amounts outstanding.
Regulated Substances shall mean any substance,
--------------------
including any solid, liquid, semisolid, gaseous, thermal,
thoriated or radioactive material, refuse, garbage, wastes, chemicals, petroleum
products, by-products, coproducts, impurities, dust, scrap, heavy metals,
defined as a "hazardous substance," "pollutant," "pollution," "contaminant,"
"hazardous or toxic substance," "extremely hazardous substance," "toxic
chemical," "toxic waste," "hazardous waste," "industrial waste," "residual
waste," "solid waste," "municipal waste," "mixed waste," "infectious waste,"
"chemotherapeutic waste," "medical waste," or "regulated substance" or any
related materials, substances or wastes as now or hereafter defined pursuant to
any Environmental Laws, ordinances, rules, regulations or other directives of
any Official Body, the generation, manufacture, extraction, processing,
distribution, treatment, storage, disposal, transport, recycling, reclamation,
use, reuse, spilling, leaking, dumping, injection, pumping, leaching, emptying,
discharge, escape, release or other management or mismanagement of which is
regulated by the Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal
Reserve System, as amended from time to time.
Reimbursement Obligation shall have the meaning
assigned to such term in Section 2.9.3.2.
Reportable Event shall mean a reportable event
----------------
described in Section 4043 of ERISA and regulations
thereunder with respect to a Plan or Multiemployer Plan.
Required Banks shall mean
(i) if there are no Loans, Reimbursement
Obligations or Letter of Credit Borrowings
outstanding, (i) Banks whose Commitments aggregate at least 66 2/3% of the
Commitments of all of the Banks, or (ii) if there are two (2) or fewer Banks,
all such Banks,
(ii) if there are Loans, Reimbursement
Obligations, or Letter of Credit Borrowings
outstanding, any Bank or group of Banks (i) if the sum of the Loans,
Reimbursement Obligations and Letter of Credit Borrowings of such Banks then
outstanding aggregates at least 66 2/3% of the total principal amount of all of
the Loans, Reimbursement Obligations and Letter of Credit Borrowings then
outstanding or (ii) if there are two (2) or fewer Banks, all such Banks.
Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for
purposes of this definition, to be in favor of the Agent and not a participating
Bank if such Bank has not made its Participation Advance in respect thereof and
shall be deemed to be in favor of such Bank to the extent of its Participation
Advance if it has made its Participation Advance in respect thereof. For
purposes of this definition, the undertaking to provide Swing Line Loans shall
not be considered in calculating Commitments or amounts outstanding.
Section 20 Subsidiary shall mean the Subsidiary of
---------------------
the bank holding company controlling any Bank, which
Subsidiary has been granted authority by the Federal Reserve Board to underwrite
and deal in certain Ineligible Securities.
Security Agreement shall mean the security agreement
------------------
executed and delivered by each of the Borrowers to the
Agent for the benefit of the Banks in respect of all the UCC Collateral of all
of the Borrowers.
Selected Collateral Locations shall mean the twenty
(20) customer locations at which the Company maintains
inventory and which are listed on Schedule 1.1(SC).
----------------
Standard & Poor's shall mean Standard & Poor's
-----------------
Ratings Services, a division of The McGraw-Hill Companies,Inc.
Standby Letter of Credit shall mean a Letter of
------------------------
Credit issued to support obligations of one or more of the
Borrowers, contingent or otherwise, which finance the working capital and
business needs of the Borrowers incurred in the ordinary course of business.
Canopy AcknowledgmentCanopy Acknowledgment Subsidiary
--------------------- ----------
of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, (ii) any partnership of which such Person is
a general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, (iii) any limited liability company of which such Person is a
member or of which 50% or more of the limited liability company interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person's Subsidiaries. Canopy
shall not be considered a "Subsidiary" hereunder. Subsidiary Shares shall have
the meaning assigned to that term in Section 6.1.3.
Swing Line shall mean the $5,000,000 Swing Line line
of credit provided on the Closing Date pursuant to
this Agreement by the Agent on behalf of the Banks, the obligations under which
are Obligations hereunder which are secured by the Collateral.
Swing Line Agreements shall mean the following
---------------------
documents executed and delivered in connection with the
Swing Line: Working Cash Trust Agreement, Working Cash Line of Credit
Investment Sweep Rider and the Swing Line Notes.
Swing Line Loans shall mean advances made by PNC Bank
to the Borrower under the Swing Line.
Swing Line Notes shall mean any of the Swing Line
Notes in form of Exhibit 1.1 (SN) evidencing a loan under
the Swing Line.
Swing Line Provisions shall mean the provisions
relating to the Swing Line set forth on Exhibit 1.1 (SW).
UCC shall mean the Uniform Commercial Code in effect
in Pennsylvania or other applicable jurisdiction.
UCC Collateral shall mean the property of the
--------------
Borrowers in which security interests are to be granted under
the Security Agreement.
Xeikon shall mean Xeikon America, Inc., a Delaware
-------
corporation and a wholly-owned subsidiary of Xeikon NV of Mortsel, Belgium.
Canopy Acknowledgment1.2 Construction.
-----------------
Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this Agreement and
each of the other Loan Documents:
1.2.1 Number; Inclusion.
- --------------------------
references to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive
meaning represented by the phrase "and/or," and "including" has the meaning
represented by the phrase "including without limitation";
1.2.2 Determination.
- ----------------------
references to "determination" of or by the Agent or
the Banks shall be deemed to include good-faith
estimates by the Agent or the Banks (in the case of quantitative determinations)
and good-faith beliefs by the Agent or the Banks (in the case of qualitative
determinations) and such determination shall be conclusive absent manifest
error;
1.2.3 Agent's Discretion and Consent.
- ---------------------------------------
whenever the Agent or the Banks are granted the
right herein to act in its or their sole discretion or to
grant or withhold consent such right shall be exercised in good faith;
1.2.4 Documents Taken as a Whole.
- -----------------------------------
the words "hereof," "herein," "hereunder," "hereto"
and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document as a whole and not
to any particular provision of this Agreement or such other Loan Document;
1.2.5 Headings.
- -----------------
the section and other headings contained in this
Agreement or such other Loan Document and the Table of
Contents (if any), preceding this Agreement or such other Loan Document are for
reference purposes only and shall not control or affect the construction of this
Agreement or such other Loan Document or the interpretation thereof in any
respect;
1.2.6 Implied References to this Agreement.
- ---------------------------------------------
article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Loan
Document, as the case may be, unless otherwise specified;
1.2.7 Persons.
- ----------------
reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement or such other Loan
Document, as the case may be, and reference to a Person in a particular capacity
excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
- -----------------------------------
reference to any agreement (including this Agreement
and any other Loan Document together with the
schedules and exhibits hereto or thereto), document or instrument means such
agreement, document or instrument as amended, modified, replaced, substituted
for, superseded or restated;
1.2.9 From, To and Through.
- -----------------------------
relative to the determination of any period of time,
"from" means "from and including," "to" means "to but
excluding," and "through" means "through and including"; and
1.2.10 Shall; Will.
- --------------------
references to "shall" and "will" are intended to have
the same meaning.
1.3 Accounting Principles.
- ------------------------------
Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP; provided, however, that all accounting
terms used in Section 8.2 (and all defined terms used in the definition of any
accounting term used in Section 8.2 shall have the meaning given to such terms
(and defined terms) under GAAP as in effect on the date hereof applied on a
basis consistent with those used in preparing the Annual Statements referred to
in Section 6.1.9(i). In the event of any change after the date hereof in GAAP,
and if such change would result in the inability to determine compliance with
the financial covenants set forth in Section 8.2 based upon the Borrowers'
regularly prepared financial statements by reason of the preceding sentence,
then the parties hereto agree to endeavor, in good faith, to agree upon an
amendment to this Agreement that would adjust such financial covenants in a
manner that would not affect the substance thereof, but would allow compliance
therewith to be determined in accordance with the Borrowers' financial
statements at that time.
1.4 UCC Terms.
- ------------------
All capitalized terms used in the Security Agreement, the
Financing Statements, and this Agreement (and not otherwise defined) shall have
the meaning, if any, provided in the UCC.
1.5 Concerning Corporate Terms.
- -----------------------------------
When terms such as "stock", "shares", "shareholders",
"corporate", "company" and similar terms generally associated with corporations
are used herein, they shall be deemed to refer to limited liability member
interests, owners of those interests and a limited liability company or similar
entity, as the context may require, and references to corporate governance
documents and procedures shall have their appropriate and correlative meanings
with respect to limited liability companies, as the context may require.
2. REVOLVING CREDIT FACILITY
2.1 Commitments.
- --------------------
2.1.1 Commitment
Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set
forth, each Bank severally agrees to make Loans to the Borrowers at any time or
from time to time on or after the date hereof to the Expiration Date provided
that after giving effect to such Loan the aggregate amount of Loans from such
Bank shall not exceed (x) the lesser of (i) such Bank's Commitment or (ii) such
Bank's Ratable Share of the Borrowing Base minus (y) such Bank's Ratable Share
of Letter of Credit Outstandings; provided however that advances in respect of
Consignment Inventory made plus Letters of Credit issued in respect of
Consignment Inventory shall at no time exceed in the aggregate $9,000,000.
Reference is made to Exhibit 1.1(SW) with regard to PNC Bank's Swing Line Loan
Commitment. Within such limits of time and amount and subject to the other
provisions of this Agreement, the Borrowers may borrow, repay and reborrow
pursuant to this Section 2.1. Notwithstanding anything to the contrary herein,
the Banks may, in their sole discretion at any time hereafter, decrease the
ratio of their advances against Qualified Inventory or increase the level of any
reserves, or create or maintain such other reserves, as the Banks may deem
necessary or appropriate. Any such change shall become effective immediately for
the purpose of calculating new advances hereunder.
2.1.2 Voluntary Reduction of Commitment.
- ------------------------------------------
The Borrowers shall have the right at any time and
from time to time upon five (5) Business Days' prior
written notice to the Agent to permanently reduce, in a minimum amount of
$1,000,000 and whole multiples of $100,000 of principal, or terminate the
Commitment, without penalty or premium except as hereinafter set forth, provided
that any such reduction or termination shall be accompanied by prepayment of the
Notes, together with the full amount of interest accrued on the principal sum to
be prepaid (and all amounts referred to in Section 5.6.2 hereof), to the extent
that the aggregate amount thereof then outstanding exceeds the Commitment as so
reduced or terminated.
2.1.3 Extension by Banks of the Expiration Date.
- --------------------------------------------------
On or promptly after the first anniversary of the
Closing Date and annually on each such anniversary
thereafter, the Borrowers may request a one-year extension of the
then-applicable Expiration Date by written notice to the Banks, and the Banks
agree to respond to the Borrower's request for an extension by sixty (60) days
following receipt of the request; provided, however, that the failure of any
Bank to respond within such time period shall not in any manner constitute an
agreement by such Bank to extend the then-applicable Expiration Date. If all
Banks elect to extend, the then-applicable Expiration Date shall be extended for
a period of one year. The failure of any Bank to respond to or approve such
request shall constitute refusal.
2.2 Nature of Banks' Obligations with Respect to Loans.
- -----------------------------------------------------------
Each Bank shall be obligated to participate in each request
for Loans pursuant to Section 2.5 in accordance with its Ratable Share. The
aggregate of each Bank's Loans outstanding hereunder to the Borrowers at any
time shall never exceed its Commitment minus its Ratable Share of the Letter of
Credit Outstandings and the Borrowers' obligations with respect to such excess
shall be governed by Section 5.5. The obligations of each Bank hereunder are
several. The failure of any Bank to perform its obligations hereunder shall not
affect the Obligations of the Borrowers to any other party nor shall any other
party be liable for the failure of such Bank to perform its obligations
hereunder. The Banks shall have no obligation to make Loans hereunder on or
after the Expiration Date.
2.3 Commitment Fee.
- -----------------------
Accruing from the date hereof until the Expiration Date, the
Borrowers agree to pay to the Agent for the account of each Bank, as
consideration for such Bank's Commitment hereunder, a nonrefundable commitment
fee (the "Commitment Fee") computed determined by reference to the "Commitment
Fee Applicable Margin" column set forth in the definition of "Applicable
Margin," measured in respect of the Leverage Ratio as of the end of each fiscal
quarter. The Commitment Fee shall be computed on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed on the average daily
difference between the amount of such Bank's Commitment as the same may be
constituted from time to time and the Facility Usage. Any changes in the
Commitment Fee pursuant to the provisions of this Section 2.3 shall become
effective from the fifth day after the Agent shall have received the Certificate
delivered pursuant to Section 8.3.4 in respect of such fiscal quarter; provided,
that, in the event that the Certificate delivered pursuant to Section 8.3.4 for
any fiscal quarter is not delivered within ten (10) days of the date required by
Section 8.3 (no waiver by the Agent being implied thereby), then the Commitment
Fee shall be calculated on the basis of the percentage set forth in item (c)
above commencing as of the date such certificate was required to be delivered
until the delivery of such certificate. All Commitment Fees shall be payable in
arrears on the first Business Day of each January, April, July and October after
the date hereof and on the Expiration Date or upon acceleration of the Notes.
Notwithstanding anything herein to the contrary, the Commitment Fee Applicable
Margin prior to the delivery of the audited year-end financial statements for
fiscal year 2000 shall be .50%.
Agent's Fees.
------------
The Borrowers shall pay the provided for in the Agent's Letter
as and when provided for therein.
2.5 Loan Requests.
- ----------------------
Except as otherwise provided herein, the Borrowers may from
time to time prior to the Expiration Date request the Banks to make Loans, or
renew or convert the Interest Rate Option applicable to existing Loans pursuant
to Section 4.2, by delivering to the Agent, not later than 12:00 noon,
Philadelphia time, (i) three (3) Business Days prior to the proposed Borrowing
Date with respect to the making of Loans to which the Euro-Rate Option applies
or the conversion to or the renewal of the Euro-Rate Option for any Loans; or
(ii) on the proposed Borrowing Date with respect to the making of a Loan to
which the Base Rate Option applies or the last day of the preceding Interest
Period with respect to the conversion to the Base Rate Option for any Loan, of a
duly completed request therefor substantially in the form of Exhibit 2.5 or a
request by telephone immediately confirmed in writing by letter, facsimile or
telex in such form (each, a "Loan Request"), it being understood that the Agent
may rely on the authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation. Each Loan Request
shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Loans comprising each Borrowing Tranche, which
shall be in integral multiples of $100,000 and not less than $2,000,000 for each
Borrowing Tranche to which the Euro-Rate Option applies and not less than the
lesser of $300,000 (as to any individual loan request) or the maximum amount
available for Borrowing Tranches to which the Base Rate Option applies; (iii)
whether the Euro-Rate Option or Base Rate Option shall apply to the proposed
Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a
Borrowing Tranche to which the Euro-Rate Option applies, an appropriate Interest
Period for the proposed Loans comprising such Borrowing Tranche.
2.6 Making Loans.
- ---------------------
The Agent shall, promptly after receipt by it of a Loan
Request pursuant to Section 2.5, notify the Banks of its receipt of such Loan
Request specifying: (i) the proposed Borrowing Date and the time and method of
disbursement of the Loans requested thereby; (ii) the amount and type of each
such Loan and the applicable Interest Period (if any); and (iii) the
apportionment among the Banks of such Loans as determined by the Agent. Provided
that the conditions described in Section 7.2 [Each Additional Loan] are
satisfied, each Bank shall remit the principal amount of each Loan to the Agent
such that the Agent is able to, and the Agent shall, to the extent the Banks
have made funds available to it for such purpose and subject to Section 7.2,
fund such Loans to the Borrowers in U.S. Dollars and immediately available funds
at the Principal Office prior to 2:00 p.m., Philadelphia time, on the applicable
Borrowing Date, provided that if any Bank fails to remit such funds to the Agent
in a timely manner, the Agent may elect in its sole discretion to fund with its
own funds the Loans of such Bank on such Borrowing Date, and such Bank shall be
subject to the repayment obligation in Section 10.16.
2.7 Notes.
- --------------
The Obligation of the Borrowers to repay the aggregate unpaid
principal amount of the Loans made to it by each Bank, together with interest
thereon, shall be evidenced by a Revolving Credit Note dated the Closing Date
payable to the order of such Bank in a face amount equal to the Commitment of
such Bank.
2.8 Use of Proceeds.
- ------------------------
The proceeds of the Loans shall be used to refinance existing
indebtedness owing under the Existing Facility and for general corporate
purposes, all in accordance with Section 8.1.10.
2.9 Letter of Credit Subfacility.
- -------------------------------------
2.9.1 Issuance of Letters of Credit.
- --------------------------------------
Borrower may request the issuance of a letter of
credit (each a "Letter of Credit") on behalf of itself or
another Borrower by delivering to the Agent a completed application and
agreement for letters of credit in such form as the Agent may specify from time
to time by no later than 10:00 a.m., Philadelphia time, at least three (3)
Business Days, or such shorter period as may be agreed to by the Agent, in
advance of the proposed date of issuance. Each Letter of Credit shall be either
a Standby Letter of Credit or a Commercial Letter of Credit. Subject to the
terms and conditions hereof and in reliance on the agreements of the other Banks
set forth in this Section 2.9, the Agent will issue a Letter of Credit provided
that each Letter of Credit shall (A) have a maximum maturity of twelve (12)
months from the date of issuance, and (B) in no event expire later than one
Business Day prior to the Expiration Date and providing that in no event shall
(i) the Letters of Credit Outstanding exceed, at any one time, $1,000,000 or
(ii) the Facility Usage exceed, at any one time, the lesser of (i) the Borrowing
Base and (ii) Commitments.
2.9.2 Letter of Credit Fees.
- ------------------------------
The Borrowers shall pay (i) to the Agent for the
ratable account of the Banks a fee (the "Letter of Credit
Fee") equal to the Applicable Margin for Loans under the Euro-Rate Option as
calculated under Section 4.1.1(ii), and (ii) to the Agent for its own account a
fronting fee equal to 1/8% per annum, which fees shall be computed on the daily
average Letters of Credit Outstanding based on a year of 360 days and shall be
payable quarterly in arrears commencing with the first Business Day of each
January, April, July and October following issuance of each Letter of Credit and
on the Expiration Date. The Borrowers shall also pay to the Agent for the
Agent's sole account the Agent's then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as the
Agent may generally charge or incur from time to time in connection with the
issuance, maintenance, modification (if any), assignment or transfer (if any),
negotiation, and administration of Letters of Credit.
2.9.3 Disbursements, Reimbursement.
- -------------------------------------
2.9.3.1 Immediately upon the issuance of each Letter of Credit, each Bank shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Agent a participation in such Letter of Credit and each drawing
thereunder in an amount equal to such Bank's Ratable Share of the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively.
2.9.3.2 In the event of any request for a drawing under a Letter of Credit by
the beneficiary or transferee thereof, the Agent will promptly notify the
Borrowers. The Borrowers shall reimburse (such obligation to reimburse the Agent
shall sometimes be referred to as a "Reimbursement Obligation") the Agent prior
to 12:00 noon, Philadelphia time on each date that an amount is paid by the
Agent under any Letter of Credit (each such date, an "Drawing Date") in an
amount equal to the amount so paid by the Agent. In the event the Borrowers fail
to reimburse the Agent for the full amount of any drawing under any Letter of
Credit by 11:00 a.m., Philadelphia time, on the Drawing Date, the Agent will
promptly notify each Bank thereof, and the Borrowers shall be deemed to have
requested that Loans be made by the Banks under the Base Rate Option to be
disbursed on the Drawing Date under such Letter of Credit, subject to the amount
of the unutilized portion of the Commitment and subject to the conditions set
forth in Section 7.2 other than any notice requirements. Any notice given by the
Agent pursuant to this Section 2.9.3.2 may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
2.9.3.3 Each Bank shall upon any notice pursuant to Section 2.9.3.2 make
available to the Agent an amount in immediately available funds equal to its
Ratable Share of the amount of the drawing, whereupon the participating Banks
shall (subject to Section 2.9.3.4) each be deemed to have made a Loan under the
Base Rate Option to the Borrowers in that amount. If any Bank so notified fails
to make available to the Agent for the account of the Agent the amount of such
Bank's Ratable Share of such amount by no later than 2:00 p.m., Philadelphia
time on the Drawing Date, then interest shall accrue on such Bank's obligation
to make such payment, from the Drawing Date to the date on which such Bank makes
such payment, at a rate per annum equal to the Federal Funds Effective Rate in
effect from time to time during such period. The Agent will promptly give notice
of the occurrence of the Drawing Date, but failure of the Agent to give any such
notice on the Drawing Date or in sufficient time to enable any Bank to effect
such payment on such date shall not relieve such Bank from its obligation under
this Section 2.9.3.3 (other than interest during the period it was not aware of
such drawing).
2.9.3.4 With respect to any unreimbursed drawing that is not converted into
Loans under the Base Rate Option to the Borrowers in whole or in part as
contemplated by Section 2.9.3.2, because of the Borrowers' failure to satisfy
the conditions set forth in Section 7.2 other than any notice requirements or
for any other reason, the Borrowers shall be deemed to have incurred from the
Agent a Letter of Credit Borrowing in the amount of such drawing. Such Letter of
Credit Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at the rate per annum applicable to the Loans under the Base
Rate Option or, if applicable, the Default Rate. Each Bank's payment to the
Agent pursuant to Section 2.9.3.3 shall be deemed to be a payment in respect of
its participation in such Letter of Credit Borrowing and shall constitute a
Participation Advance from such Bank in satisfaction of its participation
obligation under this Section 2.9.3.
2.9.4 Repayment of Participation Advances.
- --------------------------------------------
2.9.4.1 Upon (and only upon) receipt by the Agent for its account of immediately
available funds from the Borrowers (i) in reimbursement of any payment made by
the Agent under the Letter of Credit with respect to which any Bank has made a
Participation Advance to the Agent, or (ii) in payment of interest on such a
payment made by the Agent under such a Letter of Credit, the Agent will pay to
each Bank, in the same funds as those received by the Agent, the amount of such
Bank's Ratable Share of such funds, except the Agent shall retain the amount of
the Ratable Share of such funds of any Bank that did not make a Participation
Advance in respect of such payment by Agent.
2.9.4.2 If the Agent is required at any time to return to any Borrower, or to a
trustee, receiver, liquidator, custodian, or any official in any Insolvency
Proceeding, any portion of the payments made by any Borrower to the Agent
pursuant to Section 2.9.4.1 in reimbursement of a payment made under the Letter
of Credit or interest or fee thereon, each Bank shall, on demand of the Agent,
forthwith return to the Agent the amount of its Ratable Share of any amounts so
returned by the Agent plus interest thereon from the date such demand is made to
the date such amounts are returned by such Bank to the Agent, at a rate per
annum equal to the Federal Funds Effective Rate in effect from time to time.
2.9.5 Documentation.
- ----------------------
Each Borrower agrees to be bound by the terms of the
Agent's application and agreement for letters of
credit and the Agent's written regulations and customary practices relating to
letters of credit, though such interpretation may be different from the such
Borrower's own. In the event of a conflict between such application or agreement
and this Agreement, this Agreement shall govern. It is understood and agreed
that, except in the case of gross negligence or willful misconduct, the Agent
shall not be liable for any error, negligence and/or mistakes, whether of
omission or commission, in following any Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.
2.9.6 Determinations to Honor Drawing Requests.
- -------------------------------------------------
In determining whether to honor any request for
drawing under any Letter of Credit by the beneficiary
thereof, the Agent shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit.
2.9.7 Nature of Participation and Reimbursement Obligations.
- --------------------------------------------------------------
Each Bank's obligation in accordance with this
Agreement to make the Loans or Participation Advances, as
contemplated by Section 2.9.3, as a result of a drawing under a Letter of
Credit, and the Obligations of the Borrowers to reimburse the Agent upon a draw
under a Letter of Credit, shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Section 2.9
under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such
Bank may have against the Agent, the Borrowers or any other Person for any
reason whatsoever;
(ii) the failure of any Borrower or any other Person to comply, in connection
with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1,
2.5, 2.6 or 7.2 or as otherwise set forth in this Agreement for the making of a
Loan, it being acknowledged that such conditions are not required for the making
of a Letter of Credit Borrowing and the obligation of the Banks to make
Participation Advances under Section 2.9.3;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) the existence of any claim, set-off, defense or other right which any
Borrower or any Bank may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such transferee
may be acting), the Agent or any Bank or any other Person or, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between any Borrower
or Subsidiaries of a Borrower and the beneficiary for which any Letter of Credit
was procured);
(v) any draft, demand, certificate or other document 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 even
if the Agent has been notified thereof;
(vi) payment by the Agent 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;
(vii) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Borrower or Subsidiaries
of a Borrower;
(viii) any breach of this Agreement or any other Loan Document by any party
thereto;
(ix) the occurrence or continuance of an Insolvency Proceeding with respect
to any Borrower;
(x) the fact that an Event of Default or a Potential Default shall have
occurred and be continuing;
(xi) the fact that the Expiration Date shall have passed or this Agreement
or the Commitments hereunder shall have been
terminated; and
(xii) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing; provided that each Bank's obligation to make Loans under
Section 2.9.3.3 is subject to the conditions set forth in Section 7.2.
2.9.8 Indemnity.
- ------------------
In addition to amounts payable as provided in Section
10.5, the Borrowers hereby agree to protect,
indemnify, pay and save harmless the Agent and the Banks from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of counsel and
allocated costs of internal counsel) which the Agent or the Banks may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit, other than as a result of (A) the gross negligence or willful
misconduct of the Agent as determined by a final judgment of a court of
competent jurisdiction or (B) subject to the following clause (ii), the wrongful
dishonor by the Agent of a proper demand for payment made under any Letter of
Credit (except upon the request of the Borrowers), or (ii) the failure of the
Agent to honor a drawing under any such 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 (all such acts or omissions herein
called "Governmental Acts").
2.9.9 Liability for Acts and Omissions.
- -----------------------------------------
As between any Borrower and the Agent, such Borrower
assumes all risks of the acts and omissions of, 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, the Agent
shall not be responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for an issuance of any such Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged (even if the Agent shall have been notified
thereof); (ii) 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) the failure of the
beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions
required in order to draw upon such Letter of Credit or any other claim of any
Borrower against any beneficiary of such Letter of Credit, or any such
transferee, or any dispute between or among any Borrower and any beneficiary of
any Letter of Credit or any such transferee; (iv) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (v)
errors in interpretation of technical terms; (vi) 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) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of the Agent, including any Governmental Acts,
and none of the above shall affect or impair, or prevent the vesting of, any of
the Agent's rights or powers hereunder.
In furtherance and extension and not in limitation of
the specific provisions set forth above, any action
taken or omitted by the Agent under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put the Agent under any resulting liability to
the Borrowers or any Bank.
2.10 Borrowings to Repay Swing Line Loans.
Any aggregate positive balance of cash over the targeted
amount of cash in the applicable accounts under the Swing Line shall, to the
extent available at the end of a Business Day, be automatically applied to the
repayment of the outstanding balance of the Swing Line Loans. In addition to the
repayments referred to in the preceding sentence, PNC Bank may at its option at
any time demand repayment of the Swing Line Loans and upon any such demand, the
Borrower shall pay, and if the Borrower does not provide ready funds by 11:00
a.m. on the date of such demand, each Bank shall make a Revolving Credit Loan in
an amount equal to such Bank's Ratable Share of the aggregate principal amount
of such outstanding Swing Line Loan, plus, if PNC Bank so requests, accrued
interest thereon, provided that no Bank shall be obligated in any event to make
Revolving Credit Loans in excess of its Revolving Credit Commitment or its
Ratable Share of the Borrowing Base, whichever is less. Revolving Credit Loans
made pursuant to the preceding sentence shall bear interest at the Revolving
Credit Interest Rate specified in Section 4.1.1(i) and shall be deemed to have
been properly requested in accordance with Section 2.5 without regard to any of
the requirements of that provision or other provisions of the Agreement. PNC
Bank shall provide notice to the Banks (which may be telephonic or written
notice by letter, facsimile or telephone) that such Revolving Credit Loans are
to be made under this Section 2.10 and of the apportionment among the Banks, and
the Banks shall be unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 7 are then satisfied) by the
time PNC Bank so requests, which may be on the Business Day that the Banks
receive such notice from PNC Bank.
3. [RESERVED]
4. INTEREST RATES
4.1 Interest Rate Options.
- ------------------------------
The Borrowers shall pay interest in respect of the outstanding
unpaid principal amount of the Loans as selected by it from the Base Rate
Option, or Euro-Rate Option set forth below applicable to the Loans, it being
understood that, subject to the provisions of this Agreement, the Borrowers may
select different Interest Rate Options and different Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche, provided that there shall
not be at any one time outstanding more than five (5) Borrowing Tranches in the
aggregate among all of the Loans. If at any time the designated rate applicable
to any Loan made by any Bank exceeds such Bank's highest lawful rate, the rate
of interest on such Bank's Loan shall be limited to such Bank's highest lawful
rate.
4.1.1 Revolving Credit Interest Rate Options.
- -----------------------------------------------
The Borrowers shall have the right to select from the
following Interest Rate Options applicable to the
Loans:
(i) Base Rate Option: A fluctuating rate per annum (computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed) equal to
the Base Rate plus the Applicable Margin, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate or the Applicable Margin as the case may be;
(ii) Revolving Credit Euro-Rate Option: A rate per annum (computed on the basis
of a year of 360 days and actual days elapsed) equal to the Euro-Rate plus the
Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Applicable Margin.
4.1.2 Rate Quotations.
- ------------------------
The Borrowers may call the Agent on or before the
date on which a Loan Request is to be delivered to
receive an indication of the rates then in effect, but it is acknowledged that
such projection shall not be binding on the Agent or the Banks nor affect the
rate of interest which thereafter is actually in effect when the election is
made.
4.2 Interest Periods.
- -------------------------
At any time when the Borrowers shall select, convert to or
renew a Euro-Rate Option, the Borrowers shall notify the Agent thereof at least
three (3) Business Days prior to the effective date of such Euro-Rate Option by
delivering a Loan Request. The notice shall specify an interest period (the
"Interest Period") during which such Interest Rate Option shall apply, such
Interest Period to be one, two, three or six Months in the event Borrower .
Notwithstanding the preceding sentence, the following provisions shall apply to
any selection of, renewal of, or conversion to Euro-Rate Option:
4.2.1 Ending Date and Business Day.
- -------------------------------------
any Interest Period which would otherwise end on a
date which is not a Business Day shall be extended to
the next succeeding Business Day unless such Business Day falls in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day;
4.2.2 Amount of Borrowing Tranche.
- ------------------------------------
each Borrowing Tranche of Euro-Rate Loans shall be
in integral multiples of $100,000 and not less than
$2,000,000;
4.2.3 Termination Before Expiration Date.
- -------------------------------------------
the Borrowers shall not select, convert to or renew
an Interest Period for any portion of the Loans that
would end after the Expiration Date; and
4.2.4 Renewals.
- -----------------
in the case of the renewal of Euro-Rate Option at
the end of an Interest Period, the first day of the new
Interest Period shall be the last day of the preceding Interest Period, without
duplication in payment of interest for such day.
4.3 Interest After Default.
- -------------------------------
To the extent permitted by Law, upon the occurrence of an
Event of Default and until such time such Event of Default shall have been cured
or waived:
4.3.1 Letter of Credit Fees, Interest Rate.
- ---------------------------------------------
the Letter of Credit Fees and the rate of interest
for each Loan otherwise applicable pursuant to
Section 2.9.2 or Section 4.1, respectively, shall be increased by 2.0% per
annum; and
4.3.2 Other Obligations.
- --------------------------
each other Obligation hereunder if not paid when due
shall bear interest at a rate per annum equal to the
sum of the rate of interest applicable under the Base Rate Option plus an
additional 2.0% per annum from the time such Obligation becomes due and payable
and until it is paid in full.
4.3.3 Acknowledgment.
- -----------------------
The Borrowers acknowledge that the increase in rates
referred to in this Section 4.3 reflects, among other
things, the fact that such Loans or other amounts have become a substantially
greater risk given their default status and that the Banks are entitled to
additional compensation for such risk; and all such interest shall be payable by
Borrowers upon demand by Agent.
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available
4.4.1 Unascertainable.
- ------------------------
If on any date on which a Euro-Rate would otherwise
be determined, the Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such Euro-
Rate, or
(ii) a contingency has occurred which materially and adversely affects the
secondary market for negotiable certificates of deposit maintained by dealers of
recognized standing relating to the London interbank eurodollar market relating
to the Euro-Rate, the Agent shall have the rights specified in Section 4.4.3.
4.4.2 Illegality; Increased Costs; Deposits Not Available.
- ------------------------------------------------------------
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any Loan to which a Euro-Rate Option
applies has been made impracticable or unlawful by compliance by such Bank in
good faith with any Law or any interpretation or application thereof by any
Official Body or with any request or directive of any such Official Body
(whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and fairly reflect the cost
to such Bank of the establishment or maintenance of
any such Loan, or
(iii) after making all reasonable efforts, deposits of the relevant amount in
Dollars for the relevant Interest Period for a Loan to which a Euro-Rate Option
applies, respectively, are not available to such Bank at the effective cost of
funding a proposed in the London interbank market,
then the Agent shall have the rights specified in Section 4.4.3.
4.4.3 Agent's and Bank's Rights.
- ----------------------------------
In the case of any event specified in Section 4.4.1
above, the Agent shall promptly so notify the Banks and
the Borrowers thereof, and in the case of an event specified in Section 4.4.2
above, such Bank shall promptly so notify the Agent and endorse a certificate to
such notice as to the specific circumstances of such notice, and the Agent shall
promptly send copies of such notice and certificate to the other Banks and the
Borrowers. Upon such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given), the obligation of (A) the Banks,
in the case of such notice given by the Agent, or (B) such Bank, in the case of
such notice given by such Bank, to allow the Borrowers to select, convert to or
renew a Euro-Rate Option shall be suspended until the Agent shall have later
notified the Borrowers, or such Bank shall have later notified the Agent, of the
Agent's or such Bank's, as the case may be, determination that the circumstances
giving rise to such previous determination no longer exist. If at any time the
Agent makes a determination under Section 4.4.1 and the Borrowers have
previously notified the Agent of its selection of, conversion to or renewal of a
Euro-Rate Option and such Interest Rate Option has not yet gone into effect,
such notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such Loans.
If any Bank notifies the Agent of a determination under Section 4.4.2, the
Borrowers shall, subject to the Borrowers' indemnification Obligations under
Section 5.6.2, as to any Loan of the Bank to which a Euro-Rate Option applies,
on the date specified in such notice either convert such Loan to the Base Rate
Option otherwise available with respect to such Loan or prepay such Loan in
accordance with Section 5.4. Absent due notice from the Borrowers of conversion
or prepayment, such Loan shall automatically be converted to the Base Rate
Option otherwise available with respect to such Loan upon such specified date.
4.5 Selection of Interest Rate Options.
- -------------------------------------------
If the Borrowers fail to select a new Interest Period to apply
to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration
of an existing Interest Period applicable to such Borrowing Tranche in
accordance with the provisions of Section 4.2, the Borrowers shall be deemed to
have converted such Borrowing Tranche to the Base Rate Option commencing upon
the last day of the existing Interest Period.
5. PAYMENTS
5.1 Payments.
- -----------------
All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Facility Fees, Letter of Credit Fees or
other fees or amounts due from the Borrowers hereunder shall be payable prior to
12:00 noon, Philadelphia time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrowers, and without set-off, counterclaim or other deduction of any nature,
and an action therefor shall immediately accrue. Such payments shall be made to
the Agent at the Principal Office for the ratable accounts of the Banks with
respect to the Loans (or for the Account of PNC Bank with respect to Swing Line
Loans) in U.S. Dollars and in immediately available funds, and the Agent shall
promptly distribute such amounts to the Banks in immediately available funds,
provided that in the event payments are received by 12:00 noon, Philadelphia
time, by the Agent with respect to the Loans and such payments are not
distributed to the Banks on the same day received by the Agent, the Agent shall
pay the Banks the Federal Funds Effective Rate with respect to the amount of
such payments for each day held by the Agent and not distributed to the Banks.
The Agent's and each Bank's statement of account, ledger or other relevant
record shall, in the absence of manifest error, be conclusive as the statement
of the amount of principal of and interest on the Loans and other amounts owing
under this Agreement and shall be deemed an "account stated."
5.2 Pro Rata Treatment of Banks.
- ------------------------------------
Each borrowing shall be allocated to each Bank according to
its Ratable Share, and each selection of, conversion to or renewal of any
Interest Rate Option and each payment or prepayment by the Borrowers with
respect to principal, interest, Commitment Fees, Facility Fees, Letter of Credit
Fees, or other fees or amounts due from the Borrowers hereunder to the Banks
with respect to the Loans, shall (except as provided in Section 4.4.3 in the
case of an event specified in Section 4.4 [Euro-Rate Unascertainable;
Illegality; Increased Costs; Deposits Not Available], 5.4 [Voluntary
Prepayments] or 5.6 [Additional Compensation in Certain Circumstances]) be made
in proportion to the applicable Loans outstanding from each Bank and, if no such
Loans are then outstanding, in proportion to the Ratable Share of each Bank.
5.3 Interest Payment Dates.
- -------------------------------
Interest on Loans to which the Base Rate Option applies shall
be due and payable in arrears on the first Business Day of each January, April,
July and October after the date hereof and on the Expiration Date or upon
acceleration of the Notes. Interest on Loans to which the Euro-Rate Option
applies shall be due and payable on the last day of each Interest Period for
those Loans and, if such Interest Period is longer than three (3) Months, also
on the 90th day of such Interest Period. Interest on mandatory prepayments of
principal under Section 5.5 shall be due on the date such mandatory prepayment
is due. Interest on the principal amount of each Loan or other monetary
Obligation shall be due and payable on demand after such principal amount or
other monetary Obligation becomes due and payable (whether on the stated
maturity date, upon acceleration or otherwise).
5.4 Voluntary Prepayments.
- ------------------------------
5.4.1 Right to Prepay.
- ------------------------
The Borrowers shall have the right at its option from
time to time to prepay the Loans in whole or part
without premium or penalty (except as provided in Section 5.4.2 below or in
Section 5.6):
(i) at any time with respect to any Loan to which the Base Rate Option
applies,
(ii) on the last day of the applicable Interest Period with respect to Loans
to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any Bank pursuant to Section 4.4
[Euro-Rate Unascertainable] with respect to any Loan to which a Euro-Rate Option
applies.
Whenever the Borrowers desire to prepay any part of
the Loans, it shall provide a prepayment notice to the
Agent at least one (1) Business Day prior to the date of prepayment of Loans to
which a Euro-Rate Option applies and the date of prepayment of Loans to which
the Base Rate Option applies setting forth the following information:
(x)......the date, which shall be a Business Day, on
which the proposed prepayment is to be made; and
(y)......the total principal amount of such
prepayment, which shall not be less than $1,000,000 (with no
minimum in the case of Swing Line Loans).
All prepayment notices shall be irrevocable. The
principal amount of the Loans for which a prepayment
notice is given, together with interest on such principal amount except with
respect to Loans to which the Base Rate Option applies, shall be due and payable
on the date specified in such prepayment notice as the date on which the
proposed prepayment is to be made. Except as provided in Section 4.4.3, if the
Borrowers prepay a Loan but fail to specify the applicable Borrowing Tranche
which the Borrowers are prepaying, the prepayment shall be applied first to
Loans to which the Base Rate Option applies, then to Loans to which the
Euro-Rate the Option applies. Any prepayment hereunder shall be subject to the
Borrowers' Obligation to indemnify the Banks under Section 5.6.2.
5.4.2 Replacement of a Bank.
- ------------------------------
In the event any Bank (i) gives notice under Section
4.4 or Section 5.6.1, (ii) does not fund Loans because
the making of such Loans would contravene any Law applicable to such Bank, (iii)
does not approve any action as to which consent of the Required Banks is
requested by the Borrowers and obtained hereunder, or (iv) becomes subject to
the control of an Official Body (other than normal and customary supervision),
then the Borrowers shall have the right at its option, with the consent of the
Agent, which shall not be unreasonably withheld, to prepay the Loans of such
Bank in whole, together with all interest accrued thereon, and terminate such
Bank's Commitment within ninety (90) days after (w) receipt of such Bank's
notice under Section 4.4 or 5.6.1, (x) the date such Bank has failed to fund
Loans because the making of such Loans would contravene Law applicable to such
Bank, (y) the date of obtaining the consent which such Bank has not approved, or
(z) the date such Bank became subject to the control of an Official Body, as
applicable; provided that the Borrowers shall also pay to such Bank at the time
of such prepayment any amounts required under Section 5.6 and any accrued
interest due on such amount and any related fees; provided, however, that the
Commitment of such Bank shall be provided by one or more of the remaining Banks
or a replacement bank acceptable to the Agent; provided, further, the remaining
Banks shall have no obligation hereunder to increase their Commitments.
Notwithstanding the foregoing, the Agent may only be replaced subject to the
requirements of Section 10.14 and provided that all Letters of Credit have
expired or been terminated or replaced.
5.4.3 Change of Lending Office.
- ---------------------------------
Each Bank agrees that upon the occurrence of any
event giving rise to increased costs or other special
payments under Section 4.4.2 [Illegality, etc.] or 5.6.1 [Increased Costs, etc.]
with respect to such Bank, it will if requested by the Borrowers, use reasonable
efforts (subject to overall policy considerations of such Bank) to designate
another lending office for any Loans or Letters of Credit affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing is this Section 5.4.3 shall affect or postpone any of
the Obligations of the Borrowers or any other Loan Party or the rights of the
Agent or any Bank provided in this Agreement.
5.5 Mandatory Prepayments.
- ------------------------------
In the event that the Facility Usage shall at any
time exceed the Borrowing Base for any reason, the
Borrower, within five (5) Business Days after the date on which excess shall
occur, shall pay to the Agent on behalf of the Banks a principal payment to be
applied to the Loans in an aggregate amount sufficient to eliminate such excess,
together with any payments required to be made under Section 5.6.2.
5.6 Additional Compensation in Certain Circumstances.
- ---------------------------------------------------------
5.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc.
- --------------------------------------------------------------------------
If any Law, guideline or interpretation or any change
in any Law, guideline or interpretation or
application thereof by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive (whether or
not having the force of Law) of any central bank or other Official Body:
(i) subjects any Bank to any tax or changes the basis of taxation with respect
to this Agreement, the Notes, the Loans or payments by the Borrowers of
principal, interest, Commitment Fees, or other amounts due from the Borrowers
hereunder or under the Notes (except for taxes on the overall net income of such
Bank),
(ii) imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against credits or commitments to extend credit extended by,
or assets (funded or contingent) of, deposits with or for the account of, or
other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any capital adequacy or similar
requirement (A) against assets (funded or contingent) of, or letters of credit,
other credits or commitments to extend credit extended by, any Bank, or (B)
otherwise applicable to the obligations of any Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Bank's capital, taking into consideration such Bank's customary policies with
respect to capital adequacy) by an amount which such Bank in its sole discretion
deems to be material, such Bank shall from time to time notify the Borrowers and
the Agent of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income, additional
expense or reduced rate of return. Such notice shall set forth in reasonable
detail the basis for such determination. Such amount shall be due and payable by
the Borrowers to such Bank ten (10) Business Days after such notice is given.
5.6.2 Indemnity.
- ------------------
In addition to the compensation required by Section
5.6.1, the Borrowers shall indemnify each Bank against
all liabilities, losses or expenses, including loss of margin, any loss or
expense incurred in liquidating or employing deposits from third parties and any
loss or expense incurred in connection with funds acquired by a Bank to fund or
maintain Loans subject to a Euro-Rate Option, (irrespective of where and how the
actual funding occurs) which such Bank sustains or incurs as a consequence of
any
(i) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate
Option applies on a day other than the last day of the corresponding Interest
Period (whether or not such payment or prepayment is mandatory, voluntary or
automatic and whether or not such payment or prepayment is then due),
(ii) attempt by the Borrowers to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any Loan Requests under Section 2.5 or
Section 4.2 or notice relating to prepayments under Section 5.4, or
(iii) default by the Borrowers in the performance or observance of any covenant
or condition contained in this Agreement or any other Loan Document, including
any failure of the Borrowers to pay when due (by acceleration or otherwise) any
principal, interest, Commitment Fee or any other amount due hereunder.
If any Bank sustains or incurs any such loss or expense, it
shall from time to time notify the Borrowers of the amount determined in good
faith by such Bank (which determination may include such assumptions,
allocations of costs and expenses and averaging or attribution methods as such
Bank shall deem reasonable) to be necessary to indemnify such Bank for such loss
or expense. Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrowers to such
Bank ten (10) Business Days after such notice is given.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties.
- ---------------------------------------
The Borrowers and, to extent provided herein, the Guarantor,
jointly and severally, represent and warrant to the Agent and each of the Banks
as follows:
6.1.1 Organization and Qualification.
- ---------------------------------------
Each Loan Party and each Subsidiary of each Loan
Party is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. Each Loan Party and each Subsidiary of each
Loan Party has the lawful power to own or lease its properties and to engage in
the business it presently conducts or proposes to conduct. Each Loan Party and
each Subsidiary of each Loan Party is duly licensed or qualified and in good
standing in each jurisdiction listed on Schedule 6.1.1 and in all other
jurisdictions where the property owned or leased by it or the nature of the
business transacted by it or both makes such licensing or qualification
necessary.
6.1.2 Capitalization and Ownership.
- -------------------------------------
The authorized capital stock of the Borrowers other
than the Company (referred to herein as the "Shares")
which are issued and outstanding and are owned as described on Schedule 6.1.3.
All of the Shares have been validly issued and are fully paid and nonassessable.
There are no options, warrants or other rights outstanding to purchase any such
shares except as indicated on Schedule 6.1.3. Without limiting the foregoing,
Schedule 6.1.3 also describes the ownership of Canopy.
6.1.3 Subsidiaries.
- ---------------------
Schedule 6.1.3 states the name of each of the
--------------
Borrowers' Subsidiaries, its jurisdiction of incorporation,
its authorized capital stock, the issued and outstanding shares (referred to
herein as the "Subsidiary Shares") and the owners thereof if it is a
corporation, its outstanding partnership interests (the "Partnership Interests")
if it is a partnership and its outstanding limited liability company interests,
interests assigned to managers thereof and the voting rights associated
therewith (the "LLC Interests") if it is a limited liability company. The
Borrowers and each Subsidiary of the Borrowers has good and marketable title to
all of the Subsidiary Shares, Partnership Interests and LLC Interests it
purports to own, free and clear in each case of any Lien. All Subsidiary Shares,
Partnership Interests and LLC Interests have been validly issued, and all
Subsidiary Shares are fully paid and nonassessable. All capital contributions
and other consideration required to be made or paid in connection with the
issuance of the Partnership Interests and LLC Interests have been made or paid,
as the case may be. There are no options, warrants or other rights outstanding
to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests
except as indicated on Schedule 6.1.3.
6.1.4 Power and Authority.
- ----------------------------
Each Loan Party has full power to enter into,
execute, deliver and carry out this Agreement and the other
Loan Documents to which it is a party, to incur the Indebtedness contemplated by
the Loan Documents and to perform its Obligations under the Loan Documents to
which it is a party, and all such actions have been duly authorized by all
necessary proceedings on its part.
6.1.5 Validity and Binding Effect.
- ------------------------------------
This Agreement has been duly and validly executed and
delivered by each Loan Party, and each other Loan
Document which any Loan Party is required to execute and deliver on or after the
date hereof will have been duly executed and delivered by such Loan Party on the
required date of delivery of such Loan Document. This Agreement and each other
Loan Document constitutes, or will constitute, legal, valid and binding
obligations of each Loan Party which is or will be a party thereto on and after
its date of delivery thereof, enforceable against such Loan Party in accordance
with its terms, except to the extent that enforceability of any of such Loan
Document may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditors' rights generally
or limiting the right of specific performance.
6.1.6 No Conflict.
- --------------------
Neither the execution and delivery of this Agreement
or the other Loan Documents by any Loan Party nor the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof or thereof by any of them will conflict
with, constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company agreement or other organizational documents of any Loan Party or (ii)
any Law or any material agreement or instrument or order, writ, judgment,
injunction or decree to which any Loan Party or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound or to which it is
subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan
Party or any of its Subsidiaries (other than Liens granted under the Loan
Documents).
6.1.7 Litigation.
- -------------------
There are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan Party at law
or equity before any Official Body which individually or in the aggregate is
likely to result in any Material Adverse Change. None of the Borrowers or any
Subsidiaries of any Loan Party is in violation of any order, writ, injunction or
any decree of any Official Body which may result in any Material Adverse Change.
6.1.8 Title to Properties.
- ----------------------------
The real property owned or leased by each Loan Party
and each Subsidiary of each Loan Party and the
location of all Consignment Inventory is described on Schedule 6.1.8. Each Loan
Party and each Subsidiary of each Loan Party has good and marketable title to or
valid leasehold interest in all properties, assets and other rights which it
purports to own or lease or which are reflected as owned or leased on its books
and records, including the Collateral, free and clear of all Liens and
encumbrances except Permitted Liens, and subject to the terms and conditions of
the applicable leases. All leases of property are in full force and effect
without the necessity for any consent which has not previously been obtained
upon consummation of the transactions contemplated hereby. Schedule 6.1.8
describes the nature of the Collateral and Consignment Inventory at all
locations where such property is located and the nature of each Borrower's
occupancy rights thereat.
6.1.9 Financial Statements.
- -----------------------------
(i) Historical Statements. The Borrowers have delivered to the Agent copies of
its audited consolidated year-end financial statements for and as of the end of
the two (2) fiscal years ended December 31, 1999 [the "Annual Statements"). In
addition, the Borrowers have delivered to the Agent copies of the Company's
unaudited consolidated interim financial statements for the fiscal year to date
and as of the end of the fiscal quarter ended September 30, 2000 (the "Interim
Statements") (the Annual and Interim Statements being collectively referred to
as the "Historical Statements"]. The Historical Statements were compiled from
the books and records maintained by the Borrowers' management, are correct and
complete and fairly represent the consolidated financial condition of the
Borrowers and its Subsidiaries as of their dates and the results of operations
for the fiscal periods then ended and have been prepared in accordance with GAAP
consistently applied, subject (in the case of the Interim Statements) to normal
year-end audit adjustments.
(ii) Financial Projections. The Borrowers have delivered to the Agent financial
projections of the Borrowers and their Subsidiaries through 2003 derived from
various assumptions of the Borrowers' management (the "Financial Projections").
The Financial Projections represent a reasonable range of possible results in
light of the history of the business, present and foreseeable conditions and the
intentions of the Borrowers' management. The Financial Projections accurately
reflect the liabilities of the Borrowers and their Subsidiaries upon
consummation of the transactions contemplated hereby as of the Closing Date.
(iii) Accuracy of Financial Statements. Neither the Borrowers nor any Subsidiary
of any Borrower has any material liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the Historical
Statements or in the notes thereto, and except as disclosed therein there are no
unrealized or anticipated losses from any commitments of the Borrowers or any
Subsidiary of any Borrower which may cause a Material Adverse Change. Since
September 30, 2000, no Material Adverse Change has occurred.]
6.1.10 Use of Proceeds; Margin Stock.
- --------------------------------------
The Borrowers intend to use the proceeds of the Loans
in accordance with Sections 2.8 and 8.1.10. None of
the Borrowers or any Subsidiaries of any Loan Party engages or intends to engage
principally, or as one of its important activities, in the business of extending
credit for the purpose, immediately, incidentally or ultimately, of purchasing
or carrying margin stock (within the meaning of Regulation U). No part of the
proceeds of any Loan has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or to refund
Indebtedness originally incurred for such purpose, or for any purpose which
entails a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System. None of the
Borrowers or any Subsidiary of any Loan Party holds or intends to hold margin
stock in such amounts that more than 25% of the reasonable value of the assets
of any Loan Party or Subsidiary of any Loan Party are or will be represented by
margin stock.
6.1.11 Full Disclosure.
- ------------------------
Neither this Agreement nor any other Loan Document,
nor any certificate, statement, agreement or other
documents furnished to the Agent or any Bank in connection herewith or
therewith, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to any Loan Party which materially adversely
affects the business, property, assets, financial condition, results of
operations or prospects of any Loan Party or Subsidiary of any Loan Party which
has not been set forth in this Agreement or in the certificates, statements,
agreements or other documents furnished in writing to the Agent and the Banks
prior to or at the date hereof in connection with the transactions contemplated
hereby.
6.1.12 Taxes.
- --------------
All federal, state, local and other tax returns
required to have been filed with respect to each Loan Party
and each Subsidiary of each Loan Party have been filed, and payment or adequate
provision has been made for the payment of all taxes, fees, assessments and
other governmental charges which have or may become due pursuant to said returns
or to assessments received, except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made. There are no agreements or waivers extending the statutory period of
limitations applicable to any federal income tax return of any Loan Party or
Subsidiary of any Loan Party for any period.
6.1.13 Consents and Approvals; Landlord Waivers.
No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official
Body or any other Person is required by any Law or any agreement in connection
with the execution, delivery and carrying out of this Agreement and the other
Loan Documents by any Loan Party, except for the repayment on the Closing Date
of obligations to Existing Lenders.
6.1.14 No Event of Default; Compliance with Instruments.
- ---------------------------------------------------------
No event has occurred and is continuing and no
condition exists or will exist after giving effect to the
borrowings or other extensions of credit to be made on the Closing Date under or
pursuant to the Loan Documents which constitutes an Event of Default or
Potential Default. None of the Borrowers or any Subsidiaries of any Loan Party
is in violation of (i) any term of its certificate of incorporation, bylaws,
certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational documents
or (ii) any material agreement or instrument to which it is a party or by which
it or any of its properties may be subject or bound where such violation would
constitute a Material Adverse Change.
6.1.15 Licenses, Etc.
- ----------------------
Each Loan Party and each Subsidiary of each Loan
Party owns or possesses all the material patents,
trademarks, service marks, trade names, copyrights, licenses, registrations,
franchises, permits and rights necessary to own and operate its properties and
to carry on its business as presently conducted and planned to be conducted by
such Loan Party or Subsidiary, without known alleged or actual conflict with the
rights of others. Each item of such property which is Collateral is subject to a
perfected Lien in favor of the Agent, subject only to Permitted Liens.
6.1.16 Status of the Obligations.
- ----------------------------------
The Obligations of each Loan Party under this
Agreement, the Notes and each of the other Loan Documents to
which it is a party do rank and will rank at least pari passu in priority of
payment with all other Indebtedness of such Loan Party except Indebtedness of
such Loan Party to the extent secured by Permitted Liens. There is no Lien upon
or with respect to any of the properties or income of any Loan Party or
Subsidiary of any Loan Party which secures indebtedness or other obligations of
any Person except for Permitted Liens.
6.1.17 Insurance.
- ------------------
No notice has been given or claim made and no grounds
exist to cancel or avoid any material insurance
policies or bonds or to reduce the coverage provided thereby. Such policies and
bonds provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of each Loan Party and each
Subsidiary of each Loan Party in accordance with prudent business practice in
the industry of the Borrowers and their Subsidiaries.
6.1.18 Compliance with Laws.
- -----------------------------
The Borrowers and their Subsidiaries are in
compliance in all material respects with all applicable Laws
(other than Environmental Laws which are specifically addressed in Section
6.1.22) in all jurisdictions in which any Loan Party or Subsidiary of any Loan
Party is presently or will be doing business except where the failure to do so
would not constitute a Material Adverse Change.
6.1.19 Investment Companies; Regulated Entities.
- -------------------------------------------------
None of the Borrowers or any Subsidiaries of any Loan
Party is an "investment company" registered or
required to be registered under the Investment Company Act of 1940 or under the
"control" of an "investment company" as such terms are defined in the Investment
Company Act of 1940 and shall not become such an "investment company" or under
such "control." None of the Borrowers or any Subsidiaries of any Loan Party is
subject to any other Federal state statute or regulation limiting its ability to
incur Indebtedness for borrowed money.
6.1.20 Plans and Benefit Arrangements.
- ---------------------------------------
Except as set forth on Schedule 6.1.20:
(i) The Borrowers and each other member of the ERISA Group are in compliance in
all material respects with any applicable provisions of ERISA with respect to
all Benefit Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,
to the best knowledge of the Borrowers, with respect to any Multiemployer Plan
or Multiple Employer Plan, which could result in any material liability of the
Borrowers or any other member of the ERISA Group. The Borrowers and all other
members of the ERISA Group have made when due any and all payments required to
be made under any agreement relating to a Multiemployer Plan or a Multiple
Employer Plan or any Law pertaining thereto. With respect to each Plan and
Multiemployer Plan, the Borrowers and each other member of the ERISA Group (i)
have fulfilled in all material respects their obligations under the minimum
funding standards of ERISA, (ii) have not incurred any liability to the PBGC,
and (iii) have not had asserted against them any penalty for failure to fulfill
the minimum funding requirements of ERISA.
(ii) To the best of the Borrowers' knowledge, each Multiemployer Plan and
Multiple Employer Plan is able to pay benefits thereunder when due.
(iii) Neither the Borrowers nor any other member of the ERISA Group has
instituted or intends to institute proceedings to terminate any Plan.
(iv) No event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA
has occurred or is reasonably expected to occur with respect to any Plan, and no
amendment with respect to which security is required under Section 307 of ERISA
has been made or is reasonably expected to be made to any Plan.
(v) The accumulated benefit obligation for all Plans taken together shall not
exceed the aggregate fair market value of the assets in such Plans as disclosed
in, and as of the date of, the most recent actuarial report for such Plans.
(vi) Neither the Borrowers nor any other member of the ERISA Group has incurred
or reasonably expects to incur any material withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrowers nor any
other member of the ERISA Group has been notified by any Multiemployer Plan or
Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan
has been terminated within the meaning of Title IV of ERISA and, to the best
knowledge of the Borrowers, no Multiemployer Plan or Multiple Employer Plan is
reasonably expected to be reorganized or terminated, within the meaning of Title
IV of ERISA.
(vii) To the extent that any Benefit Arrangement is insured, the Borrowers and
all other members of the ERISA Group have paid when due all premiums required to
be paid for all periods through the Closing Date. To the extent that any Benefit
Arrangement is funded other than with insurance, the Borrowers and all other
members of the ERISA Group have made when due all contributions required to be
paid for all periods through the Closing Date.
(viii) All Plans, Benefit Arrangements and Multiemployer Plans have been
administered in accordance with their terms and applicable Law.
6.1.21 Employment Matters.
- ---------------------------
Each of the Borrowers and each of their Subsidiaries
is in compliance with the Labor Contracts and all
applicable federal, state and local labor and employment Laws including those
related to equal employment opportunity and affirmative action, labor relations,
minimum wage, overtime, child labor, medical insurance continuation, worker
adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply would constitute a
Material Adverse Change. There are no outstanding grievances, arbitration awards
or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at
facilities of any of the Borrowers or any of their Subsidiaries which in any
case would constitute a Material Adverse Change. The Borrowers have no
collective bargaining agreements.
6.1.22 Environmental Matters.
- ------------------------------
Except as disclosed on Schedule 6.1.22, to the best
of the Loan Parties' knowledge:
(i) None of the Borrowers or any Subsidiaries of any Loan Party has received any
Environmental Complaint from any Official Body or private Person alleging that
such Loan Party or Subsidiary or any prior or subsequent owner of any of the
Property is a potentially responsible party under the Comprehensive
Environmental Response, Cleanup and Liability Act, 42 U.S.C. ss. 9601, et seq.,
and none of the Borrowers has any reason to believe that such an Environmental
Complaint might be received. There are no pending or, to any Loan Party's
knowledge, threatened Environmental Complaints relating to any Loan Party or
Subsidiary of any Loan Party or, to any Loan Party's knowledge, any prior or
subsequent owner of any of the Property pertaining to, or arising out of, any
Environmental Conditions.
(ii) There are no circumstances at, on or under any of the Property that
constitute a breach of or non-compliance with any of the Environmental Laws, and
there are no past or present Environmental Conditions at, on or under any of the
Property or, to any Loan Party's knowledge, at, on or under adjacent property,
that prevent compliance with the Environmental Laws at any of the Property.
(iii) Neither any of the Property nor any structures, improvements, equipment,
fixtures, activities or facilities thereon or thereunder contain or use
Regulated Substances except in compliance with Environmental Laws or except
where the presence of such materials would not constitute a Material Adverse
Change. There are no processes, facilities, operations, equipment or other
activities at, on or under any of the Property, or, to any Loan Party's
knowledge, at, on or under adjacent property, that currently result in the
release or threatened release of Regulated Substances onto any of the Property,
except to the extent that such releases or threatened releases are not a breach
of or otherwise not a violation of the Environmental Laws.
(iv) There are no aboveground storage tanks, underground storage tanks or
underground piping associated with such tanks, used for the management of
Regulated Substances at, on or under any of the Property that (a) do not have,
to the extent required by Environmental Laws, a full operational secondary
containment system in place, and (b) are not otherwise in compliance with all
Environmental Laws. There are no abandoned underground storage tanks or
underground piping associated with such tanks, previously used for the
management of Regulated Substances at, on or under any of the Property that have
not either been closed in place in accordance with Environmental Laws or removed
in compliance with all applicable Environmental Laws and no contamination
associated with the use of such tanks exists on any of the Property that is not
in compliance with Environmental Laws.
(v) Each Loan Party and each Subsidiary of any Loan Party has all material
permits, licenses, authorizations, plans and approvals necessary under the
Environmental Laws for the conduct of the business of such Loan Party or
Subsidiary as presently conducted. Each Loan Party and each Subsidiary of any
Loan Party has submitted all material notices, reports and other filings
required by the Environmental Laws to be submitted to an Official Body which
pertain to past and current operations on any of the Property.
(vi) All past and present on-site generation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances at, on, or under any of the Property and all off-site transportation,
storage, processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated Substances have been done in accordance with the
Environmental Laws or except where failure to do so would not constitute a
Material Adverse Change. 6.2 Updates to Schedules.
Should any of the information or disclosures provided
on any of the Schedules attached hereto become
outdated or incorrect in any material respect, the Borrowers shall promptly
provide the Agent in writing with such revisions or updates to such Schedule as
may be necessary or appropriate to update or correct same; provided, however,
that no Schedule shall be deemed to have been amended, modified or superseded by
any such correction or update, nor shall any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule be deemed to have been cured thereby, unless and until the Required
Banks, in their sole and absolute discretion, shall have accepted in writing
such revisions or updates to such Schedule.
7. CONDITIONS OF LENDING
The obligation of each Bank to make Loans and of the Agent to
issue Letters of Credit hereunder is subject to the performance by each of the
Borrowers of their Obligations to be performed hereunder at or prior to the
making of any such Loans or issuance of such Letters of Credit and to the
satisfaction of the following further conditions:
7.1 First Loans.
- --------------------
On the Closing Date:
7.1.1 Officer's Certificate.
- ------------------------------
7.1.2 The representations and warranties of each of the Loan Parties contained
in Section 6 and in each of the other Loan Documents shall be true and accurate
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties shall
have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the Agent for the
benefit of each Bank a certificate of each of the Loan Parties, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of the Company and the President or Treasurer of each other
Loan Party, to each such effect. Secretary's Certificate.
There shall be delivered to the Agent for the benefit
of each Bank a certificate dated the Closing Date and
signed by the Secretary or an Assistant Secretary of each of the Borrowers,
certifying as appropriate as to:
(i) all action taken by each Loan Party in connection with this Agreement
and the other Loan Documents;
(ii) the names of the officer or officers authorized to sign this Agreement and
the other Loan Documents and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of each Loan Party
for purposes of this Agreement and the true signatures of such officers, on
which the Agent and each Bank may conclusively rely; and
(iii) copies of its organizational documents, including its certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, and limited liability company agreement as
in effect on the Closing Date certified by the appropriate state official where
such documents are filed in a state office together with certificates from the
appropriate state officials as to the continued existence and good standing of
each Loan Party in the states where the Selected Collateral Locations are
situated.
7.1.3 Delivery of Loan Documents.
- -----------------------------------
The Notes, the Security Agreement, , the Canopy
Acknowledgment, , the Financing Statements, the Landlord
Waivers, the Swing Line Agreements (including a duly completed Swing Line Note),
and other Loan Documents shall have been duly executed and delivered to the
Agent for the benefit of the Banks.
7.1.4 Opinion of Counsel.
- ---------------------------
There shall be delivered to the Agent for the benefit
of each Bank a written opinion of the General Counsel
of the Company, dated the Closing Date and in form and substance satisfactory to
the Agent and its counsel as to all matters incident to the transactions
contemplated herein as the Agent may reasonably request.
7.1.5 Legal Details.
- ----------------------
All legal details and proceedings in connection with
the transactions contemplated by this Agreement and
the other Loan Documents shall be in form and substance satisfactory to the
Agent and counsel for the Agent, and the Agent shall have received all such
other counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Agent and said counsel, as the Agent or said counsel may
reasonably request.
7.1.6 Payment of Fees.
- ------------------------
The Borrowers shall have paid or caused to be paid to
the Agent for itself and for the account of the Banks
to the extent not previously paid all fees accrued through the Closing Date and
the costs and expenses for which the Agent and the Banks are entitled to be
reimbursed.
7.1.7 Lien Searches.
- ----------------------
The Borrowers shall have provided to the Agent UCC
lien searches conducted within fifteen (15) days before
the Closing Date relating to all of the Loan Parties' properties and, each
Location at which Collateral or Consignment Inventory is located, including in
respect of any names under, or locations at, which any of the foregoing has or
had since 1996 maintained a distribution facility.
7.1.8 Consents and Landlord Waivers.
- --------------------------------------
All consents and Landlord Waivers required to
effectuate the transactions contemplated hereby shall have
been obtained.
7.1.9 Officer's Certificate Regarding MACs and Availability.
- --------------------------------------------------------------
Since September 30, 2000, no Material Adverse Change
shall have occurred; prior to the Closing Date, there
shall have been no material change in the management of the Company; and there
shall have been delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of the Company to each such effect.
7.1.10 No Violation of Laws.
- -----------------------------
The making of the Loans and the issuance of the
Letters of Credit shall not contravene any Law applicable
to any Loan Party or any of the Banks.
7.1.11 No Actions or Proceedings.
- ----------------------------------
No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, this Agreement, the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or which, in the Agent's sole discretion, would make it inadvisable
to consummate the transactions contemplated by this Agreement or any of the
other Loan Documents.
7.1.12 Insurance Policies.
- ---------------------------
All premiums on the Borrowers' insurance policies
shall have been paid.
7.1.13 Existing Lenders Payoff.
- --------------------------------
The Borrowers shall have delivered to the Agent such
executed payoff letters, termination statements,
satisfactions, releases, consents, cancelled notes and loan documents as shall
be required by the Agent to evidence the termination of all obligations of the
Borrowers (including with respect to letters of credit) under the Existing
Facility.
7.1.14 Availability.
- ---------------------
The Company shall have demonstrated to the
satisfaction of the Agent that there exists not less than
$5,000,000 availability for borrowing as Loans after giving effect to the
repayment of the Existing Facility.
7.2 Each Additional Loan.
- -----------------------------
At the time of making any Loans or issuing any Letters of
Credit other than Loans made or Letters of Credit issued on the Closing Date and
after giving effect to the proposed extensions of credit: the representations
and warranties of the Borrowers contained in Section 6 and in the other Loan
Documents shall be true on and as of the date of such additional Loan or Letter
of Credit with the same effect as though such representations and warranties had
been made on and as of such date (except representations and warranties which
expressly relate solely to an earlier date or time, which representations and
warranties shall be true and correct on and as of the specific dates or times
referred to therein) (and each Loan Request shall be deemed to constitute a
representation and warranty to the Agent and the Banks to that effect and that
all of the condition to funding have been met) and the Borrowers shall have
performed and complied with all covenants and conditions hereof; no Event of
Default or Potential Default shall have occurred and be continuing or shall
exist; the making of the Loans or issuance of such Letter of Credit shall not
contravene any Law applicable to any Loan Party or Subsidiary of any Loan Party
or any of the Banks; and the Borrowers shall have delivered to the Agent a duly
executed and completed Loan Request or application for a Letter of Credit as the
case may be.
8. COVENANTS
8.1 Affirmative Covenants.
- ------------------------------
The Borrowers, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings, and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Borrowers' other Obligations under
the Loan Documents and termination of the Commitments, the Borrowers shall
comply at all times with the following affirmative covenants:
8.1.1 Preservation of Existence, Etc.
- ---------------------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain its legal existence as a
corporation, limited partnership or limited liability company and its license or
qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary, except as otherwise expressly permitted in Section
8.2.5.
8.1.2 Payment of Liabilities, Including Taxes, Etc.
- -----------------------------------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, duly pay and discharge all liabilities
to which it is subject or which are asserted against it, promptly as and when
the same shall become due and payable, including all taxes, assessments and
governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and for which such reserve or other appropriate provisions, if any, as
shall be required by GAAP shall have been made, but only to the extent that
failure to discharge any such liabilities would not result in any additional
liability which would adversely affect to a material extent the financial
condition of any Loan Party or Subsidiary of any Loan Party, provided that the
Borrowers and their Subsidiaries will pay all such liabilities forthwith upon
the commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
8.1.3 Maintenance of Insurance.
- ---------------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets
against loss or damage by fire and such other insurable hazards as such assets
are commonly insured (including fire, extended coverage, property damage,
workers' compensation and public liability) and against other risks (including
errors and omissions) in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on similar
businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary. At the request of the Agent, the
Borrowers shall deliver to the Agent and each of the Banks from time to time a
summary schedule indicating all insurance then in force with respect to each of
the Borrowers.
8.1.4 Maintenance of Properties and Leases.
- ---------------------------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in good repair, working order
and condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all of those
properties useful or necessary to its business, and from time to time, such Loan
Party will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
8.1.5 Maintenance.
- --------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in full force and effect all
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the ownership and
operation of its properties and business if the failure so to maintain the same
would constitute a Material Adverse Change.
8.1.6 Visitation Rights.
- --------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or
authorized employees or representatives of the Agent or any of the Banks to
visit and inspect any of its properties and to examine and make excerpts from
its books and records and discuss its business affairs, finances and accounts
with its officers, all in such detail and at such times and as often as any of
the Banks may reasonably request, provided that each Bank shall provide the
Borrowers and the Agent with reasonable notice prior to any visit or inspection.
In the event any Bank desires to conduct an audit of any Loan Party, such Bank
shall make a reasonable effort to conduct such audit contemporaneously with any
audit to be performed by the Agent.
8.1.7 Keeping of Records and Books of Account.
- ------------------------------------------------
The Borrowers shall, and shall cause each Subsidiary
of the Borrowers to, maintain and keep proper books of
record and account which enable the Borrowers and their Subsidiaries to issue
financial statements in accordance with GAAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Borrowers or
any Subsidiary of the Borrowers, and in which full, true and correct entries
shall be made in all material respects of all its dealings and business and
financial affairs.
8.1.8 Plans and Benefit Arrangements.
- ---------------------------------------
The Borrowers shall, and shall cause each other
member of the ERISA Group to, comply with ERISA, the
Internal Revenue Code and other applicable Laws applicable to Plans and Benefit
Arrangements except where such failure, alone or in conjunction with any other
failure, would not result in a Material Adverse Change. Without limiting the
generality of the foregoing, the Borrowers shall cause all of their Plans and
all Plans maintained by any member of the ERISA Group to be funded in accordance
with the minimum funding requirements of ERISA and shall make, and cause each
member of the ERISA Group to make, in a timely manner, all contributions due to
Plans, Benefit Arrangements and Multiemployer Plans.
8.1.9 Compliance with Laws.
- -----------------------------
Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply with all applicable Laws,
including all Environmental Laws, in all respects, provided that it shall not be
deemed to be a violation of this Section 8.1.9 if any failure to comply with any
Law would not result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which in the aggregate would constitute a
Material Adverse Change.
8.1.10 Use of Proceeds.
- ------------------------
8.1.10.1 General.
- ----------------
The Borrowers will use the Letters of Credit and the
proceeds of the Loans only for (i) general corporate
purposes and for working capital and permitted advances to Canopy, (ii) to
finance Permitted Acquisitions and (iii) to repay and terminate all Indebtedness
owing to Existing Lenders. The Borrowers' use of the Letters of Credit and the
proceeds of the Loans for any purposes which contravenes any applicable Law or
any provision hereof.
8.1.10.2 Margin Stock.
- ---------------------
The Borrowers shall not use the proceeds of the Loans
to purchase margin stock as more fully provided in
Section 6.1.10.
8.1.10.3 Section 20 Subsidiaries.
- --------------------------------
The Borrowers will not, directly or indirectly, use
any portion of the proceeds of the Loans (i) knowingly
to purchase any Ineligible Securities from a Section 20 Subsidiary during any
period in which such Section 20 Subsidiary makes a market in such Ineligible
Securities, (ii) knowingly to purchase during the underwriting or placement
period Ineligible Securities being underwritten or privately placed by a Section
20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by as Section 20 Subsidiary and
issued by or for the benefit of any Loan Party or any Affiliate of any Loan
Party.
8.1.11 Further Assurances.
- ---------------------------
Each Loan Party shall, from time to time, at its
expense, faithfully preserve and protect the Agent's and
the Banks' rights hereunder and under the Loan Documents.
Canopy Acknowledgment.
---------------------
Each Loan Party shall cause any Indebtedness, loans
or advances owed by any Loan Party to any other Loan
Party, and Xeikon, to be subordinated pursuant to the terms of the Canopy
Acknowledgment.
8.1.13 Landlord Waivers.
- -------------------------
Borrowers shall make their best efforts to obtain and
deliver to the Banks on or before March 30, 2001
landlord waivers reasonably acceptable to the Agent in respect of the Selected
Collateral Locations.
8.2 Negative Covenants.
- ---------------------------
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings and interest thereon, expiration or termination of all Letters
of Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and termination of the Commitments, the Loan Parties shall comply with the
following negative covenants:
8.2.1 Indebtedness.
- ---------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create,
incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents and obligations under the
liquidity facility under the Receivable Purchase Facility;
(ii) Existing Indebtedness as set forth on Schedule 8.2.1 (including any
extensions or renewals thereof, provided there is no increase in the amount
thereof or other significant change in the terms thereof unless otherwise
specified on Schedule 8.2.1;
(iii) Capitalized and operating leases;
(iv) Indebtedness secured by Purchase Money Security Interests not exceeding
$2,000,000;
(v) Indebtedness of a Borrower to another Borrower which is subordinated in
accordance with the provisions of Section 8.1.12; and
(vi) other unsecured Indebtedness not exceeding $10,000,000 principal amount.
8.2.2 Liens.
- --------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create,
incur, assume or suffer to exist any Lien on any of its property or assets,
tangible or intangible, now owned or hereafter acquired, or agree or become
liable to do so, except Permitted Liens and no Loan Party shall consent or agree
to, permit or suffer to exist any agreement with, or assurance to, any Person
prohibiting the creation of a Lien in favor of the Agent or the Banks, except as
shown on Schedule 8.2.2.
8.2.3 Guaranties.
- -------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time, directly
or indirectly, become or be liable in respect of any Guaranty, or assume,
guarantee, become surety for, endorse or otherwise agree, become or remain
directly or contingently liable upon or with respect to any obligation or
liability of any other Person, except for Guaranties of Indebtedness of the Loan
Parties permitted hereunder, Guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, Guaranties of obligations or Borrowers' customers less than $100,000
in the aggregate or the Guaranty of VWR Corporation's obligation to make
supplemental retirement payments to Richard E. Engebrecht.
8.2.4 Loans and Investments.
- ------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time make or
suffer to remain outstanding any loan or advance to, or purchase, acquire or own
any stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) or limited liability company interest in, or any other
investment or interest in, or make any capital contribution to, any other
Person, or agree, become or remain liable to do any of the foregoing, except, to
the extent not prohibited by Section 8.2.17 [Regarding Canopy]:
(i) trade credit extended on usual and customary terms in the ordinary
course of business;
(ii) advances to employees to meet expenses incurred by such employees in
the ordinary course of business;
(iii) Permitted Investments;
(iv) acceptance of capital stock of another Person as payment of, or to
secure payment of, obligations not exceeding in the
aggregate $100,000 owing to a Borrower;
(v) other loans and investments not exceeding $1,500,000; and
(vi) Loans to Canopy not exceeding in the aggregate $7,000,000 outstanding at
any one time and, with respect to any such loan made after the Closing Date:
(a) such loans are not evidenced by any note, instrument or other evidence
of indebtedness unless endorsed over or pledged to
the Agent;
(b) at the time any such loan
is made, there exists no Event
of Default or Potential
Default.
8.2.5 Liquidations, Mergers, Consolidations, Acquisitions.
- ------------------------------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, dissolve, liquidate or
wind-up its affairs, or become a party to any merger or consolidation, or
acquire by purchase, lease or otherwise all or substantially all of the assets
or capital stock of any other Person, provided that
(1)......any Borrower may consolidate or merge into
another Borrower,
(2)......any Borrower may acquire, whether by
purchase or by merger, (A) all of the ownership interests of
another Person or (B) substantially all of assets of another Person or of a
business or division of another Person (each an "Permitted Acquisition"),
provided that each of the following requirements is met:
(ii) if the Borrowers are acquiring the
ownership interests in such Person, such Person shall
execute a Joinder and join this Agreement as a Borrower pursuant to Section
11.18 and such Person and comply with Section 11.18 on or before the date of
such Permitted Acquisition.
(iii) the board of directors or other
equivalent governing body of such Person shall have
approved such Permitted Acquisition and the Borrowers shall have delivered to
the Banks written evidence of such approval prior to such Permitted Acquisition,
(iv) the business acquired, or the
business conducted by the Person whose ownership interests
are being acquired, as applicable, shall be substantially the same as one or
more line or lines of business conducted by the Borrowers and shall comply with
Section 8.2.9,
(v) no Potential Default or Event of
Default shall exist immediately prior to and after
giving effect to such Permitted Acquisition,
(vi) the Borrowers shall demonstrate that
it shall be in compliance with the covenants
contained in Sections 8.2.14 and 8.2.15 after giving effect to such Permitted
Acquisition by delivering at least twenty (20) calendar days prior to such
Permitted Acquisition a certificate in the form of Exhibit 8.2.5 evidencing such
compliance, and
....................................(vii) the Consideration paid by the
Borrowers for such Acquisition shall not exceed $10,000,000
and after giving effect to such Permitted Acquisition, the Consideration
paid by the Borrowers for all Permitted Acquisitions made
since the Closing Date shall not exceed $20,000,000;
8.2.6 Dispositions of Assets or Subsidiaries.
- -----------------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, sell, convey, assign,
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including sale, assignment, discount or other disposition of accounts, contract
rights, chattel paper, equipment or general intangibles with or without recourse
or of capital stock, shares of beneficial interest, partnership interests or
limited liability company interests of a Subsidiary of such Borrower), except:
(i) transactions involving the sale of inventory in the ordinary course of
business;
(ii) any sale, transfer or lease of assets in the ordinary course of business
which are no longer necessary or required in the conduct of such Borrower's or
such Subsidiary's business;
(iii) any sale, transfer or lease of assets by any wholly owned Subsidiary of
such Borrower to another Borrower;
(iv) any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired or
leased;
(v) any other sale, transfer or lease of assets having an aggregate value
not greater than 5% of the Company's consolidated
assets;
(vi) any sale, transfer or lease of assets, other than those specifically
excepted pursuant to clauses (i) through (v) above, which is approved by the
Required Banks; or
(vii) the transfer as a contribution of capital of up to $11,100,000 in net
assets to Canopy effected as of July 1, 2000.
8.2.7 Affiliate Transactions.
- -------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, enter into or carry
out any transaction (including purchasing property or services from or selling
property or services to any Affiliate of any Borrower or other Person) unless
such transaction is not otherwise prohibited by this Agreement, is entered into
in the ordinary course of business upon fair and reasonable arm's-length terms
and conditions which are fully disclosed to the Agent and is in accordance with
all applicable Law.
8.2.8 Subsidiaries, Partnerships and Joint Ventures.
- ------------------------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, own or create directly
or indirectly any Subsidiaries other than (i) Canopy, (ii) any Subsidiary which
has joined this Agreement as a Borrower on the Closing Date; and (iii) any
Subsidiary formed after the Closing Date which joins this Agreement as a
Borrower pursuant to Section 11.18, provided that the Required Banks shall have
consented to such formation and joinder. Except for (or in connection with)
investments permitted by Section 8.2.4(v), each of the Loan Parties shall not
become or agree to (1) become a general or limited partner in any general or
limited partnership, except that the Loan Parties may be general or limited
partners in other Loan Parties, (2) become a member or manager of, or hold a
limited liability company interest in, a limited liability company, except that
the Loan Parties may be members or managers of, or hold limited liability
company interests in, other Loan Parties, or (3) become a joint venturer or hold
a joint venture interest in any joint venture.
8.2.9 Continuation of or Change in Business.
- ----------------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, engage in any business
other than the distribution and sale of imaging, publishing and printing
products, systems integration and related services substantially as conducted
and operated by such Loan Party or Subsidiary during the present fiscal year,
and such Loan Party or Subsidiary shall not permit any material change in such
business.
8.2.10 Plans and Benefit Arrangements.
- ---------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to:
(i) fail to satisfy the minimum funding requirements of ERISA and the
Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal Revenue Service
with respect to any Plan;
(iii) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or
Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would constitute a
Material Adverse Change;
(iv) permit the accumulated benefit obligations for all Plans taken together
to exceed the aggregate fair market value of the
assets in such Plans;
(v) fail to make when due any contribution to any Multiemployer Plan that the
Borrowers or any member of the ERISA Group may be required to make under any
agreement relating to such Multiemployer Plan, or any Law pertaining thereto;
(vi) withdraw (completely or partially) from any Multiemployer Plan or withdraw
(or be deemed under Section 4062(e) of ERISA to withdraw) from any Multiple
Employer Plan, where any such withdrawal is likely to result in a material
liability of the Borrowers or any member of the ERISA Group;
(vii) terminate, or institute proceedings to terminate, any Plan, where such
termination is likely to result in a material liability to the Borrowers or any
member of the ERISA Group;
(viii) make any amendment to any Plan with respect to which security is
required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make all disclosures and governmental
filings required under ERISA or the Internal Revenue Code, where such failure is
likely to result in a Material Adverse Change.
8.2.11 Fiscal Year.
- --------------------
The Borrowers shall not, and shall not permit any
Subsidiary of the Borrowers to, change its fiscal year
from the twelve-month period beginning January 1 and ending December 31.
8.2.12 Issuance of Stock.
- --------------------------
The Company shall not permit any of its Subsidiaries
to, issue any additional shares of its capital stock
or any options, warrants or other rights in respect thereof other than to the
Company.
8.2.13 Changes in Organizational Documents.
- --------------------------------------------
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, amend in any respect
its certificate of incorporation (including any provisions or resolutions
relating to capital stock), certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents without providing at least thirty (30) calendar
days' prior written notice to the Agent and the Banks and, in the event such
change would be adverse to the Banks as determined by the Agent in its sole
discretion, obtaining the prior written consent of the Required Banks except in
connection with transactions permitted by Section 8.2.6(i).
8.2.14 Minimum Shareholders' Equity.
- -------------------------------------
The Borrowers shall not permit the Company's
Shareholders' Equity to be less than the sum of $55,436,000
plus 50% of consolidated net income for each fiscal quarter in which net income
is earned (as opposed to a net loss) during the period from October 1, 2000 to
the date of determination.
8.2.15 Minimum Fixed Charge Coverage Ratio.
- --------------------------------------------
The Borrowers shall not permit the Fixed Charge
Coverage Ratio, calculated as of the end of each fiscal
quarter for the four (4) fiscal quarters then ended, to be less than
1.15-to-1.0.
8.2.16 Maximum Leverage Ratio.
- -------------------------------
The Borrowers shall not permit the Leverage Ratio,
calculated as of the end of each fiscal quarter for the
four (4) fiscal quarters then ended, to be more than the amount set forth below
for the period of determination:
--------------------------------------- -----------------------------------------------
Period Maximum Ratio
--------------------------------------- -----------------------------------------------
--------------------------------------- -----------------------------------------------
for quarters ending on or before 3.75-to-1.0
September 30, 2001
--------------------------------------- -----------------------------------------------
--------------------------------------- -----------------------------------------------
for quarters ending on or after 3.5-to-1.0
December 31, 2001 through March 31,
2002
--------------------------------------- -----------------------------------------------
--------------------------------------- -----------------------------------------------
for quarters ending on or after June 3.25-to-1.0
30, 2002
--------------------------------------- -----------------------------------------------
8.2.17 Regarding Canopy.
- -------------------------
The Borrowers shall not suffer or cause the Company's
ownership (beneficial and of record) to be less than
70% of all equity interests of Canopy, measured on a fully diluted basis.
8.3 Reporting Requirements.
- -------------------------------
The Loan Parties, jointly and severally, covenant and
agree that until payment in full of the Loans,
Reimbursement Obligations and Letter of Credit Borrowings and interest thereon,
expiration or termination of all Letters of Credit, satisfaction of all of the
Loan Parties' other Obligations hereunder and under the other Loan Documents and
termination of the Commitments, the Loan Parties will furnish or cause to be
furnished to the Agent and each of the Banks:
8.3.1 Quarterly Financial Statements.
- ---------------------------------------
As soon as available and in any event within forty-
five (45) calendar days after the end of each of the
first three fiscal quarters in each fiscal year, financial statements of the
Company, consisting of a consolidated and consolidating balance sheet as of the
end of such fiscal quarter and related consolidated and consolidating statements
of income and statements of retained earnings for the fiscal quarter then ended
and the fiscal year through that date and cash flows for the fiscal year through
that date, all in reasonable detail and certified (subject to normal year-end
audit adjustments) by the Chief Executive Officer, President or Chief Financial
Officer of the Company as having been prepared in accordance with GAAP,
consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous
fiscal year.
8.3.2 Annual Financial Statements.
- ------------------------------------
As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the
Company, financial statements of the Company consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements of income, stockholders' equity and
cash flows for the fiscal year then ended, all in reasonable detail and setting
forth in comparative form the financial statements as of the end of and for the
preceding fiscal year, and certified by independent certified public accountants
of nationally recognized standing satisfactory to the Agent. The certificate or
report of accountants shall be free of qualifications (other than any
consistency qualification that may result from a change in the method used to
prepare the financial statements as to which such accountants concur) and shall
not indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan Documents.
8.3.3 Borrowing Base Certificate.
On or before the fifteenth (15th) calendar day of
each calendar month, the Borrowers shall deliver to the
Bank a Borrowing Base Certificate. The Borrowing Base Certificate shall reflect
the Borrower's calculation of the Borrowing Base as of the last day of the
preceding calendar month, and a comparison of such number to the Commitment and
to the amount of outstanding Obligations.
8.3.4 Certificate of the Borrowers.
Concurrently with the financial statements of the
Borrowers furnished to the Agent and to the Banks
pursuant to Sections 8.3.1 and 8.3.2, a certificate of the Borrowers signed by
the Chief Executive Officer, President or Chief Financial Officer of the Company
and the President or Treasurer of the other Loan Parties, in the form of Exhibit
8.3.4, to the effect that, except as described pursuant to Section 8.3.5, (i)
the representations and warranties of the Borrowers contained in Section 6 and
in the other Loan Documents are true on and as of the date of such certificate
with the same effect as though such representations and warranties had been made
on and as of such date (except representations and warranties which expressly
relate solely to an earlier date or time) and the Loan Parties have performed
and complied with all covenants and conditions hereof, (ii) no Event of Default
or Potential Default exists and is continuing on the date of such certificate
and (iii) containing calculations in sufficient detail to demonstrate compliance
as of the date of such financial statements with all financial covenants
contained in Section 8.2.
8.3.5 Notice of Default.
- --------------------------
Promptly after any officer of any Loan Party has
learned of the occurrence of an Event of Default or
Potential Default, a certificate signed by the Chief Executive Officer,
President or Chief Financial Officer of such Loan Party setting forth the
details of such Event of Default or Potential Default and the action which the
such Loan Party proposes to take with respect thereto.
8.3.6 Notice of Litigation.
- -----------------------------
Promptly after the commencement thereof, notice of
all actions, suits, proceedings or investigations before
or by any Official Body or any other Person against any Loan Party or Subsidiary
of any Loan Party involve a claim or series of claims in excess of $1,000,000 or
which if adversely determined would constitute a Material Adverse Change.
8.3.7 Certain Events.
- -----------------------
Written notice to the Agent:
(i) at least thirty (30) calendar days prior thereto, with respect to any
proposed sale or transfer of assets pursuant to
Section 8.2.6((iv)) or ((vi)); and
(ii) within the time limits set forth in Section 8.2.13, any amendment to
the organizational documents of any Loan Party.
8.3.8 Budgets, Forecasts, Other Reports and Information.
- ----------------------------------------------------------
Promptly upon their becoming available to the
Borrowers:
(i) as and when prepared, the annual forecasts or projections of the Borrowers,
to be supplied not later than thirty (30) days prior to commencement of the
fiscal year to which any of the foregoing may be applicable,
(ii) any reports including management letters submitted to the Borrowers by
independent accountants in connection with any
annual, interim or special audit,
(iii) any reports, notices or proxy statements generally distributed by the
Company to its stockholders on a date no later than the date supplied to such
stockholders,
(iv) regular or periodic reports, including Forms 10-K, 10-Q and 8-K,
registration statements and prospectuses, filed by the Company with the
Securities and Exchange Commission,
(v) a copy of any material order in any proceeding to which the Borrowers
or any of their Subsidiaries is a party issued by any
Official Body,
(vi) notices of any amendments or changes of any Loan Party's bylaws or
other governing documents or charters, and
(vii) such other reports and information as any of the Banks may from time to
time reasonably request, including, without limitation, reports or financial
statements regarding Canopy. The Borrowers shall also notify the Banks promptly
of the enactment or adoption of any Law of which any Loan Party becomes aware
which may result in a Material Adverse Change.
8.3.9 Notices Regarding Plans and Benefit Arrangements.
- ---------------------------------------------------------
8.3.9.1 Certain Events.
- -----------------------
Promptly upon becoming aware of the
occurrence thereof, 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:
(i) any Reportable Event with respect to the Borrowers or any other member of
the ERISA Group (regardless of whether the obligation to report said Reportable
Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could subject the Borrowers or any other
member of the ERISA Group to a 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, any Benefit Arrangement or any trust created
thereunder,
(iii) any assertion of material withdrawal liability with respect to any
Multiemployer Plan,
(iv) any partial or complete withdrawal from a Multiemployer Plan by the
Borrowers or any other member of the ERISA Group under Title IV of ERISA (or
assertion thereof), where such withdrawal is likely to result in material
withdrawal liability,
(v) any cessation of operations (by the Borrowers or any other member of
the ERISA Group) at a facility in the circumstances
described in Section 4062(e) of ERISA,
(vi) withdrawal by the Borrowers or any other member of the ERISA Group from
a Multiple Employer Plan,
(vii) a failure by the Borrowers or any other member of the ERISA Group to make
a payment to a Plan required to avoid imposition of a Lien under Section 302(f)
of ERISA,
(viii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(ix) any change in the actuarial assumptions or funding methods used for any
Plan, where the effect of such change is to materially increase or materially
reduce the unfunded benefit liability or obligation to make periodic
contributions.
8.3.9.2 Notices of Involuntary Termination and Annual Reports.
- --------------------------------------------------------------
Promptly after receipt thereof, copies of
(a) all notices received by the Borrowers or any other
member of the ERISA Group of the PBGC's intent to terminate any Plan
administered or maintained by the Borrowers or any member of the ERISA Group, or
to have a trustee appointed to administer any such Plan; and (b) at the request
of the Agent or any Bank 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 the Borrowers or any other member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on behalf of
the Borrowers or any other member of the ERISA Group 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 the
Borrowers or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
8.3.9.3 Notice of Voluntary Termination.
- ----------------------------------------
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 Plan.
9. DEFAULT
9.1 Events of Default.
- --------------------------
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the reason
therefor and whether voluntary, involuntary or effected by operation of Law):
9.1.1 Payments Under Loan Documents.
- --------------------------------------
The Borrowers shall fail to pay any principal of any
Loan (including scheduled installments, mandatory
prepayments or the payment due at maturity), Reimbursement Obligation or Letter
of Credit Borrowing or shall fail to pay any interest on any Loan ,
Reimbursement Obligation or Letter of Credit Borrowing or any other amount owing
hereunder or under the other Loan Documents after such principal, interest or
other amount becomes due in accordance with the terms hereof or thereof;
9.1.2 Breach of Warranty.
- ---------------------------
Any representation or warranty made at any time by
any of the Loan Parties herein or by any of the Loan
Parties in any other Loan Document, or in any certificate, other instrument or
statement furnished pursuant to the provisions hereof or thereof, shall prove to
have been false or misleading in any material respect as of the time it was made
or furnished;
9.1.3 Breach of Negative Covenants or Visitation Rights.
- ----------------------------------------------------------
Any of the Loan Parties shall default in the
observance or performance of any covenant contained in
Section 8.1.6 or Section 8.2;
9.1.4 Breach of Other Covenants.
- ----------------------------------
Any of the Loan Parties shall default in the
observance or performance of any other covenant, condition or
provision hereof or of any other Loan Document and such default shall continue
unremedied for a period of ten (10) Business Days after any officer of any Loan
Party becomes aware of the occurrence thereof (such grace period to be
applicable only in the event such default can be remedied by corrective action
of the Loan Parties as determined by the Agent in its sole discretion);
9.1.5 Defaults in Other Agreements or Indebtedness.
- -----------------------------------------------------
A default or event of default shall occur at any time
under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness under which
any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or
guarantor in excess of $1,000,000 in the aggregate, and such breach, default or
event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any indebtedness when due
(whether at stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes the acceleration of any indebtedness (whether or not
such right shall have been waived) or the termination of any commitment to lend;
9.1.6 Final Judgments or Orders.
- ----------------------------------
Any final judgments or orders for the payment of
money in excess of $250,000 in the aggregate shall be
entered against any Loan Party by a court having jurisdiction in the premises,
which judgment is not discharged, vacated, bonded or stayed pending appeal
within a period of thirty (30) days from the date of entry;
9.1.7 Loan Document Unenforceable.
- ------------------------------------
Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the
party executing the same or such party's successors and assigns (as permitted
under the Loan Documents) in accordance with the respective terms thereof or
shall in any way be terminated (except in accordance with its terms) or become
or be declared ineffective or inoperative or shall in any way be challenged or
contested by any of the Loan Parties or cease to give or provide the respective
Liens, security interests, rights, titles, interests, remedies, powers or
privileges intended to be created thereby;
9.1.8 Uninsured Losses; Proceedings Against Assets.
- -----------------------------------------------------
There shall occur any material uninsured damage to or
loss, theft or destruction of any of the property of
the Borrowers in excess of $500,000 or the property of the Borrowers or any
other of the Loan Parties' or any of their Subsidiaries' assets are attached,
seized, levied upon or subjected to a writ or distress warrant; or such come
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within thirty (30) days
thereafter;
9.1.9 Notice of Lien or Assessment.
- -------------------------------------
A notice of Lien or assessment in excess of $500,000
which is not a Permitted Lien is filed of record with
respect to all or any part of any of the Loan Parties' or any of their
Subsidiaries' assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, including the PBGC, or any taxes or debts owing at any time
or times hereafter to any one of these becomes payable and the same is not paid
within thirty (30) days after the same becomes payable;
9.1.10 Insolvency.
- -------------------
Any Loan Party or any Subsidiary of a Loan Party
ceases to be solvent or admits in writing its inability to
pay its debts as they mature;
9.1.11 Events Relating to Plans and Benefit Arrangements.
- ----------------------------------------------------------
Any of the following occurs: (i) any Reportable
Event, which the Agent determines in good faith constitutes
grounds for the termination of any Plan by the PBGC or the appointment of a
trustee to administer or liquidate any Plan, shall have occurred and be
continuing; (ii) proceedings shall have been instituted or other action taken to
terminate any Plan, or a termination notice shall have been filed with respect
to any Plan; (iii) a trustee shall be appointed to administer or liquidate any
Plan; (iv) the PBGC shall give notice of its intent to institute proceedings to
terminate any Plan or Plans or to appoint a trustee to administer or liquidate
any Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above,
the Agent determines in good faith that the amount of the Borrowers' liability
is likely to exceed 10% of its Consolidated Tangible Net Worth; (v) the
Borrowers or any member of the ERISA Group shall fail to make any contributions
when due to a Plan or a Multiemployer Plan; (vi) the Borrowers or any other
member of the ERISA Group shall make any amendment to a Plan with respect to
which security is required under Section 307 of ERISA; (vii) the Borrowers or
any other member of the ERISA Group shall withdraw completely or partially from
a Multiemployer Plan; (viii) the Borrowers or any other member of the ERISA
Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to
withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is adopted,
changed or interpreted by any Official Body with respect to or otherwise
affecting one or more Plans, Multiemployer Plans or Benefit Arrangements and,
with respect to any of the events specified in (v), (vi), (vii), (viii) or (ix),
the Agent determines in good faith that any such occurrence would be reasonably
likely to materially and adversely affect the total enterprise represented by
the Borrowers and the other members of the ERISA Group;
9.1.12 Cessation of Business.
- ------------------------------
Any Loan Party or Subsidiary of a Loan Party ceases
to conduct its business as contemplated, except as
expressly permitted under Section 8.2.5 or 8.2.6, or any Loan Party or
Subsidiary of a Loan Party is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business and such
injunction, restraint or other preventive order is not dismissed within thirty
(30) days after the entry thereof;
9.1.13 Change of Control.
- --------------------------
(i) Any person or group of persons (within the
meaning of Sections 13(a) or 14(a) of the Securities
Exchange Act of 1934, as amended) shall have acquired beneficial ownership of
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) 30% or more of the voting capital stock of the
Company; or (ii) within a period of twelve (12) consecutive calendar months,
individuals who were directors of the Company on the first day of such period
shall cease to constitute a majority of the board of directors of the Company;
9.1.14 Involuntary Proceedings.
- --------------------------------
A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or
order for relief in respect of any Loan Party or Subsidiary of a Loan Party in
an involuntary case under any applicable bankruptcy, insolvency, reorganization
or other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or Subsidiary of a Loan Party for any
substantial part of its property, or for the winding-up or liquidation of its
affairs, and such proceeding shall remain undismissed or unstayed and in effect
for a period of thirty (30) consecutive days or such court shall enter a decree
or order granting any of the relief sought in such proceeding; or
9.1.15 Voluntary Proceedings.
- ------------------------------
Any Loan Party or Subsidiary of a Loan Party shall
commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or other similar official) of itself or for any substantial part of its
property or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.
9.2 Consequences of Event of Default.
- -----------------------------------------
9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.
- -------------------------------------------------------------------------------
If an Event of Default specified under Sections 9.1.1
through 9.1.13 shall occur and be continuing, the
Banks and the Agent shall be under no further obligation to make Loans or issue
Letters of Credit, as the case may be, and the Agent may, and upon the request
of the Required Banks, shall (i) by written notice to the Borrowers, declare the
unpaid principal amount of the Notes then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrowers to the
Banks hereunder and thereunder to be forthwith due and payable, and the same
shall thereupon become and be immediately due and payable to the Agent for the
benefit of each Bank without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived, and (ii) require the
Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest
bearing account with the Agent, as cash collateral for its Obligations under the
Loan Documents, an amount equal to the maximum amount currently or at any time
thereafter available to be drawn on all outstanding Letters of Credit, and the
Borrowers hereby pledge to the Agent and the Banks, and grants to the Agent and
the Banks a security interest in, all such cash as security for such
Obligations. Upon the curing of all existing Events of Default to the
satisfaction of the Required Banks, the Agent shall return such cash collateral
to the Borrowers; and
9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
- -------------------------------------------------------------
If an Event of Default specified under Section 9.1.14
or 9.1.15 shall occur, the Banks shall be under no
further obligations to make Loans or participate in new Letters of Credit and
PNC Bank or the Agent shall be under no further obligations to issue Letters of
Credit or make Swing Line Loans hereunder and the unpaid principal amount of the
Notes then outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Borrowers to the Banks hereunder and thereunder shall
be immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived; and
9.2.3 Set-off.
- ----------------
If an Event of Default shall occur and be continuing,
any Bank to whom any Obligation is owed by any Loan
Party hereunder or under any other Loan Document or any participant of such Bank
which has agreed in writing to be bound by the provisions of Section 10.13 and
any branch, Subsidiary or Affiliate of such Bank or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set-off against and apply
to the then unpaid balance of all the Loans and all other Obligations of the
Borrowers and the other Loan Parties hereunder or under any other Loan Document
any debt owing to, and any other funds held in any manner for the account of,
the Borrowers or such other Loan Party by such Bank or participant or by such
branch, Subsidiary or Affiliate, including all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Borrowers or such
other Loan Party for its own account (but not including funds held in custodian
or trust accounts) with such Bank or participant or such branch, Subsidiary or
Affiliate. Such right shall exist whether or not any Bank or the Agent shall
have made any demand under this Agreement or any other Loan Document, whether or
not such debt owing to or funds held for the account of the Borrowers or such
other Loan Party is or are matured or unmatured and regardless of the existence
or adequacy of any Guaranty or any other security, right or remedy available to
any Bank or the Agent; and
9.2.4 Suits, Actions, Proceedings.
- ------------------------------------
If an Event of Default shall occur and be continuing,
and whether or not the Agent shall have accelerated
the maturity of Loans pursuant to any of the foregoing provisions of this
Section 9.2, the Agent or any Bank, if owed any amount with respect to the
Notes, may proceed to protect and enforce its rights by suit in equity, action
at law and/or other appropriate proceeding, whether for the specific performance
of any covenant or agreement contained in this Agreement or the Notes, including
as permitted by applicable Law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Agent or such Bank; and
9.2.5 Application of Proceeds.
- --------------------------------
From and after the date on which the Agent has taken
any action pursuant to this Section 9.2 and until all
Obligations of the Loan Parties have been paid in full, any and all proceeds
received by the Agent from any sale or other disposition of any property of the
Borrowers, or any part thereof, or the exercise of any other remedy by the
Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Banks for out-of-pocket costs,
expenses and disbursements, including reasonable attorneys' and paralegals' fees
and legal expenses, incurred by the Agent or the Banks in connection with
collection of any Obligations of any of the Loan Parties under any of the Loan
Documents, including advances made by the Banks or any one of them or the Agent
for the reasonable maintenance, preservation, protection or enforcement of, or
realization upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the property of
the Borrowers;
(ii) second, to the repayment of all Indebtedness then due and unpaid of the
Loan Parties to the Banks incurred under this Agreement or any of the other Loan
Documents, whether of principal, interest, fees, expenses or otherwise, in such
manner as the Agent may determine in its discretion; and
(iii) the balance, if any, as required by Law.
9.2.6 Other Rights and Remedies.
- ----------------------------------
In addition to all of the rights and remedies
contained in this Agreement or in any of the other Loan
Documents (including the Mortgage), the Agent shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code or other
applicable Law, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by Law. The Agent may, and upon the
request of the Required Banks shall, exercise all post-default rights granted to
the Agent and the Banks under the Loan Documents or applicable Law.
9.3 Notice of Sale.
- -----------------------
Any notice required to be given by the Agent of a sale, lease,
or other disposition of the property of the Borrowers or any other intended
action by the Agent, if given ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the Borrowers.
10. THE AGENT
10.1 Appointment.
- --------------------
Each Bank hereby irrevocably designates, appoints and
authorizes PNC Bank to act as Agent for such Bank under this Agreement and to
execute and deliver or accept on behalf of each of the Banks the other Loan
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of a Note shall be deemed irrevocably to authorize, the Agent
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and any other instruments and agreements referred to
herein, and to exercise such powers and to perform such duties hereunder as are
specifically delegated to or required of the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. PNC Bank agrees to act as
the Agent on behalf of the Banks to the extent provided in this Agreement.
10.2 Delegation of Duties.
- -----------------------------
The Agent may perform any of its duties hereunder by or
through agents or employees (provided such delegation does not constitute a
relinquishment of its duties as Agent) and, subject to Sections 10.5 and 10.6,
shall be entitled to engage and pay for the advice or services of any attorneys,
accountants or other experts concerning all matters pertaining to its duties
hereunder and to rely upon any advice so obtained.
10.3 Nature of Duties; Independent Credit Investigation.
- -----------------------------------------------------------
The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Bank expressly acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed to constitute
any representation or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto, whether coming into
its possession before the making of any Loan or at any time or times thereafter.
10.4 Actions in Discretion of Agent; Instructions from the Banks.
- --------------------------------------------------------------------
The Agent agrees, upon the written request of the Required
Banks, to take or refrain from taking any action of the type specified as being
within the Agent's rights, powers or discretion herein, provided that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
applicable Law. In the absence of a request by the Required Banks, the Agent
shall have authority, in its sole discretion, to take or not to take any such
action, unless this Agreement specifically requires the consent of the Required
Banks or all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to Section
10.6. Subject to the provisions of Section 10.6, no Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute
discretion of the Agent.
10.5 Reimbursement and Indemnification of Agent by the Borrowers.
- --------------------------------------------------------------------
The Borrowers unconditionally agree to pay or reimburse the
Agent and the Banks and hold them harmless against (a) liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements, including
fees and expenses of counsel (including the allocated costs of staff counsel),
appraisers and environmental consultants, incurred by the Agent or any Bank (i)
subject to the terms of the Agent's Letter, in connection with the Agent's
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan
Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, and
(b) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent or
any Bank, in its capacity as such, arising out of this Agreement or any other
Loan Documents or any action taken or omitted by the Agent or any Bank hereunder
or thereunder, provided that the Borrowers shall not be liable to any person for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements if the same results
from the such person's gross negligence or willful misconduct, or if the
Borrowers were not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Borrowers
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrowers), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrowers, which shall not be
unreasonably withheld. In addition, the Borrowers agree to reimburse and pay all
reasonable out-of-pocket expenses of the Agent's regular employees and agents
engaged periodically to perform audits of the Loan Parties' books, records and
business properties.
10.6 Exculpatory Provisions; Limitation of Liability.
- --------------------------------------------------------
Neither the Agent nor any of its directors, officers,
employees, agents, attorneys or Affiliates shall (a) be liable to any Bank for
any action taken or omitted to be taken by it or them hereunder, or in
connection herewith including pursuant to any Loan Document, unless caused by
its or their own gross negligence or willful misconduct, (b) be responsible in
any manner to any of the Banks for the effectiveness, enforceability,
genuineness, validity or the due execution of this Agreement or any other Loan
Documents or for any recital, representation, warranty, document, certificate,
report or statement herein or made or furnished under or in connection with this
Agreement or any other Loan Documents, or (c) be under any obligation to any of
the Banks to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions hereof or thereof on the part of the Loan
Parties, or the financial condition of the Loan Parties, or the existence or
possible existence of any Event of Default or Potential Default. No claim may be
made by any of the Loan Parties, any Bank, the Agent or any of their respective
Subsidiaries against the Agent, any Bank or any of their respective directors,
officers, employees, agents, attorneys or Affiliates, or any of them, for any
special, indirect or consequential damages or, to the fullest extent permitted
by Law, for any punitive damages in respect of any claim or cause of action
(whether based on contract, tort, statutory liability, or any other ground)
based on, arising out of or related to any Loan Document or the transactions
contemplated hereby or any act, omission or event occurring in connection
therewith, including the negotiation, documentation, administration or
collection of the Loans, and each of the Loan Parties, (for itself and on behalf
of each of its Subsidiaries), the Agent and each Bank hereby waive, releases and
agree never to sue upon any claim for any such damages, whether such claim now
exists or hereafter arises and whether or not it is now known or suspected to
exist in its favor. Each Bank agrees that, except for notices, reports and other
documents expressly required to be furnished to the Banks by the Agent hereunder
or given to the Agent for the account of or with copies for the Banks, the Agent
and each of its directors, officers, employees, agents, attorneys or Affiliates
shall not have any duty or responsibility to provide any Bank with an credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Loan Parties
which may come into the possession of the Agent or any of its directors,
officers, employees, agents, attorneys or Affiliates.
10.7 Reimbursement and Indemnification of Agent by Banks.
- ------------------------------------------------------------
Each Bank agrees to reimburse and indemnify the Agent (to the
extent not reimbursed by the Borrowers and without limiting the Obligation of
the Borrowers to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements, including attorneys' fees and disbursements
and costs of appraisers and environmental consultants, of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent,
in its capacity as such, in any way relating to or arising out of this Agreement
or any other Loan Documents or any action taken or omitted by the Agent
hereunder or thereunder, provided that no Bank shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (a) if the same results from
the Agent's gross negligence or willful misconduct, or (b) if such Bank was not
given notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense (except that such Bank shall remain liable to
the extent such failure to give notice does not result in a loss to the Bank),
or (c) if the same results from a compromise and settlement agreement entered
into without the consent of such Bank, which shall not be unreasonably withheld.
In addition, each Bank agrees promptly upon demand to reimburse the Agent (to
the extent not reimbursed by the Borrowers and without limiting the Obligation
of the Borrowers to do so) in proportion to its Ratable Share for all amounts
due and payable by the Borrowers to the Agent in connection with the Agent's
periodic audit of the Loan Parties' books, records and business properties. In
the event both the Borrowers and the Banks make a required indemnity payment for
the same obligation, a proportionate portion of the excess shall be returned to
the Banks.
10.8 Reliance by Agent.
- --------------------------
The Agent shall be entitled to rely upon any writing,
telegram, telex or teletype message, resolution, notice, consent, certificate,
letter, cablegram, statement, order or other document or conversation by
telephone or otherwise believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon the advice and
opinions of counsel and other professional advisers selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action
hereunder unless it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
10.9 Notice of Default.
- --------------------------
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrowers referring to this
Agreement, describing such Potential Default or Event of Default and stating
that such notice is a "notice of default."
10.10 Notices.
- ----------------
The Agent shall promptly send to each Bank a copy of all
notices or reports referred to in Section 8.3 received from the Borrowers
pursuant to the provisions of this Agreement or the other Loan Documents
promptly upon receipt thereof not otherwise delivered by Borrowers to such Bank.
The Agent shall promptly notify the Borrowers and the other Banks of each change
in the Base Rate and the effective date thereof.
10.11 Banks in Their Individual Capacities.
- ---------------------------------------------
With respect to its Commitment, the Loans, and any other
rights and powers given to it as a Bank hereunder or under any of the other Loan
Documents, the Agent shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not the Agent, and the
term "Banks" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. PNC Bank and its Affiliates and each of the Banks and
their respective Affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for, act
as trustee under indentures of, and generally engage in any kind of banking or
trust business with, the Loan Parties and their Affiliates, in the case of the
Agent, as though it were not acting as Agent hereunder and in the case of each
Bank, as though such Bank were not a Bank hereunder. The Banks acknowledge that,
pursuant to such activities, the Agent or its Affiliates may (i) receive
information regarding the Loan Parties (including information that may be
subject to confidentiality obligations in favor of the Loan Parties) and
acknowledge that the Agent shall be under no obligation to provide such
information to them, and (ii) accept fees and other consideration from the Loan
Parties for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
10.12 Holders of Notes.
- -------------------------
The Agent may deem and treat any payee of any Note as the
owner thereof for all purposes hereof unless and until 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 Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
10.13 Equalization of Banks.
- ------------------------------
The Banks and the holders of any participations in any Notes
agree among themselves that, with respect to all amounts received by any Bank or
any such holder for application on any Obligation hereunder or under any Note or
under any such participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or banker's
lien, by counterclaim or by any other non-pro rata source, equitable adjustment
will be made in the manner stated in the following sentence so that, in effect,
all such excess amounts will be shared ratably among the Banks and such holders
in proportion to their interests in payments under the Notes, except as
otherwise provided in Section 4.4.3, 5.4.2 or 5.6. The Banks or any such holder
receiving any such amount shall purchase for cash from each of the other Banks
an interest in such Bank's Loans in such amount as shall result in a ratable
participation by the Banks and each such holder in the aggregate unpaid amount
under the Notes, provided that if all or any portion of such excess amount is
thereafter recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Bank or the holder making such
purchase.
10.14 Successor Agent.
- ------------------------
The Agent (i) may resign as Agent or (ii) shall resign if such
resignation is required by Section 5.4.2, in either case of (i) or (ii) by
giving not less than thirty (30) days' prior written notice to the Borrowers. If
the Agent shall resign under this Agreement, then either (a) the Required Banks
shall appoint from among the Banks a successor agent for the Banks, subject to
the consent of the Borrowers, such consent not to be unreasonably withheld, or
(b) if a successor agent shall not be so appointed and approved within the
thirty (30) day period following the Agent's notice to the Banks of its
resignation, then the Agent shall appoint, with the consent of the Borrowers
(such consent not to be unreasonably withheld and no such consent being required
if there exists an Event of Default), a successor agent who shall serve as Agent
until such time as the Required Banks appoint and the Borrowers consent to the
appointment of a successor agent. Upon its appointment pursuant to either clause
(a) or (b) above, such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent,
effective upon its appointment, and the former Agent's rights, powers and duties
as Agent shall be terminated without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement. After the
resignation of any Agent hereunder, the provisions of this Section 10 shall
inure to the benefit of such former Agent and such former Agent shall not by
reason of such resignation be deemed to be released from liability for any
actions taken or not taken by it while it was an Agent under this Agreement.
10.15 [RESERVED]
10.16 Availability of Funds.
- ------------------------------
The Agent may assume that each Bank has made or will make the
proceeds of a Loan available to the Agent unless the Agent shall have been
notified by such Bank on or before the close of Business on the Business Day
preceding the Borrowing Date with respect to such Loan (whether using its own
funds pursuant to this Section 10.16 or using proceeds deposited with the Agent
by the Banks and whether such funding occurs before or after the time on which
Banks are required to deposit the proceeds of such Loan with the Agent). The
Agent may, in reliance upon such assumption (but shall not be required to), make
available to the Borrowers a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Bank, the Agent shall be
entitled to recover such amount on demand from such Bank (or, if such Bank fails
to pay such amount forthwith upon such demand from the Borrowers) together with
interest thereon, in respect of each day during the period commencing on the
date such amount was made available to the Borrowers and ending on the date the
Agent recovers such amount, at a rate per annum equal to the applicable interest
rate in respect of the Loan.
10.17 Calculations.
- ---------------------
In the absence of gross negligence or willful misconduct, the
Agent shall not be liable for any error in computing the amount payable to any
Bank whether in respect of the Loans, fees or any other amounts due to the Banks
under this Agreement, subject to the following sentence. In the event an error
in computing any amount payable to any Bank is made, the Agent, the Borrowers
and each affected Bank shall, forthwith upon discovery of such error, make such
adjustments as shall be required to correct such error, and any compensation
therefor will be calculated at the Federal Funds Effective Rate.
10.18 Beneficiaries.
- ----------------------
Except as expressly provided herein, the provisions of this
Section 10 are solely for the benefit of the Agent and the Banks, and the Loan
Parties shall not have any rights to rely on or enforce any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any of the Loan Parties.
11. MISCELLANEOUS
11.1 Modifications, Amendments or Waivers.
- ---------------------------------------------
With the written consent of the Required Banks, the Agent,
acting on behalf of all the Banks, and the Borrower Agent, on behalf of the Loan
Parties, may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the
rights of the Banks or the Loan Parties hereunder or thereunder, or may grant
written waivers or consents to a departure from the due performance of the
Obligations of the Loan Parties hereunder or thereunder. Any such agreement,
waiver or consent made with such written consent shall be effective to bind all
the Banks and the Loan Parties; provided, that, without the written consent of
all the Banks, no such agreement, waiver or consent may be made which will:
11.1.1 Increase of Commitment; Extension or Expiration Date.
- -------------------------------------------------------------
Increase the amount of the Commitment of any Bank
hereunder or extend the Expiration Date;
11.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment.
- -----------------------------------------------------------------------------
Whether or not any Loans are outstanding, extend the
time for payment of principal or interest of any Loan
the Commitment Fee or any other fee payable to any Bank, or reduce the principal
amount of or the rate of interest borne by any Loan or reduce the Commitment Fee
or any other fee payable to any Bank, or otherwise affect the terms of payment
of the principal of or interest of any Loan, the Commitment Fee or any other fee
payable to any Bank;
11.1.3 Miscellaneous
Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6
[Exculpatory Provisions, etc.] or 10.13 [Equalization
of Banks] or this Section 11.1, alter any provision regarding the pro rata
treatment of the Banks, change the definition of Required Banks, or change any
requirement providing for the Banks or the Required Banks to authorize the
taking of any action hereunder;
11.1.4 Letters of Credit.
- --------------------------
Waive the precondition to the issuance of Letters of
Credit or the making of any Swing Line Loan; or
11.1.5 Releases and Waiver.
-
Release any guarantor, any Borrower or any
Collateral.
provided, further, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Agent in its capacity as Agent or as the
issuer of Letters of Credit shall be effective without the written consent of
the Agent
11.2 No Implied Waivers; Cumulative Remedies; Writing Required.
- ------------------------------------------------------------------
No course of dealing and no delay or failure of the Agent or
any Bank in exercising any right, power, remedy or privilege under this
Agreement or any other Loan Document shall affect any other or future exercise
thereof or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a right,
power, remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege. The rights and remedies of the Agent and the
Banks under this Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have. Any waiver,
permit, consent or approval of any kind or character on the part of any Bank of
any breach or default under this Agreement or any such waiver of any provision
or condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.
11.3 Reimbursement and Indemnification of Banks by the Borrowers; Taxes.
- ---------------------------------------------------------------------------
The Borrowers agree unconditionally upon demand to pay or
reimburse to each Bank (other than the Agent, as to which the Borrowers'
Obligations are set forth in Section 10.5) and to save such Bank harmless
against (i) liability for the payment of all reasonable out-of-pocket costs,
expenses and disbursements (including fees and expenses of counsel (including
allocated costs of staff counsel) for each Bank except with respect to (a) and
(b) below), incurred by such Bank (a) in connection with the administration and
interpretation of this Agreement, and other instruments and documents to be
delivered hereunder, (b) relating to any amendments, waivers or consents
pursuant to the provisions hereof, (c) in connection with the enforcement of
this Agreement or any other Loan Document, or collection of amounts due
hereunder or thereunder or the proof and allowability of any claim arising under
this Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (d) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, or
(ii) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against such Bank,
in its capacity as such, arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Bank hereunder or thereunder,
provided that the Borrowers shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct, or (B) if the Borrowers were not given notice
of the subject claim and the opportunity to participate in the defense thereof,
at its expense (except that the Borrowers shall remain liable to the extent such
failure to give notice does not result in a loss to the Borrowers), or (C) if
the same results from a compromise or settlement agreement entered into without
the consent of the Borrowers, which shall not be unreasonably withheld. The
Banks will attempt to minimize the fees and expenses of legal counsel for the
Banks which are subject to reimbursement by the Borrowers hereunder by
considering the usage of one law firm to represent the Banks and the Agent if
appropriate under the circumstances. The Borrowers agree unconditionally to pay
all stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by the Agent or any Bank to be payable
in connection with this Agreement or any other Loan Document, and the Borrowers
agree unconditionally to save the Agent and the Banks harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions.
11.4 Holidays.
- -----------------
Whenever payment of a Loan to be made or taken hereunder shall
be due on a day which is not a Business Day such payment shall be due on the
next Business Day and such extension of time shall be included in computing
interest and fee, except that the Loans shall be due on the Business Day
preceding the Expiration Date if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than payment
of the Loans) shall be stated to be due on a day which is not a business Day,
such payment or action shall be made or taken on the next following Business Day
(except as provided in Section 4.2 with respect to Interest Periods under the
Euro-Rate Option), and such extension of time shall not be included in computing
interest or fees, if any, in connection with such payment or action.
11.5 Funding by Branch, Subsidiary or Affiliate.
- ---------------------------------------------------
11.5.1 Notional Funding.
- -------------------------
Each Bank shall have the right from time to time,
without notice to the Borrowers, to deem any branch,
Subsidiary or Affiliate (which for the purposes of this Section 11.5 shall mean
any corporation or association which is directly or indirectly controlled by or
is under direct or indirect common control with any corporation or association
which directly or indirectly controls such Bank) of such Bank to have made,
maintained or funded any Loan to which the Euro-Rate Option applies at any time,
provided that immediately following (on the assumption that a payment were then
due from the Borrowers to such other office), and as a result of such change,
the Borrowers would not be under any greater financial obligation pursuant to
Section 5.6 than it would have been in the absence of such change. Notional
funding offices may be selected by each Bank without regard to such Bank's
actual methods of making, maintaining or funding the Loans or any sources of
funding actually used by or available to such Bank.
11.5.2 Actual Funding.
- -----------------------
Each Bank shall have the right from time to time to
make or maintain any Loan by arranging for a branch,
Subsidiary or Affiliate of such Bank to make or maintain such Loan subject to
the last sentence of this Section 11.5.2. If any Bank causes a branch,
Subsidiary or Affiliate to make or maintain any part of the Loans hereunder, all
terms and conditions of this Agreement shall, except where the context clearly
requires otherwise, be applicable to such part of the Loans to the same extent
as if such Loans were made or maintained by such Bank, but in no event shall any
Bank's use of such a branch, Subsidiary or Affiliate to make or maintain any
part of the Loans hereunder cause such Bank or such branch, Subsidiary or
Affiliate to incur any cost or expenses payable by the Borrowers hereunder or
require the Borrowers to pay any other compensation to any Bank (including any
expenses incurred or payable pursuant to Section 5.6) which would otherwise not
be incurred.
11.6 Notices.
- ----------------
All notices, requests, demands, directions and other communications (as
used in this Section 11.6, collectively referred to as "notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including by means of electronic transmission (i.e.,
"e-mail") or facsimile transmission or by setting forth such notice on a site on
the World Wide Web (a "website posting") if notice of such website posting,
including the information necessary to access such website, has previously been
delivered to the applicable parties hereto by another method of notice permitted
hereunder) unless otherwise expressly permitted hereunder and shall be delivered
or sent by facsimile to the respective parties at the addresses and numbers set
forth under their respective names on Schedule 1.1(B) hereof or in accordance
with any subsequent unrevoked written direction from any party to the others. No
notices to a Borrower of Potential Defaults or Events of Default shall be made
solely by a website posting or by e-mail, or any combination thereof. All
notices shall, except as otherwise expressly herein provided, be effective (a)
in the case of facsimile, when received, (b) in the case of hand-delivered
notice, when hand-delivered, (c) in the case of telephone, when telephoned,
provided, however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter or facsimile, (d) if
given by mail, four (4) days after such communication is deposited in the mail
with first-class postage prepaid, return receipt requested, (e) if by electronic
transmission, when actually received, (f) if by website posting, upon delivery
of a notice (including the information necessary to access such website) by
another means permitted hereunder and (g) if given by any other means (including
by air courier), when delivered; provided, that notices to the Agent shall not
be effective until received. Any Bank giving any notice to any Borrower shall
simultaneously send a copy thereof to the Agent, and the Agent shall promptly
notify the other Banks of the receipt by it of any such notice.
11.7 Severability.
- ---------------------
The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
11.8 Governing Law.
- ----------------------
Each Letter of Credit and Section 2.9 shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, as the same may be
revised or amended from time to time, and to the extent not inconsistent
therewith, the internal laws of the Commonwealth of Pennsylvania without regard
to its conflict of laws principles and the balance of this Agreement shall be
deemed to be a contract under the Laws of the Commonwealth of Pennsylvania and
for all purposes shall be governed by and construed and enforced in accordance
with the internal laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.
11.9 Prior Understanding.
- ----------------------------
This Agreement and the other Loan Documents supersede all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
11.10 Duration; Survival.
- ---------------------------
All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the making of
Loans and issuance of Letters of Credit and shall not be waived by the execution
and delivery of this Agreement, any investigation by the Agent or the Banks, the
making of Loans, issuance of Letters of Credit, or payment in full of the Loans.
All covenants and agreements of the Loan Parties contained in Sections 8.1, 8.2
and 8.3 herein shall continue in full force and effect from and after the date
hereof so long as the Borrowers may borrow or request Letters of Credit
hereunder and until termination of the Commitments and payment in full of the
Loans and expiration or termination of all Letters of Credit. All covenants and
agreements of the Borrowers contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Section 5 and Sections
10.5, 10.7 and 11.3, shall survive payment in full of the Loans, expiration or
termination of the Letters of Credit and termination of the Commitments.
11.11 Successors and Assigns.
- -------------------------------
(i) This Agreement shall be binding upon
and shall inure to the benefit of the Banks, the
Agent, the Loan Parties and their respective successors and assigns, except that
none of the Loan Parties may assign or transfer any of its rights and
Obligations hereunder or any interest herein. Each Bank may, at its own cost,
make assignments of or sell participations in all or any part of its Commitment
and the Loans made by it to one or more banks or other entities, subject to the
consent of the Borrowers and the Agent with respect to any assignee, such
consent not to be unreasonably withheld, provided that (1) no consent of the
Borrowers shall be required in the case of an assignment by a Bank to an
Affiliate of such Bank, and (2) assignments may not be made in amounts less than
$5,000,000. In the case of an assignment, upon receipt by the Agent of the
Assignment and Assumption Agreement, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights, benefits
and obligations as it would have if it had been a signatory Bank hereunder, the
Commitments shall be adjusted accordingly, and upon surrender of any Note
subject to such assignment, the Borrowers shall execute and deliver a new Note
to the assignee in an amount equal to the amount of the Commitment assumed by it
and a new Note to the assigning Bank in an amount equal to the Commitment
retained by it hereunder. The assigning Bank shall pay to the Agent a service
fee in the amount of $3,500 for each assignment. In the case of a participation,
the participant shall only have the rights specified in Section 9.2.3 (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 11.1.1, 11.1.2, or 11.1.3
all of such Bank's obligations under this Agreement or any other Loan Document
shall remain unchanged, and all amounts payable by any Loan Party hereunder or
thereunder shall be determined as if such Bank had not sold such participation.
(ii) Any assignee or participant which is
not incorporated under the Laws of the United States
of America or a state thereof shall deliver to the Borrowers and the Agent the
form of certificate described in Section 11.17 relating to federal income tax
withholding. Each Bank may furnish any publicly available information concerning
any Loan Party or its Subsidiaries and any other information concerning any Loan
Party or its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 11.12.
(iii) Notwithstanding any other provision
in this Agreement, any Bank may at any time pledge or
grant a security interest in all or any portion of its rights under this
Agreement, its Note and the other Loan Documents to any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
Section 203.14 without notice to or consent of the Borrowers or the Agent. No
such pledge or grant of a security interest shall release the transferor Bank of
its obligations hereunder or under any other Loan Document.
11.12 Confidentiality.
- ------------------------
The Agent and the Banks each agree to keep confidential all
information obtained from any Loan Party or its Subsidiaries which is nonpublic
and confidential or proprietary in nature (including any information the
Borrowers specifically designate as confidential), except as provided below, and
to use such information only in connection with their respective capacities
under this Agreement and for the purposes contemplated hereby. The Agent and the
Banks shall be permitted to disclose such information (i) to outside legal
counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and participants as contemplated by Section 11.11, (iii) to
the extent requested by any bank regulatory authority or, with notice to the
Borrowers, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising out
of the transactions contemplated by this Agreement, (iv) if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not known to be subject to confidentiality restrictions,
or (v) if the Borrowers shall have consented to such disclosure.
11.13 Counterparts.
- ---------------------
This Agreement may be executed by different parties hereto on
any number of separate counterparts, each of which, when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.
11.14 Agent's or Bank's Consent.
- ----------------------------------
Whenever the Agent's or any Bank's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a condition
to any action, inaction, condition or event, the Agent and each Bank shall be
authorized to give or withhold such consent in its sole and absolute discretion
and to condition its consent upon the giving of additional collateral, the
payment of money or any other matter.
11.15 Exceptions.
- -------------------
The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any representation,
warranty or covenant shall be deemed to be an exception to any other
representation, warranty or covenant contained herein unless expressly provided,
nor shall any such exceptions be deemed to permit any action or omission that
would be in contravention of applicable Law.
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY
AND THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA,
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH
LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST
IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
11.17 Tax Withholding Clause.
- -------------------------------
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrowers and the Agent two (2) duly
completed copies of the following: (i) Internal Revenue Service Form W-9, 4224
or 1001, or other applicable form prescribed by the Internal Revenue Service,
certifying that such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes, or is subject to such tax
at a reduced rate under an applicable tax treaty, or (ii) Internal Revenue
Service Form W-8 or other applicable form or a certificate of such Bank,
assignee or participant indicating that no such exemption or reduced rate is
allowable with respect to such payments. Each Bank, assignee or participant
required to deliver to the Borrowers and the Agent a form or certificate
pursuant to the preceding sentence shall deliver such form or certificate as
follows: (A) each Bank which is a party hereto on the Closing Date shall deliver
such form or certificate at least five (5) Business Days prior to the first date
on which any interest or fees are payable by the Borrowers hereunder for the
account of such Bank; (B) each assignee or participant shall deliver such form
or certificate at least five (5) Business Days before the effective date of such
assignment or participation (unless the Agent in its sole discretion shall
permit such assignee or participant to deliver such form or certificate less
than five (5) Business Days before such date in which case it shall be due on
the date specified by the Agent). Each Bank, assignee or participant which so
delivers a Form W-8, W-9, 4224 or 1001 further undertakes to deliver to each of
the Borrowers and the Agent two (2) additional copies of such form (or a
successor form) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event requiring a change in the most recent form
so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrowers or the Agent, either
certifying that such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating that no such
exemption or reduced rate is allowable. The Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the Bank,
assignee or participant establishes an exemption or that it is subject to a
reduced rate as established pursuant to the above provisions.
11.18 Joinder Of Borrowers.
- -----------------------------
Any Subsidiary of a Borrower which is required to join this
Agreement as a Borrower pursuant to Section 8.2.8 shall execute and deliver to
the Agent (i) a Joinder in substantially the form attached hereto as Exhibit
1.1(J) pursuant to which it shall join as a Borrower each of the documents to
which the Borrowers are parties; and (ii) documents in the forms described in
Section 7.1 modified as appropriate to relate to such Subsidiary. The Company
shall deliver such Joinder and related documents to the Agent within five (5)
Business Days after the date of the filing of such Subsidiary's articles of
incorporation if the Subsidiary is a corporation, the date of the filing of its
certificate of limited partnership if it is a limited partnership, the date of
its organization if it is an entity other than a limited partnership or
corporation or the date of its acquisitions by any Borrower, as applicable.
11.19 Borrower Agency.
- ------------------------
Each Borrower hereby unconditionally and irrevocably
agrees that the Company shall have the right to take
any and all actions required to be taken by the Company on behalf of such
Borrower under the this Agreement and each of the other Loan Documents and such
Borrower hereby irrevocably makes, constitutes and appoints the Company (and any
of the Company's officers, employees or agents, as designated by the Company) as
its true and lawful attorney with power to execute such documents, instruments
and certificates and to take any and all actions required to be taken by the
Company on behalf of such Borrower under the this Agreement or any other Loan
Document. Such power, being coupled with an interest, is irrevocable until all
of the Obligations have been fully paid and performed, and the commitments have
terminated, all in accordance with the this Agreement and the other Loan
Documents. Without limiting the generality of the foregoing, each Borrower
hereby agrees that on behalf of such Borrower, the Company shall:
(a) Deliver certificates and make certifications required
to be delivered by or on behalf of the Borrowers to
the Administrative Agent including without limitation
financial certificates, compliance certificates, and
such other certificates, information and notices
required to be delivered to the Administrative Agent
under the this Agreement or the Loan Documents and
otherwise provide information on behalf of the
Borrowers;
(b) Receive notices and communications from the
Administrative Agent (it being agreed that notice to the
Company shall be deemed to be notice to all
Borrowers); and
(c) Take such other actions as any Borrower may request
on behalf of such Borrower under this Agreement.
Although the Company is authorized and directed to take the foregoing actions on
behalf of each Borrower, notwithstanding the foregoing, nothing contained herein
shall in any way release any Borrower from the performance of its obligations
under the this Agreement or under any other Loan Document, it being acknowledged
and agreed that the actions authorized to be taken by the Company hereunder are
solely for the purpose of administrative ease. Without limiting the foregoing,
nothing herein shall vitiate or be held contrary to any Borrower's
representations, express or implied, or covenants or undertakings. The
Administrative Agent shall be entitled to rely exclusively (but is not required
to rely exclusively) on the Company's authority to act in each instance without
inquiry or investigation and each of the Company and Subsidiary hereby agrees to
indemnify and hold harmless the Administrative Agent for any losses, costs,
delays, errors, claims, penalties or charges arising from or out of the
Company's actions pursuant to this Section 11.19. The Company, in the role
described in this Section 11.19, is sometimes referred to as "Borrower Agent."
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
ATTEST: PRIMESOURCE CORPORATION for itself and as Borrower Agent
By:
- -----------------------------------------------------
Title:
[Seal]
PNC BANK, NATIONAL ASSOCIATION, as Agent and as a Bank
By:
Title:
FLEET NATIONAL BANK, as a Bank
By:
Title:
MELLON BANK, N.A., as a Bank
By:
Title:
FIRST UNION NATIONAL BANK, as a Bank
By:
Title:
NATIONAL CITY BANK, as a Bank
By:
Title:
ACCEPTED AND AGREED and intending to be legally bound, including in respect of
the within provisions to the extent they related to Guarantor:
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 1 of 2
Part 1--Commitments of Banks and Addresses for Notices to Banks
Bank Amount of Commitment Ratable Share
PNC Bank, N.A. $20,000,000 26.67%
1600 Market Street
22nd Floor
Philadelphia, PA 19103
Attention: Forrest B. Patterson, Jr.
Telephone: (215) 585-5235
Fleet National Bank $15,000,000 20.0%
250 Moore Street
Hackensack, New Jersey 07602
Telephone: (201) 646-5704
Telecopy: (201) 488-6185
Attention: Joseph A. Nalbach
First Union National Bank $15,000,000 20%
600 Cuthbert Boulevard
Haddon Township, NJ 07602
phone (856)858-7687
fax (856)858-7698
Attention: Dante Bucci
Mellon Bank, N.A. $15,000,000 20%
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
phone (610)941-4155
fax (610)941-4136
Attention: Devon Starks
National City Bank $10,000,000 13.33%
One South Broad Street
18th Floor
Philadelphia, PA 19107
Phone (267)256-4043
fax (267)256-4001
Attention: Melissa Landay
Total $75,000,000 100%
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 2 of 2
Part 2--Addresses for Notices to Borrower
AGENT
PNC Bank, N.A.
1600 Market Street, 22nd Floor
Philadelphia, PA 19103
Attention: Forrest B. Patterson, Jr.
Telephone: (215) 585-5235
Telecopy: (215) 585-6987
BORROWER:
PrimeSource Corporation
Fairway Corporate Center
4350 Haddonfield Road, Suite 222
Pennsauken, NJ 08109
Attention: Chief Financial Officer
Telephone: (609) 486-2985
Telecopy: (609) 486-2999
with a copy to:
PrimeSource Corporation
355 Treck Drive
Seattle, Washington 98188
Attention: General Counsel
Telephone: (206) 394-5582
Telecopy: (206) 394-5579