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CREDIT AGREEMENT
Dated as of November 25, 1996
Among
MERRILL CORPORATION,
THE BANKS,
as defined herein,
and
FIRST BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
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CREDIT AGREEMENT
THIS AGREEMENT, dated as of November 25, 1996, is by and between MERRILL
CORPORATION, a Minnesota corporation (the "Borrower"), the banks or financial
institutions listed on the signature pages hereof or which hereafter become
parties hereto by means of assignment and assumption as hereinafter described
(individually referred to as a "Bank" or collectively as the "Banks"), and FIRST
BANK NATIONAL ASSOCIATION, a national banking association, as agent for the
Banks (in such capacity, the "Agent").
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the following respective
meanings (and such meanings shall be equally applicable to both the singular and
plural form of the terms defined, as the context may require):
"ADVANCE": The portion of the outstanding Loans bearing interest at an
identical rate for an identical Interest Period, provided that all Reference
Rate Advances shall be deemed a single Advance. An Advance may be a "CD Rate
Advance", "Eurodollar Advance", or "Reference Rate Advance" (each, a "type" of
Advance).
"ADVERSE EVENT": The occurrence of any event that could have material
adverse effect on the business, operations, property, assets or condition
(financial or otherwise) of the Borrower and the Subsidiaries as a consolidated
enterprise or on the ability of the Borrower, any Guarantor, or any other party
obligated thereunder to perform its obligations under the Loan Documents.
"AFFILIATE": Any officer, director, independent contractor or employee of
the Borrower or any Guarantor or any other Person under the common control of
the Borrower or any other Affiliate.
"AGENT": First Bank National Association, as agent for the Banks hereunder
and each successor, as provided in SECTION 11.8, who shall act as Agent.
"AGREEMENT": This Credit Agreement, as it may be amended, modified,
supplemented, restated or replaced from time to time.
"ASSIGNMENT": Shall have the meaning set forth in SECTION 12.3.
"ASSIGNMENT AND ASSUMPTION AGREEMENT": Shall have the meaning set forth in
SECTION 12.3.
"BUSINESS DAY": Any day (other than a Saturday, Sunday or legal holiday in
the State of Minnesota) on which national banks are permitted to be open in
Minneapolis, Minnesota and, with respect to Eurodollar Advances, a day on which
dealings in Dollars may be carried on by the Agent in the interbank eurodollar
market.
"CAPITAL EXPENDITURE": Any amount debited to the fixed asset account on
the consolidated balance sheet of the Borrower in respect of (a) the acquisition
(including, without limitation, acquisition by entry into a Capitalized Lease),
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds,
and (b) to the extent related to and not included in (a) above, materials,
contract labor and direct labor (excluding expenditures properly chargeable to
repairs or maintenance in accordance with GAAP).
"CAPITALIZED LEASE": Any lease which is or should be capitalized on the
books of the lessee in accordance with GAAP.
"CASH FLOW LEVERAGE": The ratio of (a) total interest bearing Debt,
including Capitalized Leases, at the end of each fiscal quarter, to (b) net
income of the Borrower before extraordinary gains PLUS depreciation and
amortization expense, MINUS Capital Expenditures, calculated over the four
consecutive quarters ending as of the date of the test; PROVIDED, HOWEVER, that
(i) for the fiscal quarter ended October 31, 1996, adjusted net income shall be
annualized by multiplying the result for the two consecutive quarters ending on
the date of the test by two, and (ii) for the fiscal quarter ending January 31,
1997, adjusted net income shall be annualized by multiplying the result for the
three consecutive quarters ending on the date of the test by four-thirds.
"CD ASSESSMENT RATE": The annual assessment rate (rounded upward, if
necessary, to the nearest 1/100th of 1%) actually incurred by the Agent during a
given Interest Period to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's insuring of time deposits at offices of the
Agent in the United States, as adjusted as hereinafter provided. If the annual
assessment rate for the Federal Deposit Insurance Corporation's (or any
successor's) insuring such time deposits is scheduled to change during such
Interest Period, the CD Assessment Rate for such Interest Period shall be the
weighted average (rounded upward, if necessary, to the nearest 1/100th of 1%) of
the annual assessment rates in effect at the beginning and as of such change.
"CD RATE": The rate of interest determined by the Agent for the relevant
Interest Period to be the average (rounded upward, if necessary, to the nearest
1/100th of 1%) of the rates quoted to the Agent at approximately 8:00 a.m.,
Minneapolis time (or as soon thereafter as practicable), or at the option of the
Agent at approximately the time of the request for a CD Rate Advance if such
request is made later than 8:00 a.m., Minneapolis time, in each case on the
first day of the applicable Interest Period by certificate of deposit dealers
selected by the Agent, in its sole discretion, for the purchase from the Agent,
at face value, of certificates of deposit issued by the Agent in an amount and
maturity comparable to the amount and maturity of the requested CD Rate Advance,
or at the option of the Agent determined for such amount and maturity based on
published composite quotations of certificate of deposit rates.
"CD RATE ADVANCE": An Advance designated as such in a notice of borrowing
under SECTION 2.3 or a notice of continuation or conversion under SECTION 2.4.
"CD RATE (RESERVE ADJUSTED)": A rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) calculated for the Interest Period of a
CD Rate Advance in accordance with the following formula:
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CD RATE
CDRA = ------------- + CDAR
1.00 - CDRR
In such formula, "CDAR" means "CD Assessment Rate", "CDRA" means "CD Rate
(Reserve Adjusted)" and "CDRR" means "CD Reserve Rate", in each instance
determined by the Agent for the applicable Interest Period. The Bank's
determination of all such rates for any Interest Period shall be rebuttably
presumptive evidence of the subject matter thereof.
"CD RESERVE RATE": A percentage equal to the daily average during such
Interest Period of the aggregate maximum reserve requirements (including all
basic, supplemental, marginal and other reserves), as specified under Regulation
D of the Federal Reserve Board, or any other applicable regulation that
prescribes reserve requirements applicable to non-personal time deposits (as
presently defined in Regulation D) with the Agent or applicable to extensions of
credit by the Agent the rate of interest on which is determined with regard to
rates applicable to non-personal time deposits. Without limiting the generality
of the foregoing, the CD Reserve Requirement shall reflect any reserves required
to be maintained by the Agent against (i) any category of liabilities that
includes deposits by reference to which the CD Rate is to be determined, or (ii)
any category of extensions of credit or other assets that includes CD Advances.
"CODE": The Internal Revenue Code of 1986, as amended, or any successor
statute, together with regulations thereunder.
"COMMITMENT": (i) The maximum unpaid principal amount of the Loans of all
Banks which may from time to time be outstanding hereunder, being initially
$40,000,000 as the same may be reduced from time to time pursuant to SECTION
4.3, or (ii) if so indicated for an individual Bank, the maximum unpaid
principal amount of the Loans of such Bank which may from time to time be
outstanding hereunder, being initially the amounts set forth on the signature
pages hereof or in the relevant Assignment and Assumption Agreement for such
Bank, as the same may be reduced from time to time pursuant to SECTION 4.3, or
(iii) as the context may require, the agreement of each Bank to make Loans to
the Borrower subject to the terms and conditions of this Agreement up to its
Commitment.
"COMPLIANCE CERTIFICATE": A certificate in the form of EXHIBIT C, duly
completed and signed by an authorized officer of the Borrower.
"CONSOLIDATED": When used with reference to any financial information
pertaining to (or when used as a part of any defined term or statement
pertaining to the financial condition of) any Person, the accounts of such
Person and its Subsidiaries, determined on a consolidated basis, all determined
as to principles of consolidation and, except as otherwise specifically required
by the definition of such term or by such statement as to such accounts, in
accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH": As of any date of determination, the
sum of the retained earnings, capital stock and surplus of the Borrower on a
Consolidated basis, less loans or accounts (other than accounts incurred in the
ordinary course of business) due from Affiliates, treasury stock and goodwill.
"DEBT": Without duplication, the sum of: (i) all items of indebtedness or
liability which, in accordance with GAAP, would be included in determining total
liabilities as shown on the
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liabilities side of a balance sheet as of the date as of which Debt is to be
determined, including any indebtedness owed to an Affiliate, and (ii)
indebtedness secured by any mortgage, pledge, lien or security interest existing
on property owned by the Person whose Debt is being determined, whether or not
the indebtedness secured thereby shall have been assumed, and (iii) guaranties,
endorsements (other than for purposes of collection in the ordinary course of
business) and other contingent obligations in respect of, or to purchase or
otherwise acquire indebtedness of others; provided, however, that for purposes
of calculating that Debt evidenced by Minnesota Agricultural and Economical
Development Authority Small business Revenue Bonds, Series 1985C and Series
1990B, Debt shall be calculated net of deposits and reserves maintained with the
trustee to secure these bonds.
"DEFAULT": Any event which, with the giving of notice to the Borrower or
lapse of time, or both, would constitute an Event of Default.
"DOCUMENTARY LETTERS OF CREDIT": The documentary letters of credit issued
for the account of the Borrower pursuant to the provisions of SECTION 2.7 hereof
and the Existing Documentary Letters of Credit.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended,
and any successor statute, together with regulations thereunder.
"ERISA AFFILIATE": Any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is
treated as a single employer under Section 414 of the Code.
"EURODOLLAR ADVANCE": An Advance designated as such in a notice of
borrowing under SECTION 2.3 or a notice of continuation or conversion under
SECTION 2.4.
"EURODOLLAR INTERBANK RATE": The average offered rate for deposits in
United States Dollars (rounded upwards, if necessary, to the nearest 1/16 of 1%)
for delivery of such deposits on the first day of an Interest Period of a
Eurodollar Advance, for the number of days comprised therein, which appears on
the Reuters Screen LIBO Page as of 11:00 a.m., London time (or such other time
as of which such rate appears) on the day that is two Business Days preceding
the first day of the Interest Period or the rate for such deposits determined by
the Agent at such time based on such other published service of general
application as shall be selected by the Agent for such purpose; PROVIDED, that
in lieu of determining the rate in the foregoing manner, the Agent may determine
the rate based on rates offered to the Agent for deposits in United States
Dollars (rounded upwards, if necessary, to the nearest 1/16 of 1%) in the
interbank eurodollar market at such time for delivery on the first day of the
Interest Period for the number of days comprised therein. "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuter Monitor Money
Rates Service (or such other page as may replace the LIBO Page on that service
for the purpose of displaying London interbank offered rates of major banks for
United States Dollar deposits).
"EURODOLLAR RATE (RESERVE ADJUSTED)": A rate per annum (rounded upward, if
necessary, to the nearest 1/16th of 1%) calculated for the Interest Period of a
Eurodollar Advance in accordance with the following formula:
Eurodollar Interbank Rate
ERRA = --------------------------
1.00 - ERR
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In such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA" means
"Eurodollar Rate (Reserve Adjusted)", in each instance determined by the Agent
for the applicable Interest Period. The Agent's determination of all such rates
for any Interest Period shall be rebuttably presumptive evidence of the subject
matter thereof.
"EURODOLLAR RESERVE RATE": A percentage equal to the daily average during
such Interest Period of the aggregate maximum reserve requirements (including
all basic, supplemental, marginal and other reserves), as specified under
Regulation D of the Federal Reserve Board, or any other applicable regulation
that prescribes reserve requirements applicable to Eurocurrency liabilities (as
presently defined in Regulation D) or applicable to extensions of credit by the
Agent the rate of interest on which is determined with regard to rates
applicable to Eurocurrency liabilities. Without limiting the generality of the
foregoing, the Eurocurrency Reserve Requirement shall reflect any reserves
required to be maintained by the Agent against (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Interbank Rate is to
be determined, or (ii) any category of extensions of credit or other assets that
includes Eurodollar Advances.
"EVENT OF DEFAULT": Any event described in SECTION 10.1.
"EXISTING DOCUMENTARY LETTERS OF CREDIT": Those documentary letters of
credit identified on Schedule 1.1, and previously issued by First Bank for the
account of the Borrower.
"EXISTING STANDBY LETTERS OF CREDIT": Those standby letters of credit
identified on Schedule 1.1, and previously issued by First Bank for the account
of the Borrower.
"FEDERAL FUNDS RATE": For any date, the weighted average of the rates on
overnight Federal Funds transactions, with members of the Federal Reserve System
only, arranged by Federal Funds brokers applicable to Federal Funds transactions
on that date. The Federal Funds rate shall be determined by the Agent on the
basis of reports by Federal Funds brokers to, and published daily by, the
Federal Reserve Bank of New York in the Composite Closing Quotations for U.S.
Government securities. If such publication is unavailable or the Federal Funds
Rate is not set forth therein, the Federal Funds Rate shall be determined on the
basis of any other source reasonably selected by the Agent. In the case of a
Saturday, Sunday or legal holiday on which banking institutions in Minneapolis,
Minnesota are not required to be open, the Federal Funds Rate shall be the rate
applicable to Federal Funds transactions on the immediately preceding day for
which the Federal Funds Rate is reported.
"FEDERAL RESERVE BOARD": The Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP": Generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
SECTION 7.5.
"GUARANTIES": Collectively, a Guaranty in the form of EXHIBIT B attached
hereto, as the same may be amended, modified, extended renewed or replaced from
time to time, together with each other or additional guaranty of the Borrower's
obligations to the Agent and the Banks executed by any Guarantor from time to
time hereafter.
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"GUARANTOR": Each Subsidiary of Borrower (except for 793473 Ontario
Limited, unless the guaranty of such entity is required under SECTION 8.14) and
any other Person(s) guaranteeing Borrower's obligations to the Agent and the
Banks, from time to time.
"INTEREST PERIOD"
(a) For any Eurodollar Advance, the period commencing on the borrowing
date of such Eurodollar Advance or the date a Reference Rate Advance is
converted into such Eurodollar Advance, or the last day of the preceding
Interest Period for such Eurodollar Advance, as the case may be, and ending
on the numerically corresponding day one, two, three or six months
thereafter, as selected by the Borrower pursuant to SECTION 2.3 or SECTION
2.4; PROVIDED, that:
(i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding Business Day
unless such next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall end on the next
preceding Business Day;
(ii) any Interest Period which begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Termination
Date.
(b) For any CD Rate Advance, the period commencing on the borrowing
date of such CD Rate Advance or the date a Reference Rate Advance is
converted into such CD Rate Advance, or the last day of the preceding
Interest Period for such CD Rate Advance, as the case may be, and ending
30, 60, 90 or 180 days thereafter, as selected by the Borrower pursuant to
SECTION 2.3 or SECTION 2.4; PROVIDED, that:
(i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding Business Day;
and
(ii) no Interest Period shall extend beyond the Termination Date.
"LETTERS OF CREDIT": Collectively, the Documentary Letters of Credit and
the Standby Letters of Credit.
"LETTER OF CREDIT AGREEMENTS": Shall have the meaning set forth in Section
2.7.
"LETTER OF CREDIT OBLIGATIONS": The aggregate amount of all possible
drawings under all Letters of Credit plus all amounts drawn under any Letter of
Credit and not reimbursed by the Borrower under the applicable Letter of Credit
Agreement.
"LIEN": Any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of the lessors under Capitalized Leases and the interest of a vendor
under any conditional sale or other title retention agreement).
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"LOAN DOCUMENTS": This Agreement, the Notes, all Letter of Credit
Agreements, the Guaranties, and each other instrument, document, guaranty,
security agreement, mortgage, or other agreement executed and delivered by the
Borrower or any guarantor or party granting security interests in connection
with this Agreement, the Loans, the Letters of Credit, or any collateral for the
Loans or Letters of Credit (whether delivered prior to, concurrently with or
subsequent to delivery of this Agreement).
"LOANS": The loan or loans referred to in SECTION 2.1 and any other loans
or advances made to the Borrower by the Banks under or pursuant to this
Agreement.
"MULTIEMPLOYER PLAN": Means a "multiemployer plan" as defined in
SECTION 4001(A)(3) of ERISA to which Borrower or any Subsidiary is making or
accruing an obligation to make contributions, or has within any of the preceding
three plan years made or accrued an obligation to make contributions.
"NOTES": Collectively, the revolving notes of the Borrower, substantially
in the form of EXHIBIT A hereto, made payable each to a Bank and any note which
renews a Note or extends the maturity date thereof and which specifically refers
to this Agreement; and individually, as to any Bank, a "Note".
"PAYMENT DATE": The Termination Date PLUS (a) with respect to CD Rate
Advances and Eurodollar Advances, the last day of each Interest Period and, if
such Interest Period is in excess of 90 days (in the case of a CD Rate Advance)
or three months (in the case of a Eurodollar Advance), the day, 90 days or three
months, as the case may be, after the first day of such Interest Period, and
thereafter each day, 90 days or three months after each succeeding Payment Date;
(b) with respect to Reference Rate Advances, the first day of each month; and
(c) with respect to Commitment Fees, in arrears on the first day of each
September, December, March and June commencing December 1, 1996.
"PBGC": The Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions
thereof.
"PERCENTAGE": As to any Bank the proportion, expressed as a percentage,
that such Bank's Commitment bears to the total Commitments of all Banks.
"PERSON": Any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
"PLAN": An employee benefit plan or other plan, maintained for employees
of the Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or
Section 412 of the Code.
"REFERENCE RATE": The rate of interest from time to time publicly
announced by the Agent as its "reference rate." The Agent may lend to its
customers at rates that are at, above or below the Reference Rate. For purposes
of determining any interest rate which is based on the Reference Rate, such
interest rate shall change on the effective date of any change in the Reference
Rate.
"REFERENCE RATE ADVANCE": An Advance designated as such in a notice of
borrowing under SECTION 2.3 or a notice of continuation or conversion under
SECTION 2.4.
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"REPORTABLE EVENT": A reportable event as defined in Section 4043 of ERISA
and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.
"REQUIRED BANKS": Either (a) at any time that there are only two Banks,
both of such Banks, or (b) if there are three or more Banks, those Banks whose
total Percentage equals or exceeds 67%, or if no Commitments remain in effect,
whose share of principal of the Loans constitutes at least 67% of the aggregate
outstanding principal of all Loans.
"RESTRICTED PAYMENT": In respect of any corporation: (a) dividends,
whether in cash or property, on any shares of its capital stock of any class
(except dividends or other distributions payable solely in shares of capital
stock of the corporation making the distribution); (b) any purchase, redemption
or retirement, directly or indirectly or through any Subsidiary, of any shares
of its capital stock, or any warrants, rights or options to purchase or assign
any shares of its capital stock; and (c) any other payment or distribution,
either directly or indirectly, or through a Subsidiary, in respect of its
capital stock.
"STANDBY LETTERS OF CREDIT": The standby letters of credit issued for the
account of Borrower pursuant to the provisions of SECTION 2.7 hereof and the
Existing Standby Letters of Credit.
"STANDBY LETTER OF CREDIT SUBLIMIT": Shall be $4,000,000.
"SUBSIDIARY": Any Person of which or in which the Borrower, the Borrower
and one or more of its Subsidiaries or one or more other Subsidiaries own
directly or indirectly 50% or more of: (a) the combined voting power of all
classes of stock having general voting power under ordinary circumstances to
elect a majority of the board of directors of such Person, if it is a
corporation, (b) the capital interest or profit interest of such Person, if it
is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
"TERMINATION DATE": The earliest of (a) November 29, 1999, (b) the date on
which the Commitments are terminated pursuant to SECTION 10.2 hereof, (c) the
date on which the Commitments are reduced to zero pursuant to SECTION 4.3
hereof, or (d) such other date as may be mutually agreed upon by the Borrower,
Agent and all Banks.
SECTION 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder (including,
without limitation, determination of compliance with financial ratios and
restrictions in ARTICLES VIII and IX hereof) shall be made in accordance with
GAAP consistently applied. Any reference to "consolidated" financial terms
shall be deemed to refer to those financial terms as applied to the Borrower and
its Subsidiaries in accordance with GAAP.
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SECTION 1.3 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."
SECTION 1.4 OTHER DEFINITIONAL TERMS. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
ARTICLE II TERMS OF LENDING
SECTION 2.1 THE COMMITMENTS. Subject to the terms and conditions hereof
and in reliance upon the warranties of the Borrower herein, each Bank agrees,
severally and not jointly, to make loans (each, a "Loan" and, collectively, the
"Loans") to the Borrower from time to time from the date hereof until the
Termination Date, during which period the Borrower may repay and reborrow in
accordance with the provisions hereof, provided, that the aggregate unpaid
principal amount of the Loans plus the Letter of Credit Obligations at any one
time outstanding shall not exceed the total Commitments of all Banks. The Loans
shall be made by the Banks on a pro rata basis, calculated for each Bank based
on its Percentage.
SECTION 2.2 ADVANCE OPTIONS. The Loans shall be constituted of CD Rate
Advances, Eurodollar Advances and Reference Rate Advances, as shall be selected
by the Borrower, except as otherwise provided herein. Any combination of types
of Advances may be outstanding at the same time, except that the total number of
outstanding CD Rate Advances and Eurodollar Advances shall not exceed four at
any one time. Each CD Rate Advance or Eurodollar Advance shall be in a minimum
amount of $100,000 or in an integral multiple of $100,000 above such amount.
Each Reference Rate Advance shall be in a minimum amount of $10,000 or in an
integral multiple of $10,000 above such amount.
SECTION 2.3 BORROWING PROCEDURES.
(a) REQUEST BY BORROWER. Any request by the Borrower for a Loan
shall be in writing or by telephone or by telecopy, and must be given so as
to be received by the Agent not later than:
(i) 12:01 p.m., Minneapolis time, on the date of the requested
Loan, if the Loan shall be comprised of CD Rate Advances or Reference
Rate Advances; or
(ii) 12:01 p.m., , Minneapolis time, two Business days prior to
the date of the requested Loan, if the Loan shall be, or shall
include, a Eurodollar Advance.
Each request for a Loan shall specify (1) the borrowing date (which shall
be a Business Day), (2) the amount of such Loan and the type or types of
Advances comprising such Loan, and (3) if such Loan shall include CD Rate
Advances or Eurodollar Advances, the initial Interest Periods for such
Advances. The failure of the Borrower to confirm a telephonic request in
writing or otherwise comply with the provisions of this SECTION 2.3 shall
not in any manner affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement and the Notes.
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(b) FUNDING OF AGENT. The Agent shall promptly notify each other
Bank of the receipt of such request, the matters specified therein, and of
such Bank's Percentage of the requested Loans. On the date of the
requested Loans, provided that such Bank receives the request for the loan
by 1:30 p.m., Minneapolis time, each Bank shall provide its share of the
requested Loans to the Agent in immediately available funds not later than
4:00 p.m., Minneapolis time. Unless the Agent determines that any
applicable condition specified in ARTICLE VI has not been satisfied, the
Agent will make the requested Loans available to the Borrower at the
Agent's principal office in Minneapolis, Minnesota in immediately available
funds not later than 5:00 p.m. (Minneapolis time) on the lending date so
requested, PROVIDED, that without limiting the generality of the foregoing,
if the Agent has received notice that an Event of Default has occurred, the
Agent will not make any additional Loan available for any other Bank
without prior consent of such Bank. If the Agent has made a Loan to the
Borrower on behalf of a Bank but has not received the amount of such Loan
from such Bank by the time herein required, such Bank shall pay interest to
the Agent on the amount so advanced at the overnight Federal Funds rate
from the date of such Loan to the date funds are received by the Agent from
such Bank, such interest to be payable with such remittance from such Bank
of the principal amount of such Loan (provided, however, that the Agent
shall not make any Loan on behalf of a Bank if the Agent has received prior
notice from such Bank that it will not make such Loan). If the Agent does
not receive payment from such Bank by the next Business Day after the date
of any Loan, the Agent shall be entitled to recover such Loan, with
interest thereon at the rate then applicable to the such Loan, on demand,
from the Borrower, without prejudice to the Agent's and the Borrower's
rights against such Bank. If such Bank pays the Agent the amount herein
required with interest at the overnight Federal Funds Rate before the Agent
has recovered from the Borrower, such Bank shall be entitled to the
interest payable by the Borrower with respect to the Loan in question
accruing from the date the Agent made such Loan.
SECTION 2.4 CONTINUATION OR CONVERSION OF LOANS. The Borrower may elect
to (i) continue any outstanding CD Rate Advance or Eurodollar Advance from one
Interest Period into a subsequent Interest Period to begin on the last day of
the earlier Interest Period, or (ii) convert any outstanding Advance into
another type of Advance (on the last day of an Interest Period only, in the
instance of a CD Rate Advance or Eurodollar Advance), by giving the Agent notice
in writing or by telephone or by telecopy, given so as to be received by the
Agent not later than:
(a) 12:01 p.m., Minneapolis time, on the date of the requested
continuation or conversion, if the continuing or converted Advance shall be
a CD Rate Advance or Reference Rate Advance; or
(b) 12:01 p.m., Minneapolis time, two Business days prior to the date
of the requested continuation or conversion, if the continuing or converted
Advance shall be a Eurodollar Advance.
Each notice of continuation or conversion of an Advance shall specify (i) the
effective date of the continuation or conversion date (which shall be a Business
Day), (ii) the amount and the type or types of Advances following such
continuation or conversion (subject to the limitation on amount set forth in
SECTION 2.2), and (iii) for continuation as, or conversion into, CD Rate
Advances or Eurodollar Advances, the Interest Periods for such Advances. Absent
timely notice of continuation or conversion, each CD Rate Advance and Eurodollar
Advance shall
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automatically convert into a Reference Rate Advance on the last day of an
applicable Interest Period, unless paid in full on such last day. No Advance
shall be continued as, or converted into, a CD Rate Advance or Eurodollar
Advance if the shortest Interest Period for such Advance may not transpire prior
to the Termination Date or if a Default or Event of Default shall exist.
SECTION 2.5 THE NOTES. The Loans of each Bank shall be evidenced by a
Note in the amount of said Bank's Commitment originally in effect and dated as
of the date of this Agreement. The Banks shall enter in their respective
records the amount of each Loan and Advance, the rate of interest borne by each
Advance and the payments made on the Loans, and such records shall be rebuttably
presumptive evidence of the subject matter thereof.
SECTION 2.6 FUNDING LOSSES. The Borrower will indemnify each Bank upon
demand against any loss or expense which such Bank may sustain or incur
(including, without limitation, any loss or expense sustained or incurred in
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund, or maintain any Advance) as a consequence of (i) any failure of the
Borrower to make any payment when due of any amount due hereunder or under said
Bank's Note, (ii) any failure of the Borrower to borrow, continue or convert an
Advance on a date specified therefor in a notice thereof, or (iii) any payment
(including, without limitation, any payment pursuant to SECTION 4.2, 4.3, 5.3 or
10.2), prepayment or conversion of any CD Rate Advance or Eurodollar Advance on
a date other than the last day of the Interest Period for such Advance.
Determinations by each Bank for purposes of this SECTION 2.6 of the amount
required to indemnify such Bank shall be rebuttably presumptive evidence of the
subject matter thereof. At the request of the Borrower, the Bank requesting
payment hereunder shall furnish the Borrower with a written explanation, in
reasonable detail, showing how the amounts of such payment were calculated.
SECTION 2.7 LETTERS OF CREDIT.
(a) LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, and on the condition that the sum of the aggregate Letter of
Credit Obligations plus the outstanding principal balance of all Loans
shall never exceed the total Commitments of all of the Banks, the Borrower
may, in addition to Loans, request that the Agent issue letters of credit
for the account of the Borrower (or any Subsidiary of the Borrower,
provided that the Borrower shall be co-applicant with any such Subsidiary
for such Letter of Credit, and unconditionally jointly and severally
obligated in respect of any such Letter of Credit and under the Letter of
Credit Agreement pertaining thereto), by making such request to the Agent
(such letters of credit as any of them may be amended, supplemented,
extended or confirmed from time to time, being herein collectively called
the 'Letters of Credit'). The Agent may, at its discretion, elect to issue
or decline to issue any requested Letter of Credit. Upon the date of the
issuance of a Letter of Credit, the Agent shall be deemed, without further
action by any party hereto, to have sold to each Bank, and each Bank shall
be deemed without further action by any party hereto, to have purchased
from the Agent, a participation, in its Percentage, in such Letter of
Credit and the related Letter of Credit Obligations.
(b) ADDITIONAL PROVISIONS. The following additional provisions shall
apply to each Letter of Credit:
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(i) Borrower may request a standby Letter of Credit (a
"Standby Letter of Credit") or a documentary Letter of Credit (a
"Documentary Letter of Credit").
(ii) Upon receipt of any request for a Letter of Credit, the
Agent shall notify each Bank of the contents of such request and of
such Bank's Percentage of the amount of such proposed Letter of
Credit.
(iii) No Letter of Credit may be issued if after giving effect
thereto (1) the sum of (A) the aggregate outstanding principal amount
of Loans PLUS (B) the aggregate Letter of Credit Obligations would
exceed the total Commitments of all Banks, or (2) with respect to
Standby Letters of Credit, the aggregate Letter of Credit Obligations
pertaining to Standby Letters of Credit exceeds the Standby Letter of
Credit Sublimit. The Commitment of each Bank shall be deemed to be
utilized for all purposes hereof in an amount equal to such Bank's
Percentage of the Letter of Credit Obligations.
(iv) All Letters of Credit shall expire on the earlier of (1)
the date set forth in the applicable Letter of Credit, which date
shall be no later than one (1) year after the date of issuance, or (2)
the Termination Date.
(v) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment thereunder, Agent shall promptly notify the
Borrower and each Bank as to the amount to be paid as a result of such
demand and the payment date. If requested by any Bank, the Agent will
provided to such Bank a photocopy of the Letter of Credit and the
drafts and certificates presented to draw under such Letter of Credit.
If at any time the Agent shall have made a payment to a beneficiary of
such Letter of Credit in respect of a drawing or in respect of an
acceptance created in connection with a drawing under such Letter of
Credit, each Bank will pay to Agent immediately upon demand by the
Agent at any time during the period commencing after such payment
until reimbursement thereof in full by the Borrower, an amount equal
to such Bank's Percentage of such payment, together with interest on
such amount for each day from the date of demand for such payment (or,
if such demand is made after 2:00 p.m., Minneapolis time on such date,
from the next succeeding Business Day) to the date of payment by such
Bank of such amount at a rate of interest per annum equal to the
Federal Funds Rate for such period.
(vi) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the Agent for any amount paid by the
Agent upon any drawing under any Letter of Credit, without
presentment, demand, protest or other formalities of any kind, all of
which are hereby waived. Such reimbursement may, subject to
satisfaction of the conditions in ARTICLE VI hereof and to the unused
Commitment (after adjustment in the same to reflect the elimination of
the corresponding Letter of Credit Obligation), be made by the
borrowing of Loans. The Borrower shall pay interest on any amount
paid by the Agent upon any drawing under any Letter of Credit from the
date of such payment by the Agent until the date such amount is fully
reimbursed by the Borrower, at the rate set forth in SECTION 3.1(c),
or if remaining unpaid (whether by the making of a Loan hereunder or
otherwise) for more than one Business Day at the rate set forth in
SECTION 3.1(d). The Agent will pay to each Bank such
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Bank's Percentage of all amounts received from the Borrower for
application in payment, in whole or in part, of a Letter of Credit
Obligation, but only to the extent such Bank has made payment to the
Agent in respect of such Letter of Credit pursuant to CLAUSE (v)
above.
(vii) The Borrower will pay to Agent for the account of each
Bank in accordance with its Percentage a letter of credit fee (the
"Letter of Credit Fee") with respect to each Letter of Credit equal to
an amount, calculated on the basis of face amount of each Letter of
Credit, in each case for the period from and including the date of
issuance of such Letter of Credit to and including the date of
expiration or termination thereof at a per annum rate equal to 0.75%
in the case of Standby Letters of Credit and 0.25% in the case of
Documentary Letters of Credit. The Letter of Credit Fee is due and
payable in advance on the date of the issuance thereof and on each
anniversary date of such issuance so long as such Letter of Credit
remains outstanding. The Agent will pay to each Bank, promptly after
receiving any payment in respect of Letter of Credit Fees referred to
in this CLAUSE (vii), an amount equal to the product of such Bank's
Percentage TIMES the amount of such fees.
(viii) The Borrower shall also pay to Agent on demand an up-front
issuance fee of $250.00 for each Letter of Credit and all of Agent's
standard administrative and operating fees and charges in effect from
time to time for issuing, administering and honoring draws under any
Letter of Credit.
(ix) All fees hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed.
(x) The issuance by the Agent of each Letter of Credit shall,
in addition to the discretionary nature of this Letter of Credit
facility, be subject to the conditions precedent set forth in ARTICLE
VI hereof and the condition precedent that the Borrower shall have
executed and delivered such applications and other instruments and
agreements relating to such Letter of Credit as the Agent shall have
reasonably requested and are not inconsistent with the terms of this
Agreement (the 'Letter of Credit Agreements'). In the event of a
conflict between the terms of this Agreement and the terms of any
Letter of Credit Agreement (including the charging of any fees other
than normal and customary reimbursable expenses), the terms hereof
shall control.
(c) INDEMNIFICATION. The Borrower will indemnify the Agent and each
Bank from and against (i) all loss and damage to the Agent or any Bank
arising out of issuance of, or any other action taken in connection with,
any Letter of Credit other than loss or damage resulting from such party's
gross negligence or willful misconduct, and (ii) all costs and expenses
(including reasonable attorneys' fees and legal expenses) of all claims or
legal proceedings arising out of issuance of any Letter of Credit,
including without limitation, legal proceedings relating to any court
order, injunction or other process or decree restraining or seeking to
restrain the Agent from paying any amount under any Letter of Credit.
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ARTICLE III INTEREST AND FEES
SECTION 3.1 INTEREST.
(a) CD RATE ADVANCES. The unpaid principal amount of each CD Rate
Advance shall bear interest prior to maturity at a rate per annum equal to
the CD Rate (Reserve Adjusted) in effect for each Interest Period for such
CD Rate Advance plus 1.0% per annum
(b) EURODOLLAR ADVANCES. The unpaid principal amount of each
Eurodollar Advance shall bear interest prior to maturity at a rate per
annum equal to the Eurodollar Rate (Reserve Adjusted) in effect for each
Interest Period for such Eurodollar Advance plus 1.0% per annum.
(c) REFERENCE RATE ADVANCES. The unpaid principal amount of each
Reference Rate Advance shall bear interest prior to maturity at a rate per
annum equal to the Reference Rate.
(d) INTEREST AFTER MATURITY. Any amount of the Loans not paid when
due, whether at the date scheduled therefor or earlier upon acceleration,
shall bear interest until paid in full at a rate per annum equal to the
greater of (i) 1.75% in excess of the rate applicable to the unpaid
principal amount immediately before it became due, or (ii) 1.75% in excess
of the Reference Rate in effect from time to time.
SECTION 3.2 COMMITMENT FEES. The Borrower shall pay fees (the
"Commitment Fees") to the Agent for the account of the Banks in an amount
determined by applying a rate of 0.25% per annum to the average daily unused
amount of the Commitments of the respective Banks for the period from the date
hereof to the Termination Date.
SECTION 3.3 COMPUTATION. Interest and Commitment Fees shall be computed
on the basis of actual days elapsed and a year of 360 days.
SECTION 3.4 PAYMENT DATES. Accrued interest under SECTION 3.1(a), (b)
and (c) and Commitment Fees shall be payable on the applicable Payment Dates.
Accrued interest under SECTION 3.1(d) shall be payable on demand.
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT AND SETOFF
SECTION 4.1 REPAYMENT. Principal of the Loans, together with all
accrued and unpaid interest thereon, shall be due and payable on the Termination
Date.
SECTION 4.2 OPTIONAL PREPAYMENTS. The Borrower may, upon notice to the
Agent (which shall promptly notify the Banks) not later than 12:00 noon,
Minneapolis time, prepay the Loans, in whole or in part, at any time subject to
the provisions of SECTION 2.6, without any other premium or penalty. Each
partial prepayment shall be in an amount of $100,000 or an integral multiple
thereof, or in the instance of prepayment of a Reference Rate Advance, in an
amount of $10,000 or an integral multiple thereof.
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SECTION 4.3 OPTIONAL REDUCTION OR TERMINATION OF COMMITMENT. The
Borrower may, at any time, upon no less than three Business Days prior written
or telephonic notice received by the Agent (which shall promptly notify the
Banks), reduce the total Commitments. Any such reduction shall be in a minimum
amount of $1,000,000 or an integral multiple thereof and shall be applied to
reduce each Bank's Commitment ratably in accordance with the Banks' respective
Percentage. Upon any reduction in the Commitments pursuant to this Section, the
Borrower shall pay to the Agent for the account of the Banks the amount, if any,
by which the aggregate unpaid principal amount of outstanding Loans plus the
Letter of Credit Obligations exceeds the Commitments as so reduced. Amounts so
paid cannot be reborrowed. The Borrower may, at any time, upon not less than
three Business Days prior written notice to the Agent, terminate the Commitments
in their entirety. Upon termination of the Commitments pursuant to this
Section, the Borrower shall pay to the Agent for the account of the Banks the
full amount of all outstanding Loans, all accrued and unpaid interest thereon,
all unpaid Commitment Fees accrued to the date of such termination and all other
unpaid obligations of the Borrower to the Banks hereunder, and shall deliver
cash collateral to be held in accordance with SECTION 10.4 in respect of all
outstanding Letters of Credit. All payments described in this Section are
subject to the provisions of SECTION 2.6.
SECTION 4.4 PAYMENTS. Payments and prepayments of principal of, and
interest on, the Notes, payment of all reimbursement obligations under the
Letters of Credit and payment of all fees, expenses and other obligations under
the Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 1:30 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. The Agent shall notify the Banks of such payment not later than 3:00 p.m.,
Minneapolis time, and shall promptly distribute in like funds to each Bank its
Percentage share of each such payment of principal, interest and Commitment
Fees. Subject to the definition of the term "Interest Period", whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
any interest or fees.
SECTION 4.5 PRORATION OF PAYMENTS. If any Bank or other holder of a
Loan shall obtain any payment or other recovery (whether voluntary, involuntary,
by application of offset, pursuant to the guaranty hereunder, or otherwise) on
account of principal of, interest on, or fees with respect to any Loan, or
payment of any Letter of Credit Obligations, in any case in excess of the share
of payments and other recoveries of other Banks or holders, such Bank or other
holder shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Loans or Letter of Credit
Obligations held by such other Banks or holders as shall be necessary to cause
such purchasing Bank or other holder to share the excess payment or other
recovery ratably with each of such other Banks or holders; PROVIDED, HOWEVER,
that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank or holder, the purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
AND LETTERS OF CREDIT
SECTION 5.1 INCREASED COSTS. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance
15
by the Banks with any request or directive (whether or not having the force of
law) from any court, central bank, governmental authority, agency or
instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Loan, the
Notes, any Letter of Credit or the Commitments is imposed, modified or
deemed applicable, or the basis of taxation of payments to any Bank of
interest or principal of the Loans, Letters of Credit or of the Commitment
Fees (other than taxes imposed on the overall net income of such Bank by
the jurisdiction in which such Bank has its principal office) is changed;
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
Letters of Credit issued by or credit extended by, any Bank is imposed,
modified or deemed applicable;
(c) any increase in the amount of capital required or expected to be
maintained by any Bank or any Person controlling such Bank is imposed,
modified or deemed applicable; or
(d) any other condition affecting this Agreement or the Commitments
is imposed on any Bank or the relevant funding markets;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans, issuing or participating in the Letters of
Credit or extending its Commitment is increased, or the amount of any sum
receivable by such Bank hereunder or under the Notes in respect of any Loan or
Letters of Credit is reduced;
THEN, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that the Banks
have not been compensated for such additional cost or reduction in the
calculation of the CD Reserve Rate or Eurodollar Reserve Rate). Determinations
by each Bank for purposes of this SECTION 5.1 of the additional amounts required
to compensate such Bank shall be rebuttably presumptive evidence of the subject
matter thereof. In determining such amounts, the Banks may use any reasonable
averaging, attribution and allocation methods. At the request of the Borrower,
each Bank making a claim hereunder shall furnish the Borrower with a written
explanation showing in reasonable detail how the foregoing additional amounts
were calculated.
SECTION 5.2 DEPOSITS UNAVAILABLE OR INTEREST RATE UNASCERTAINABLE OR
INADEQUATE; IMPRACTICABILITY. If the Agent reasonably determines that:
(a) deposits of the necessary amount for the relevant Interest Period
for any CD Rate Advance or Eurodollar Advance are not available to the
Banks in the relevant markets or that, by reason of circumstances affecting
such market, adequate and reasonable means do not exist for ascertaining
the CD Rate or Eurodollar Interbank Rate, as the case may be, for such
Interest Period;
(b) the CD Rate (Reserve Adjusted) or the Eurodollar Rate (Reserve
Adjusted), as the case may be, will not adequately and fairly reflect the
cost to the Banks of making or funding the CD Rate Advance or Eurodollar
Advance for a relevant Interest Period; or
16
(c) the making or funding of CD Rate Advances or Eurodollar Advances,
as the case may be, has become impracticable as a result of any event
occurring after the date of this Agreement which, in the reasonable opinion
of the Agent, materially and adversely affects such Advances or any Bank's
Commitment to make such Advance or the relevant market;
the Agent shall promptly give notice of such determination to the Borrower, and
(i) any notice of a new CD Rate Advance or Eurodollar Advance, as the case may
be, previously given by the Borrower and not yet borrowed or converted shall be
deemed to be a notice to make a Reference Rate Advance, and (ii) the Borrower
shall be obligated to either prepay in full any outstanding CD Rate Advances or
Eurodollar Advances, as the case may be, without premium or penalty on the last
day of the current Interest Period with respect thereto or convert any such
Advance to an Advance of another type, as selected by Borrower, on such last
day.
SECTION 5.3 CHANGES IN LAW RENDERING CD RATE ADVANCES OR EURODOLLAR
ADVANCES UNLAWFUL. If at any time due to the adoption of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof by any court, central bank, governmental authority,
agency or instrumentality, or comparable agency charged with the interpretation
or administration thereof, or for any other reason arising subsequent to the
date of this Agreement, it shall become unlawful or impossible for any Bank to
make or fund any CD Rate Advance or Eurodollar Advance, the obligation of such
Bank to provide such Advance shall, upon the happening of such event, forthwith
be suspended for the duration of such illegality or impossibility. If any such
event shall make it unlawful or impossible for the Bank to continue any CD Rate
Advance or Eurodollar Advance previously made by it hereunder, such Bank shall,
upon the happening of such event, notify the Agent and the Borrower thereof in
writing, and the Borrower shall, at the time notified by such Bank, either
convert each such unlawful Advance to a Reference Rate Advance or repay such
Advance in full, together with accrued interest thereon, subject to the
provisions of SECTION 2.6.
SECTION 5.4 DISCRETION OF THE BANKS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans in
any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each CD Rate Advance and Eurodollar Advance
during the Interest Period for such Advance through the purchase of deposits
having a term corresponding to such Interest Period and bearing an interest rate
equal, in the case of CD Rate Advances, to the CD Rate for such Interest Period
or, in the case of Eurodollar Advances, to the Eurodollar Interbank Rate for
such Interest Period (whether or not any Bank shall have granted any
participations in such Advances).
ARTICLE VI CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS OF INITIAL LOAN. The obligation of the Banks to
make the initial Loan hereunder shall be subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions precedent set
forth in SECTION 6.2 below, that the Agent shall have received all of the
following, in form and substance satisfactory to the Agent, each duly executed
and certified or dated the date of the initial Loan or such other date as is
satisfactory to the Agent:
(a) This Agreement executed by duly authorized officers of the
Borrower, Agent and each Bank.
17
(b) The Notes executed by a duly authorized officer (or officers) of
the Borrower.
(c) The Guaranty executed by a duly authorized officer (or officers)
of each Guarantor.
(d) A copy of the corporate resolution of the Borrower and each
corporate Guarantor authorizing the execution, delivery and performance of
the Loan Documents to which it is a party, certified by the Secretary or an
Assistant Secretary of the applicable corporation.
(e) An incumbency certificate showing the names and titles, and
bearing the signatures of, the officers of the Borrower and each corporate
Guarantor authorized to execute the Loan Documents and, in the case of the
Borrower, to request Loans hereunder, certified by the Secretary or an
Assistant Secretary of the applicable corporation.
(f) A copy of the Articles or Certificate of Incorporation and the
By-laws of the Borrower and each corporate Guarantor with all amendments
thereto, certified by the Secretary or an Assistant Secretary of the
applicable corporation, PROVIDED, that in lieu of submitting new copies of
such documents, the Borrower and each Guarantor may submit updating
certificates for copies of such documents that have been submitted to the
Agent within twelve months prior to the date hereof.
(g) A Certificate of Good Standing for the Borrower and each
corporate Guarantor in the jurisdiction of its incorporation, certified by
the appropriate governmental officials.
(h) A duly executed opinion of counsel to the Borrower and the
Guarantors, addressed to the Agent and the Banks, in substantially the form
of EXHIBIT D.
(i) A lien search on the Borrower showing no outstanding liens not
previously disclosed.
SECTION 6.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the
Banks to make any Loan hereunder (including the initial Loan) or issue any
Letter of Credit shall be subject to the satisfaction of the following
conditions precedent (and any request for a Loan or Letter of Credit shall be
deemed a representation and warranty by the Borrower that the following have
been satisfied):
(a) Before and after giving effect to such Loan or Letter of Credit,
the representation and warranties contained in ARTICLE VII shall be true
and correct, as though made on the date of such Loan, except to the extent
that such representations or warranties relate solely to an earlier date;
and
(b) Before and after giving effect to such Loan or issuance of such
Letter of Credit, no Default or Event of Default shall have occurred and be
continuing.
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ARTICLE VII REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, to grant
the Commitments and to make Loans and issue Letters of Credit hereunder, the
Borrower represents and warrants to the Agent and the Banks:
SECTION 7.1 ORGANIZATION, STANDING, ETC. The Borrower, each corporate
Guarantor and each of its corporate Subsidiaries are corporations duly
incorporated and validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and have all requisite corporate
power and authority to carry on their respective businesses as now conducted, to
enter into the Loan Documents and to perform its obligations under the Loan
Documents to which they are a party. With the exception of New Jersey (in which
the Borrower or the relevant Subsidiary shall become qualified as a foreign
corporation in due course), the Borrower and each of its Subsidiaries are duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned, leased or operated by it or the
business conducted by it makes such qualification necessary.
SECTION 7.2 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Borrower and each corporate Guarantor of the Loan Documents
to which it is a party have been duly authorized by all necessary corporate
action by the applicable corporation, and the Loan Documents constitute the
legal, valid and binding obligations of each such corporation, enforceable
against it in accordance with their respective terms, subject to limitations as
to enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors' rights generally or might result from
general principles of equity.
SECTION 7.3 NO CONFLICT; NO DEFAULT; COMPLIANCE. The execution,
delivery and performance by the Borrower and each corporate Guarantor of the
Loan Documents to which it is a party will not (a) violate any provision of any
law, statute, rule or regulation or any order, writ, judgment, injunction,
decree, determination or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Borrower or such Guarantor, (b)
violate or contravene any provisions of the Articles (or Certificate) of
Incorporation or by-laws of the Borrower or any corporate Guarantor, or (c)
result in a breach of or constitute a default under any indenture, loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower or any corporate Guarantor is a party or by which it or any of its
properties may be bound or result in the creation of any Lien on any asset of
the Borrower or any corporate Guarantor or other Subsidiary. Neither the
Borrower nor any corporate Guarantor or other Subsidiary is in default under or
in violation of any such law, statute, rule or regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture, loan
or credit agreement or other agreement, lease or instrument in any case in which
the consequences of such default or violation could constitute an Adverse Event.
No Default or Event of Default has occurred and is continuing.
SECTION 7.4 CONSENT. No consent or approval of the shareholders of the
Borrower or any corporate Guarantor or any other Subsidiary and no order,
consent, approval, license, authorization or validation of, or filing, recording
or registration with, or exemption by, any governmental or public body or
authority is required on the part of the Borrower, corporate Guarantor or other
Subsidiary to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, the Loan Documents.
19
SECTION 7.5 FINANCIAL STATEMENTS AND CONDITION. The Borrower's audited
consolidated financial statements as of January 31, 1996, and its unaudited
consolidated financial statements as of July 31, 1996, as heretofore furnished
to the Banks, have been prepared in accordance with GAAP on a consistent basis
and fairly present the financial condition of the Borrower and its Subsidiaries
as of such dates and the results of their operations and their statement of cash
flows for the respective periods then ended. As of the dates of such financial
statements, neither the Borrower nor any Subsidiary had any material obligation,
contingent liability, liability for taxes or long-term lease obligation which is
not reflected in such financial statements or in the notes thereto. Since July
31, 1996, no Adverse Event has occurred.
SECTION 7.6 LITIGATION AND CONTINGENT LIABILITIES. Except as described
in SCHEDULE 7.6, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Subsidiary, could constitute an
Adverse Event. Except as described in SCHEDULE 7.6, neither the Borrower nor
any Subsidiary has any contingent liabilities which are material to the Borrower
and the Subsidiaries as a consolidated enterprise.
SECTION 7.7 ENVIRONMENTAL, HEALTH AND SAFETY LAWS. There does not exist
any violation by the Borrower or any Subsidiary of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Subsidiary or which would require a material
expenditure by the Borrower or such Subsidiary to cure. Neither the Borrower
nor any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, the consequences of which non-compliance or remedial action could
constitute an Adverse Event.
SECTION 7.8 ERISA. (a) Each Plan is in compliance in all material
respects with all applicable provisions of ERISA and the Code with respect to
which failure to comply would reasonably be expected to result in a material
liability to the Borrower or any Subsidiary (relative to the Borrower's
Consolidated Tangible New Worth or its ability to maintain compliance with the
covenants herein); (b) as of the date of the most recent valuation of each Plan
subject to Title IV of ERISA (other than a Multiemployer Plan), the aggregate
present value of all accrued vested benefits under such Plans (calculated on the
basis of the actuarial assumptions specified in the most recent actuarial
valuation for such Plans) did not exceed by a material amount (relative to the
Borrower's Consolidated Tangible Net Worth or its ability to maintain compliance
with the covenants herein) the fair market value of the assets of such Plans
allocable to such benefits; (c) the Borrower is not aware of any information
since the date of such valuations which would materially affect the information
contained therein: (d) no Plan which is subject to Part 3 of Subtitle B of Title
I of ERISA or Section 412 of the Code has incurred an accumulated funding
deficiency as that term is defined in Section 302 of ERISA or Section 412 of the
Code (whether or not waived); (e) no liability to the PBGC (other than required
premiums which have become due and payable, all of which have been paid) has
been incurred with respect to any Plan, and there has not been any Reportable
Event which presents a material risk of termination of any Plan by the PBGC; and
(f) to the best of its knowledge, the Borrower has not engaged in a transaction
which would subject it to any
20
material tax, penalty or liability for prohibited transactions imposed by ERISA
or the Code. As of the effective date of this Agreement, neither the Borrower
nor any Subsidiary contributes to any Multiemployer Plan.
SECTION 7.9 REGULATION U. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
will be used to purchase or carry margin stock or for any other purpose which
would violate any of the margin requirements of the Board of Governors of the
Federal Reserve System.
SECTION 7.10 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and the
Subsidiaries has good and marketable title to its real properties and good and
sufficient title to its other properties, including all properties and assets
referred to as owned by the Borrower and its Subsidiaries in the audited
financial statements referred to in SECTION 7.5 (other than property disposed of
since the date of such financial statement as permitted by SECTION 9.5). None
of the properties, revenues or assets of the Borrower or any of its Subsidiaries
is subject to a Lien, except for (a) Liens disclosed in the financial statements
referred to in SECTION 7.5, (b) Liens listed on SCHEDULE 7.11, or (c) Liens
allowed under SECTION 9.1.
SECTION 7.11 TAXES. Each of the Borrower and the Subsidiaries has filed
all federal, state and local tax returns which to the knowledge of the officers
of the Borrower and each Subsidiary are required to be filed and has paid or
made provision for the payment of all taxes due and payable pursuant to such
returns and pursuant to any assessments made against it or any of its property
and all other taxes, fees and other charges imposed on it or any of its property
by any governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of the Borrower or Subsidiary). No tax Liens have been
filed and no material claims are being asserted with respect to any such taxes,
fees or charges. The charges, accruals and reserves on the books of the
Borrower and the Subsidiaries in respect of taxes and other governmental charges
are adequate.
SECTION 7.12 TRADEMARKS, PATENTS. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business, without known conflict with the rights of others.
SECTION 7.13 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended.
SECTION 7.14 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a holding company or of a subsidiary company of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended.
SECTION 7.15 SUBSIDIARIES. SCHEDULE 7.15 sets forth, as of the date of
this Agreement, a complete and correct list of all Subsidiaries of Borrower and
the present ownership of each, and the jurisdiction of incorporation of each.
Except as otherwise indicated on SCHEDULE 7.15, all
21
shares of each Subsidiary owned by the Borrower or by any other Subsidiary are
fully paid and non-assessable.
SECTION 7.16 PARTNERSHIPS AND JOINT VENTURES. SCHEDULE 7.16 sets forth
as of the date of this Agreement a list of all partnerships or joint ventures in
which the Borrower or any Subsidiary is a partner (limited or general) or joint
venturer.
SECTION 7.17 ACCURACY OF INFORMATION. All factual information heretofore
or herewith furnished by the Borrower to the Banks for purposes of or in
connection with this Agreement or any of the transactions contemplated hereby
is, and all other such factual information hereafter furnished by the Borrower
to the Banks for purposes of or in connection with this Agreement or any of the
transactions will be, true and accurate in every material respect on the date as
of which such information is dated or certified and no such information contains
any material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading.
SECTION 7.18 SURVIVAL OF REPRESENTATIONS. All representations and
warranties contained in this ARTICLE VII shall survive the delivery of the Notes
and the making of the Loans and the issuance of any Letter of Credit evidenced
thereby and any investigation at any time made by or on behalf of the Banks
shall not diminish its rights to rely thereon.
ARTICLE VIII AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments are
terminated or expire and the Loans and all other liabilities of the Borrower to
the Banks hereunder and under the Notes and any Letters of Credit have been paid
in full and all Letters of Credit have expired or been terminated, the Borrower
will do, and will cause each Subsidiary (except in the instance of SECTION 8.1)
to do, all of the following:
SECTION 8.1 FINANCIAL STATEMENTS AND REPORTS. Furnish to the Banks:
(a) As soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, the annual audit report of the
Borrower and its Subsidiaries prepared on a consolidated basis and in
conformity with GAAP, consisting of at least statements of income, cash
flow, changes in stockholders' equity, and a consolidated balance sheet as
of the end of such year, setting forth in each case in comparative form
corresponding figures from the previous annual audit, certified without
qualification by Coopers and Lybrand, or other independent certified public
accountants of recognized standing selected by the Borrower and acceptable
to the Agent.
(b) As soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year, a copy of
the unaudited financial statement of the Borrower and its subsidiaries
prepared in the same manner as the audit report referred to in SECTION
8.1(a), signed by the Borrower's chief financial officer, consisting of at
least consolidated statements of income, and cash flow for the Borrower and
the Subsidiaries for such quarter and for the period from the beginning of
such fiscal year to the end of such quarter, and a consolidated balance
sheet of the Borrower as of the end of such quarter.
22
(c) Together with the financial statements furnished by the Borrower
under SECTIONS 8.1(a) and 8.1(b), a Compliance Certificate.
(d) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower shall have sent
to its stockholders.
(e) promptly after the sending or filing thereof, copies of all
regular and periodic financial reports which the Borrower shall file with
the Securities and Exchange Commission or any national securities exchange,
including the Borrower's quarterly 10-Q statements and annual 10-K
statements.
(f) immediately after the commencement thereof, notice in writing of
any and all litigation and of all proceedings before any governmental or
regulatory agency affecting the Borrower or any Subsidiary of the type
described in SECTION 7.6 or which seek a monetary recovery against the
Borrower in excess of $250,000.
(g) as promptly as practicable (but in any event not later than five
(5) Business Days) after an officer of the Borrower obtains knowledge of
the occurrence of any event which constitutes an Event of Default, notice
of such occurrence, together with a detailed statement by a responsible
officer of the Borrower of the steps being taken by the Borrower to cure
the effect of such event.
(h) as soon as possible and in any event within 30 days after the
Borrower knows that a Reportable Event with respect to any Plan has
occurred, the statement of the chief financial officer of the Borrower
setting forth details as to such Reportable Event and the action, if any,
which the Borrower proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event to the PBGC if such notice is
required to be furnished to the PBGC.
(i) as soon as possible, any notice of any default received by the
Borrower or any Subsidiary in the repayment of any indebtedness for
borrowed money owed by any of them the outstanding principal amount of
which exceeds $250,000.
(j) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental
proceeding which could result in an Adverse Event, or the rendering of a
judgment or decision in such litigation or proceeding, and the steps being
taken by the Person(s) affected by such proceeding.
(k) Immediately upon becoming aware of the occurrence thereof, notice
of any violation as to any environmental matter by the Borrower or any
Subsidiary and of the commencement of any judicial or administrative
proceeding relating to health, safety or environmental matters (i) in which
an adverse determination or result could result in the revocation of or
have a material adverse effect on any operating permits, air emission
permits, water discharge permits, hazardous waste permits or other permits
held by the Borrower or any Subsidiary which are material to the operations
of the Borrower or such Subsidiary, or (ii) which will or threatens to
impose a material liability on the Borrower or such Subsidiary to any
Person or which will require a material expenditure by the Borrower or such
Subsidiary to cure any alleged problem or violation.
23
(l) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries as
any Bank may reasonably request.
SECTION 8.2 CORPORATE EXISTENCE. Subject to SECTION 9.6 in the instance
of a Subsidiary, maintain its corporate existence in good standing under the
laws of its jurisdiction of incorporation and (subject to the provision on
qualification in New Jersey in SECTION 7.1) its qualification to transact
business in each jurisdiction in which the character of the properties owned,
leased or operated by it or the business conducted by it makes such
qualification necessary.
SECTION 8.3 INSURANCE. Maintain with insurance companies believed by
the Borrower to be financially sound and reputable, such insurance as may be
required by law and such other insurance in such amounts and against such
hazards as is customary in the case of reputable corporations engaged in the
same or similar business and similarly situated.
SECTION 8.4 PAYMENT OF TAXES AND CLAIMS. File all tax returns and
reports which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; PROVIDED that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings.
SECTION 8.5 INSPECTION. Permit any Person designated by any Bank to
visit and inspect any of its properties, corporate books and financial records,
to examine and to make copies of its books of accounts and other financial
records, and to discuss the affairs, finances and accounts of the Borrower and
the Subsidiaries with, and to be advised as to the same by, its officers at such
reasonable times and intervals as such Bank may designate. So long as no Event
of Default exists, the expenses of the Banks for such visits, inspections and
examinations shall be at the expense of the individual Bank making such visit,
inspection or examination, but any such visits, inspections, and examinations
made while any Event of Default is continuing shall be at the expense of the
Borrower.
SECTION 8.6 MAINTENANCE OF PROPERTIES. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
SECTION 8.7 BOOKS AND RECORDS. Keep adequate and proper records and
books of account in which full and correct entries will be made of its dealings,
business and affairs.
SECTION 8.8 COMPLIANCE. Comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, to the extent that non-compliance could result in an Adverse Event.
SECTION 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and all material applicable
rulings and regulations issued under the provisions of ERISA and of the Code
with respect to which failure to comply would
24
reasonably be expected to result in a material liability to the Borrower or any
Subsidiary (relative to the Borrower's Consolidated Tangible Net Worth).
SECTION 8.10 ENVIRONMENTAL MATTERS. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute or result in an Adverse Event.
SECTION 8.11 CONSOLIDATED TANGIBLE NET WORTH. The Borrower will
maintain, at the end of each fiscal quarter designated herein, its Consolidated
Tangible Net Worth at an amount not less than the sum of (a) $43,270,000 PLUS
(b) 70% of the cumulative positive net income in all fiscal quarters ending
after July 31, 1996; PROVIDED, HOWEVER, under no circumstances shall the minimum
Consolidated Tangible Net Worth ever decrease.
SECTION 8.12 MAXIMUM CASH FLOW LEVERAGE. The Borrower will ensure that
its Cash Flow Leverage does not exceed 4.50 to 1.00 at the end of each fiscal
quarter.
SECTION 8.13 MINIMUM INTEREST, LEASE AND DIVIDEND COVERAGE. The Borrower
will maintain at the end of each fiscal quarter, the ratio of (a) its net income
before extraordinary gains, interest expense, income tax expense, amortization
expense and operating lease expense, to (b) the sum of (i) total interest on
interest bearing Debt, including the interest component of Capitalized Leases,
(ii) the total payments on all operating leases, and (iii) the total dividends
declared and paid (which ratio shall be calculated over the periods of two, and
three consecutive fiscal quarters beginning, in each case, on August 1, 1996 and
November 1, 1996, and ending, respectively, on October 31, 1996, and January 31,
1997, and over the period of four consecutive fiscal quarters ending on
April 30, 1997, and the last day of each fiscal quarter thereafter) at not less
than 2.00 to 1.00.
SECTION 8.14 GUARANTORS. The Borrower will cause each Subsidiary that is
acquired, formed or incorporated, or otherwise comes into existence after the
date hereof to become a Guarantor by signing a Guaranty and submitting other
documents similar to those submitted by, or on behalf of, the Guarantors
existing as of the date of this Agreement. It is agreed and acknowledged that
793473 Ontario Limited, a corporation organized under the laws of Ontario,
Canada, is not a Guarantor, and shall not be required to become a Guarantor
unless either (a) such corporation shall have any material assets, or (b) such
corporation shall remain in existence later than April 30, 1997, and the Agent,
upon direction of the Required Banks shall request that the Guaranty of such
corporation shall be delivered.
ARTICLE IX NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments are
terminated or expire and the Loans and all other liabilities of the Borrower to
the Banks hereunder and under the Notes and any Letters of Credit have been paid
in full and all Letters of Credit have expired or terminated, the Borrower will
not, and will not permit any Subsidiary to, do any of the following:
SECTION 9.1 LIENS. Create, incur or suffer to exist any mortgage, deed
of trust, pledge, lien, security interest, assignment or transfer upon or of any
of its assets, now owned or hereafter acquired, to secure any indebtedness for
borrowed money; EXCLUDING, HOWEVER, from the operation of the foregoing:
25
(a) liens for taxes or assessments or other governmental charges to
the extent not required to be paid by SECTION 8.4;
(b) materialmen's, merchants', carriers', workmen's, repairmen's, or
other like liens arising in the ordinary course of business to the extent
not required to be paid by SECTION 8.4;
(c) pledges or deposits to secure obligations under workmen's
compensation laws, unemployment insurance and social security laws, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases or to secure statutory obligations
or surety or appeal bonds, or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
(d) zoning restrictions, easements, licenses, restrictions on the use
of real property or minor irregularities in title thereto, which do not
materially impair the use of such property in the operation of the business
of the Borrower and any Subsidiary or the value of such property for the
purpose of such business;
(e) purchase money mortgages, liens, or security interests (which
term for purposes of this subsection shall include conditional sale
agreements or other title retention agreements and leases in the nature of
title retention agreements) upon or in property acquired after the date
hereof, or mortgages, liens or security interests existing in such property
at the time of acquisition thereof, or, in the case of any corporation
which thereafter becomes a Subsidiary, mortgages, liens or security
interests upon or in its property, existing at the time such corporation
becomes a Subsidiary, PROVIDED that:
(1) no such mortgage, lien or security interest extends or shall
extend to or cover any property of the Borrower or such Subsidiary, as
the case may be, other than the property then being acquired and fixed
improvements then or thereafter erected thereon;
(2) the aggregate principal amount of all Debt of the Borrower
and all Subsidiaries secured by all mortgages, liens or security
interests described in this subsection (e) shall not exceed $1,000,000
at any one time outstanding; and
(3) the aggregate principal amount of Debt secured by mortgages,
liens and security interests described in this subsection (e) at the
time of acquisition of the property subject thereto shall not exceed
the cost of such property or of the then fair market value of such
property as determined by the Board of Directors of the Borrower,
whichever shall be less, and the aggregate amount of payments made
thereunder will not result in a violation of the restriction contained
in SECTION 9.8;
(f) mortgages, liens, pledges and security interests on any property
of the Borrower or any Subsidiary (other than those described in subsection
(e)) securing any indebtedness for borrowed money in existence on the date
hereof and listed in SCHEDULE 7.11; and
26
(g) liens arising out of a judgment against the Borrower or any
Subsidiary for the payment of money not exceeding $1,000,000 with respect
to which an appeal is being prosecuted and a stay of execution pending such
appeal has been secured.
SECTION 9.2 INDEBTEDNESS. The Borrower will not, and will not permit
any Subsidiary to, incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for borrowed
money, or any other indebtedness or liability evidenced by notes, bonds,
debentures or similar obligations, except:
(a) indebtedness evidenced by the Notes;
(b) indebtedness of the Borrower or any Subsidiary in existence on
the date hereof and listed in SCHEDULE 9.2;
(c) indebtedness of a Subsidiary to the Borrower or another
Subsidiary on account of borrowings from the Borrower or such other
Subsidiary, or indebtedness of the Borrower to a Subsidiary on account of
borrowings from that Subsidiary; and
(d) indebtedness of the Borrower or any Subsidiary incurred after the
date hereof which in the aggregate for the Borrower and all Subsidiaries
does not exceed $5,000,000 at any time outstanding.
SECTION 9.3 GUARANTIES. The Borrower will not, and will not permit any
Subsidiary to, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:
(a) the endorsement of negotiable instruments by the Borrower or a
Subsidiary for deposit or collection or similar transactions in the
ordinary course of business;
(b) guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in SCHEDULE 9.3;
(c) guaranties given after the date hereof in the ordinary course of
business of the Borrower or a Subsidiary; and
(d) guaranties by the Borrower or any Subsidiary of the indebtedness
of any Subsidiary or of the Borrower, or guaranties by any Subsidiary of
the indebtedness of any other another Subsidiary if all such Subsidiaries
are Guarantors and if such indebtedness is permitted under SECTION 9.2(d).
SECTION 9.4 INVESTMENTS. The Borrower will not, and will not permit any
Subsidiary to, purchase or hold beneficially any stock or other securities or
evidences of indebtedness of, make or permit to exist any loans or advances to,
or make any investment or acquire any interest whatsoever in, any other Person,
except:
(a) investments in direct obligations of the United States of America
or any agency or instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America having a
maturity of one year or less,
27
commercial paper issued by U.S. corporations rated "A1" or "A2" by Standard
& Poor's Ratings Service or "P1" or "P2" by Moody's Investors Service or
certificates of deposit or bankers' acceptances having a maturity of one
year or less issued by members of the Federal Reserve System having
deposits in excess of $10,000,000;
(b) advances and loans to Affiliates;
(c) advances in the form of progress payments, prepaid rent or
security deposits;
(d) loans and advances by a Subsidiary to the Borrower or another
Subsidiary, PROVIDED, HOWEVER, that a Subsidiary that is a Guarantor may
make loans or advances only to Borrower or another Subsidiary that is also
a Guarantor;
(e) loans and advances by the Borrower to any Subsidiary;
(f) subject to the limitation contained in SECTION 9.6 hereof, stock
in any Subsidiaries acquired after the date hereof; and
(g) investments in stock or debt instruments of other Persons which
in the aggregate do not exceed $5,000,000 at any time outstanding.
SECTION 9.5 SALE OF ASSETS. The Borrower will not, nor shall it permit
any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of all or
a substantial part of its assets (whether in one transaction or in a series, of
transactions) to any other Person other than in the ordinary course of business;
provided, however, that the restrictions contained in this Section shall not
apply to or prevent:
(a) the conveyance, lease or transfer by a Subsidiary of all or a
part of its properties to the Borrower or to another wholly-owned
Subsidiary of the Borrower;
(b) sales or leases by the Borrower or a Subsidiary of its properties
in the ordinary course of business; and
(c) sales or lease by the Borrower or a Subsidiary of its surplus,
obsolete or worn-out properties.
SECTION 9.6 CONSOLIDATION AND MERGER; ACQUISITION OF ASSETS AND STOCK.
The Borrower will not, nor shall it permit any Subsidiary to, consolidate with
or merge into any Person, or permit any other Person to merge into it unless (i)
the Borrower immediately notifies each of the Banks following the merger or
consolidation, (ii) the Borrower or the Subsidiary is the surviving entity, and
(iii) the Borrower reaffirms its liability under the Loan Documents after the
merger or consolidation and represents and warrants to the Bank that there does
not then exist any Default or Event of Default hereunder; PROVIDED, HOWEVER,
that the foregoing restrictions shall not apply to or prevent the consolidation
or merger of a Subsidiary with the Borrower (if Borrower shall be the continuing
or surviving corporation) or another then existing wholly-owned Subsidiary of
the Borrower. The Borrower agrees that in each consecutive 12 month period, the
aggregate amount that is expended (whether in cash or in stock) by the Borrower
and its Subsidiaries to acquire all or substantially all of the assets or any
stock of
28
another Person, and to merge or consolidate with another Person, shall not
exceed $5,000,000 in the aggregate.
SECTION 9.7 SALE AND LEASEBACK. The Borrower will not, nor shall it
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
with any other Person whereby the Borrower or any Subsidiary shall sell or
transfer any real or personal property, whether now owned or hereafter acquired,
and then or thereafter rent or lease as lessee such property or any part thereof
or any other property which the Borrower or any Subsidiary intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
SECTION 9.8 EXPENDITURES FOR FIXED ASSETS. The Borrower will not, nor
shall it permit any Subsidiary to, make any future expenditure of money for the
purchase or construction of fixed assets if, after giving effect to such
expenditure, the aggregate amount of such expenditures made by the Borrower and
its Subsidiaries in any fiscal year will exceed $20,000,000.
SECTION 9.9 RESTRICTIONS ON ISSUANCE AND SALE OF SUBSIDIARY STOCK. The
Borrower will not:
(a) permit any Subsidiary to issue or sell any shares of stock of any
class of such Subsidiary to any other Person (other than the Borrower or a
wholly-owned Subsidiary of the Borrower), except for the purpose of
qualifying directors or of satisfying preemptive rights of paying a common
stock dividend on, or splitting, common stock of such Subsidiary; or
(b) sell, transfer or otherwise dispose of any shares of stock of any
class (except to a wholly-owned Subsidiary of the Borrower or to qualify
directors) of any Subsidiary or permit any Subsidiary to sell, transfer or
otherwise dispose of (except to the Borrower or a wholly-owned Subsidiary
of the Borrower or to qualified Directors) any shares of stock of any class
of any other Subsidiary.
SECTION 9.10 RESTRICTIONS ON NATURE OF BUSINESS. The Borrower will not,
nor will it permit any Subsidiary to, engage in any line of business materially
different from that presently engaged in by the Borrower or its Subsidiaries.
SECTION 9.11 PLANS. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $250,000.
SECTION 9.12 OTHER AGREEMENTS. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Bank which
would be violated or breached by the Borrower's performance of its obligations
under the Loan Documents.
SECTION 9.13 RESTRICTED PAYMENTS. Make, or incur any liability to make,
any Restricted Payment, except that:
29
(a) any Subsidiary may make Restricted Payments to the Borrower or a
wholly-owned Subsidiary; and
(b) the Borrower may make Restricted Payments, PROVIDED, immediately after
giving effect to such Restricted Payments, that the aggregate amount of all
Restricted Payments made during the period commencing on July 31, 1996 and
ending on the date such Restricted Payment is made, inclusive, would not
exceed the sum of (i) $15,000,000, PLUS (ii) 75% of cumulative consolidated
net after-tax income of the Borrower and its Subsidiaries for the period
commencing on August 1, 1996, and ending on the most-recently ended fiscal
quarter of the Borrower, MINUS (iii) 75% of cumulative consolidated net
loss of the Borrower and its Subsidiaries for the same period, PLUS (iv)
the aggregate amount of net proceeds to the Borrower from the issuance of
capital stock during such period; PROVIDED, FURTHER, that (x) at the time
of making such Restricted Payment and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing, and (y)
Restricted Payments consisting of any purchase, redemption or retirement,
directly or indirectly or through any Subsidiary, of any shares of capital
stock, shall not exceed
30
$25,000,000 in the aggregate for all such Restricted Payments under this
subsection (y) after July 31, 1996. For purposes of the foregoing,
cumulative consolidated net income and net loss shall be calculated on an
annual basis for fiscal years that have ended, and a quarterly basis for
fiscal years not ended.
SECTION 9.14 UNCONDITIONAL PURCHASE OBLIGATIONS. Enter into or be a
party to any material contract for the purchase or lease of materials, supplies
or other property or services if such contract requires that payment be made by
it regardless of whether or not delivery is ever made of such materials,
supplies or other property or services.
SECTION 9.15 TRANSACTIONS WITH AFFILIATES. Enter into or be a party to
any transaction or arrangement, including, without limitation, the purchase,
sale lease or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or the applicable Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person not an
Affiliate, PROVIDED, that this Section shall not prohibit transfers of assets
(which may or may not be for arms-length consideration) from any Subsidiary to
another Subsidiary, provided that the transferee is also a Guarantor.
SECTION 9.16 USE OF PROCEEDS. Permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to the Bank, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) The Borrower shall fail to make when due, whether by acceleration
or otherwise, any payment of principal of or interest on the Notes or any
Letter of Credit reimbursement obligation and such failure shall continue
for a period of five (5) calendar days;
(b) Any representation or warranty made or deemed to have been made
by or on behalf of the Borrower or any Guarantor or other Subsidiary in any
of the Loan Documents or by or on behalf of the Borrower or any Subsidiary
in any certificate, statement, report or other writing furnished by or on
behalf of the Borrower or any Guarantor to the Banks pursuant to the Loan
Documents shall prove to have been false or misleading in any material
respect on the date as of which the facts set forth are stated or certified
or deemed to have been stated or certified;
31
(c) The Borrower shall fail to comply with SECTION 8.2, 8.11, 8.12 or
8.13 hereof or any Section of ARTICLE IX hereof;
(d) The Borrower shall fail to comply with any agreement, covenant,
condition, provision or term contained in this Agreement (and such failure
shall not constitute an Event of Default under any of the other provisions
of this SECTION 10.1) and such failure to comply shall continue for 30
calendar days after notice thereof to the Borrower by the Agent or any
Bank;
(e) The Borrower or any Guarantor or Subsidiary shall become
insolvent or shall generally not pay its debts as they mature or shall
apply for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower or such Guarantor or
Subsidiary or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a custodian, trustee
or receiver shall be appointed for the Borrower or a Guarantor or
Subsidiary or for a substantial part of the property thereof and shall not
be discharged within 60 days;
(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against the Borrower, any Guarantor or a Subsidiary, and, if instituted
against the Borrower, Guarantor or a Subsidiary, shall have been consented
to or acquiesced in by the Borrower or such Subsidiary, or shall remain
undismissed for 60 days, or an order for relief shall have been entered
against the Borrower, Guarantor or such Subsidiary, or the Borrower,
Guarantor or any Subsidiary shall take any corporate action to approve
institution of, or acquiescence in, such a proceeding;
(g) Any dissolution or liquidation proceeding shall be instituted by
or against the Borrower, any Guarantor or any Subsidiary and, if instituted
against the Borrower, Guarantor or Subsidiary, shall be consented to or
acquiesced in by the Borrower, Guarantor or such Subsidiary or shall remain
for 60 days undismissed, or the Borrower, any Guarantor or any Subsidiary
shall take any corporate action to approve institution of, or acquiescence
in, such a proceeding;
(h) The Borrower or any Guarantor shall fail to comply with any
agreement, covenant, condition, provision or term contained in any Loan
Document to which it is a party (other than, in Borrower's case, this
Agreement) (and such failure shall not constitute an Event of Default under
any of the other provisions of this SECTION 10.1) and the applicable grace
period, if any, shall have expired;
(i) Any writ, warranty of attachment or execution or similar process
shall be issued or levied against a substantial part of the property of the
Borrower, a Guarantor or Subsidiary and such judgment, writ or similar
process shall not be released, vacated or fully bonded within 60 days after
its issue or levy;
(j) A judgment or judgments for the payment of money in excess of the
sum of $250,000 shall be rendered against the Borrower, a Guarantor or a
Subsidiary and the Borrower, Guarantor or such Subsidiary shall not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof, prior to any execution on
such judgments by such judgment creditor, within 30 days from the date of
32
entry thereof, and within said period of 30 days, or such longer period
during which execution of such judgment shall be stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal;
(k) To the extent that it would reasonably be expected to result in a
material liability to the Borrower or any Subsidiary (relative to the
Borrower's Consolidated Tangible Net Worth), (a) any Reportable Event,
which the Agent or the Required Banks shall reasonably determine in good
faith is likely to constitute grounds for the termination of any Plan or
for the appointment by the appropriate United States District Court of a
trustee to administer any such Plan shall have occurred and be continuing
30 days after written notice to such effect shall have been given to the
Borrower by the Bank; or (b) any Plan subject to Title IV of ERISA shall
have been terminated, or a trustee shall have been appointed by an
appropriate United States District Court to administer any Plan, or the
PBGC shall have instituted proceedings to terminate any Plan or to appoint
a trustee to administer any Plan;
(l) A default under any bond, debenture, note or other evidence of
indebtedness of the Borrower, any Guarantor or any Subsidiary which exceeds
$250,000, or under any indenture or other instrument under which any
evidence of indebtedness exceeding $250,000 has been issued or by which it
is governed and the expiration of the applicable period of grace, if any,
specified in such evidence of indebtedness;
(m) Any governmental authority assesses the Borrower for violating
any environmental law, regulation, ordinance, or requirement regarding
hazardous waste that involves clean up costs which in the reasonable
opinion of the Required Banks may exceed $500,000.
SECTION 10.2 REMEDIES. If (a) any Event of Default described in SECTIONS
10.1(e), (f) or (g) shall occur with respect to the Borrower, the Commitments
shall automatically terminate and the outstanding unpaid principal balance of
the Notes, the accrued interest thereon and all other obligations of the
Borrower to the Banks and the Agent under the Loan Documents shall automatically
become immediately due and payable; or (b) any other Event of Default shall
occur and be continuing, then the Agent may take any or all of the following
actions (and shall promptly take any or all of the following actions on
direction of the Required Banks): (i) by notice to the Borrower declare the
Commitments terminated, whereupon the Commitments shall terminate, (ii) by
notice to the Borrower declare that the outstanding unpaid principal balance of
the Notes, the accrued and unpaid interest thereon and all other obligations of
the Borrower to the Banks and the Agent under the Loan Documents to be forthwith
due and payable, whereupon the Notes, all accrued and unpaid interest thereon
and all such obligations shall immediately become due and payable, in each case
without demand or further notice of any kind, all of which are hereby expressly
waived, (iii) exercise all rights and remedies under any other instrument,
document or agreement between the Borrower and the Agent or the Banks, and (iv)
enforce all rights and remedies under any applicable law. In exercising the
rights and duties under this SECTION 10.2: (x) the Agent shall take action
without consent and direction of the Required Banks only in instances in which
no direction has been received from the Required Banks within ten days after the
Required Banks have been informed of the issue or the need to act (provided that
the Agent may take actions that it shall reasonably determine are consistent
with any consent and direction of the Required Banks, once given), (y) the Agent
will notify the Banks if it shall act without consent and direction of the
Required Banks, and (z)
33
the Agent, upon request of any Bank, will provide copies of any notice or
communication to the Borrower under this Section.
SECTION 10.3 OFFSET. In addition to the remedies set forth in SECTION
10.2, upon the occurrence of any Event of Default or at any time thereafter
while such Event of Default continues, each Bank or any other holder of any Note
may offset any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or monies of the Borrower then or
thereafter with such Bank or such other holder, or any obligations of such Bank
or such other holder of a Note, against the indebtedness then owed by the
Borrower to such Bank or other holder.
SECTION 10.4 LETTERS OF CREDIT. In addition to the foregoing remedies,
if any Event of Default described in SECTION 10.1(e), (f) or (g) shall have
occurred, or if any other Event of Default shall have occurred and the Agent
shall have declared that the principal balance of the Notes is due and payable,
the Borrower shall pay to the Agent an amount equal to the all Letter of Credit
Obligations. Such payment shall be in immediately available funds or in similar
cash collateral acceptable to the Agent and the Required Banks and shall be
pledged to the Agent for the ratable benefit of the Banks. Such amount shall be
held by the Agent in a cash collateral account until the outstanding Letters of
Credit are terminated without payment or are paid and Letter of Credit
Obligations with respect thereto are payable. Upon termination of all Letters
of Credit without payment or other payment of all Letter of Credit Obligations,
such amount shall be released to the Borrower, subject to any right of setoff.
In the event the Borrower defaults in the payment of any Letter of Credit
Obligations, the proceeds of the cash collateral account shall be applied to the
payment thereof. The Borrower acknowledges and agrees that the Banks would not
have an adequate remedy at law for failure by the Borrower to pay immediately to
the Agent the amount provided under this Section, and that the Agent shall, on
behalf of the Banks, have the right to require the Borrower to perform
specifically such undertaking whether or not any of the Letter of Credit
Obligations are due and payable. Upon the failure of the Borrower to make any
payment required under this Section, the Agent, on behalf of the Banks, may
proceed to use all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Agent. The balance of any payment due
under this Section shall bear interest payable on demand until paid in full at a
per annum rate equal to the Reference Rate plus 1.75%.
ARTICLE XI THE AGENT
SECTION 11.1 APPOINTMENT AND GRANT OF AUTHORITY. Each Bank hereby
appoints the Agent, and the Agent hereby agrees to act, as agent under this
Agreement. The Agent shall have and may exercise such powers under this
Agreement as are specifically delegated to the Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
Each Bank hereby authorizes, consents to, and directs the Borrower to deal with
the Agent as the true and lawful agent of such Bank to the extent set forth
herein.
SECTION 11.2 NON RELIANCE ON AGENT. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement. The Agent shall not be required to keep informed as to the
performance or observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower.
34
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its related companies) which may come into the Agent's
possession.
SECTION 11.3 RESPONSIBILITY OF THE AGENT AND OTHER MATTERS.
(a) The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and those duties and liabilities
shall be subject to the limitations and qualifications set forth in this
Section. The duties of the Agent shall be mechanical and administrative in
nature.
(b) Neither the Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted (whether or not such action
taken or omitted is within or without the Agent's responsibilities and
duties expressly set forth in this Agreement) under or in connection with
this Agreement, or any other instrument or document in connection herewith,
except for gross negligence or willful misconduct. Without limiting the
foregoing, neither the Agent nor any of its directors, officers or
employees shall be responsible for, or have any duty to examine:
(i) the genuineness, execution, validity, effectiveness,
enforceability, value or sufficiency of (a) this Agreement, the
Notes, or Letter of Credit Agreements, or (b) any document or
instrument furnished pursuant to or in connection with this Agreement,
the Notes or any Letter of Credit,
(ii) the collectibility of any amounts owed by the Borrower,
(iii) any recitals or statements or representations or
warranties in connection with this Agreement, the Notes or other Loan
Documents,
(iv) any failure of any party to this Agreement to receive any
communication sent, or
(v) the assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Borrower or any
Guarantor.
(c) The Agent shall be entitled to act, and shall be fully protected
in acting upon, any communication in whatever form believed by the Agent in
good faith to be genuine and correct and to have been signed or sent or
made by a proper person or persons or entity. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected in-any
action taken in good faith, in accordance with advice given by counsel.
The Agent may employ agents and attorneys-in-fact and shall not be liable
for the default or misconduct of any such agents or attorneys-in-fact
selected by the Agent with reasonable care. The Agent shall not be bound
to ascertain or inquire as to the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Notes on the
Borrower's part.
SECTION 11.4 ACTION ON INSTRUCTIONS. The Agent shall be entitled to
act or refrain from acting, and in all cases shall be fully protected in acting
or refraining from acting under this
35
Agreement or the Notes or any other instrument or document in connection
herewith or therewith in accordance with instructions in writing from (i) the
Required Banks except for instructions which under the express provisions hereof
must be received by the Agent from all the Banks, and (ii) in the case of such
instructions, from all the Banks.
SECTION 11.5 INDEMNIFICATION. To the extent the Borrower does not
reimburse and save the Agent harmless according to the terms hereof for and from
all costs, expenses and disbursements in connection herewith or with the other
Loan Documents, such costs, expenses and disbursements to the extent reasonable
shall be borne by the Banks ratably in accordance with their Percentages and the
Banks hereby agree on such basis (a) to reimburse the Agent for all such
reasonable costs, expenses and disbursements on request and (b) to indemnify and
save harmless the Agent against and from any and all losses, obligations,
penalties, actions, judgments and suits and other reasonable costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent, arising out of or in
connection with this Agreement or the Notes or any instrument or document in
connection herewith or therewith, or any request of the Banks, including
without limitation the reasonable costs, expenses and disbursements in
connection with defending itself against any claim or liability, or answering
any subpoena, related to the exercise or performance of any of its powers or
duties under this Agreement or the other Loan Documents or the taking of any
action under or in connection with this Agreement or the Notes.
SECTION 11.6 FIRST BANK NATIONAL ASSOCIATION AND OTHER BANKS. With
respect to First Bank National Association's Commitment and any Loans by First
Bank National Association under this Agreement and any Note and any interest of
First Bank National Association in any Note, First Bank National Association
shall have the same rights, powers and duties under this Agreement and such Note
as any other Bank and may exercise the same as though it were not the Agent.
First Bank National Association and each other Bank and their respective
affiliates may accept deposits from, lend money to, and generally engage, and
continue to engage, in any kind of business with the Borrower as if First Bank
National Association were not the Agent, and as if such other Banks were not
party hereto.
SECTION 11.7 NOTICE TO HOLDER OF NOTES. The Agent may deem and treat the
payees of the Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note.
SECTION 11.8 SUCCESSOR AGENT. The Agent may resign at any time by giving
at least 30 days written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent with the consent of the Borrower, which shall not be unreasonably
withheld. If no successor Agent shall have been appointed by the Required Banks
or approved by the Borrower and shall have accepted such appointment within 30
days after the retiring Agent's giving notice of resignation, then the retiring
Agent may, but shall not be required to, on behalf of the Banks, appoint a
successor Agent.
ARTICLE XII MISCELLANEOUS
SECTION 12.1 NO WAIVER AND AMENDMENT. No failure on the part of the
Banks or the holder of the Notes to exercise and no delay in exercising any
power or right hereunder or
36
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right preclude any other or further
exercise thereof or the exercise of any other power or right. The remedies
herein and in any other instrument, document or agreement delivered or to be
delivered to the Banks hereunder or in connection herewith are cumulative and
not exclusive of any remedies provided by law. No notice to or demand on the
Borrower not required hereunder or under the Notes shall in any event entitle
the Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Banks or the holder of
the Notes to any other or further action in any circumstances without notice or
demand.
SECTION 12.2 AMENDMENTS, ETC. No amendment, waiver, consent,
modification, or consent to waive violations of any provision of, or to waive
any Event of Default under, this Agreement or any Loan Document shall in any
event be effective unless the same shall be in writing and signed by the
Borrower and the Agent (which shall so sign only upon the direction or consent
of the Required Banks) and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no amendment, waiver, consent, modification, or consent to waive
violations of any provision of, or to waive any Event of Default under, this
Agreement or any Loan Document shall, unless agreed to by the Agent and all of
the Banks:
(a) increase the amounts of or extend the terms of the Commitments or
subject the Banks to any additional obligations or extend the final
scheduled maturity date of the Loans or the latest permissible expiry date
of any Letter of Credit;
(b) reduce, forgive or compromise the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder;
(c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder;
(d) release all or substantially all of any collateral for the Loans;
or
(e) change the definition of Required Banks or amend this SECTION
12.2.
PROVIDED, FURTHER that amendments, waivers or consents affecting the rights of
the Agent shall also require the consent of the Agent.
SECTION 12.3 ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Each Bank shall have the right, subject to the
further provisions of this SECTIONS 12.3, to sell or assign all or any part
of its Commitments, Loans, Notes, and other rights and obligations under
this Agreement and related documents (such transfer, and "Assignment") to
any commercial lender, other financial institution or other entity (an
"Assignee"). Upon such Assignment becoming effective as provided in
SECTION 12.3(b), the assigning Bank shall be relieved from the portion of
its Commitment, obligations to indemnify the Agent and other obligations
hereunder to the extent assumed and undertaken by the Assignee, and to such
extent the Assignee shall have the rights and obligations of a "Bank"
hereunder. Notwithstanding the foregoing,
37
unless otherwise consented to by the Borrower and the Agent, each
Assignment shall be in the initial principal amount of not less than
$5,000,000 in the aggregate for all Loans and Commitments assigned, or an
integral multiple of $1,000,000 if above such amount. Each Assignment
shall be documented by an agreement between the assigning Bank and the
Assignee (an "Assignment and Assumption Agreement") in form and substance
satisfactory to the Agent.
(b) EFFECTIVENESS OF ASSIGNMENTS. An Assignment shall become
effective hereunder when all of the following shall have occurred: (i) the
Agent and the Borrower shall have been given notice of the Assignment and
shall have given prior written consent to such Assignment, unless the
Assignee is already a Bank under this Agreement, (ii) either the assigning
Bank or the Assignee shall have paid a processing fee of $2,500 to the
Agent for its own account, (iii) the Assignee shall have submitted the
assignment document in form satisfactory to the Agent, in which the
Assignee shall have agreed in writing to have irrevocably assumed and
undertaken the transferred portion of the assigning Bank's obligations
hereunder (including without limitation the obligations to indemnify the
Agent hereunder), to the Agent with a copy for the Borrower, and shall have
provided to the Agent information the Agent shall have reasonably requested
to make payments to the Assignee, and (iv) the assigning Bank and the Agent
shall have agreed upon a date upon which the Assignment shall become
effective. Upon the Assignment becoming effective, (x) if requested by the
assigning Bank, the Agent and the Borrower shall make appropriate
arrangements so that new Notes are issued to the assigning Bank and the
Assignee and so that the prior Notes are returned to the Borrower; (y) the
Agent shall forward all payments of interest, principal, fees and other
amounts that would have been made to the assigning Bank, in proportion to
the percentage of the assigning Bank's rights transferred, to the Assignee;
and (z) the Agent shall give notice to the Borrower of such Assignment
becoming effective.
(c) PARTICIPATIONS. Each Bank shall have the right, subject to the
further provisions of this SECTION 12.3, to grant or sell a participation
in all or any part of its Loans, Notes and Commitments (a "Participation")
to any commercial lender, other financial institution or other entity (a
"Participant") without the consent of the Borrower, the Agent or any other
party hereto. The Borrower agrees that if amounts outstanding under this
agreement and the Notes are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in
respect of its Participation in amounts owing under this Agreement and any
Note to the same extent as if the amount of its Participation were owing
directly to it as a Bank under this agreement or any note; provided, that
such right of setoff shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with such
Participant, as provided in SECTION 4.5 hereof. The Borrower also agrees
that each Participant shall be entitled to the benefits of ARTICLE V with
respect to its Participation, provided, that no Participant shall be
entitled to receive any greater amount pursuant to such Sections than the
transferor Bank would have been entitled to receive in respect of the
amount of the Participation transferred by such transferor Bank to such
Participant had no such transfer occurred.
(d) LIMITATION OF RIGHTS OF ANY ASSIGNEE OR PARTICIPANT.
Notwithstanding anything in the foregoing to the contrary, except in the
instance of an Assignment that
38
has become effective as provided in SECTION 12.3(b), (i) no Assignee or
Participant shall have any direct rights hereunder, (ii) the Borrower, the
Agent and the Banks other than the assigning or selling Bank shall deal
solely with the assigning or selling Bank and shall not be obligated to
extend any rights or make any payment to, or seek any consent of, the
Assignee or Participant, (iii) no Assignment or Participation shall relieve
the assigning or selling Bank from its Commitment to make Loans hereunder
or any of its other obligations hereunder and such Bank shall remain solely
responsible for the performance hereof, the (iv) no Assignee or
Participant, other than an affiliate of the assigning or selling Bank,
shall be entitled to require such Bank to take or omit to take any action
hereunder, except that such Bank may agree with such Assignee or
Participant that such Bank will not, without such Assignee's or
Participant's consent, take any action which would, in the case of any
principal, interest or fee in which the Assignee or Participant has an
ownership or beneficial interest: (w) extend the final maturity of any
Loans or extend the Termination Date, (x) reduce the interest rate on the
Loans or the rate of Commitment Fees, (y) forgive any principal of, or
interest on, the Loans or any fees, or (z) release all or substantially all
of the collateral for the Loans.
(e) TAX MATTERS. No Bank shall be permitted to enter into any
Assignment or Participation with any Assignee or Participant who is not a
United States Person unless such Assignee or Participant represents and
warrants to such Bank that, as of the date of such Assignment or
Participation, it is entitled to receive interest payments without
withholding or deduction of any taxes and such Assignee or Participant
executes and delivers to such Bank on or before the date of execution and
delivery of documentation of such Participation or Assignment, a United
States Internal Revenue Service Form 1001 or 4224, or any successor to
either of such forms, as appropriate, properly completed an claiming
complete exemption from withholding and deduction of all Federal Income
Taxes. A "United States Person" means any citizen, national or resident of
the United States, any corporation or other entity created or organized in
or under the laws of the United States or any political subdivision hereof
or any estate or trust, in each case that is not subject to withholding of
United States Federal income taxes or other taxes on payment of interest,
principal of fees hereunder.
(f) INFORMATION. Each Bank may furnish any information concerning
the Borrower in the possession of such Bank from time to time to Assignees
and Participants and potential Assignees and Participants.
(g) AGENT'S INTEREST. Subject to subsection (h) below, the Agent
agrees that it shall retain an economic interest (net of Assignments or
Participations) in the Loans and Commitment equal to or exceeding the
greatest economic interest of any of the other Banks. Upon the Agent's
request, each Bank shall inform the Agent of the amount of its retained
economic interest. Nothing herein shall prevent the Agent from resigning
as Agent hereunder as provided in ARTICLE XI in order for the Agent to be
able to reduce its economic interest in the Loans and Commitments.
(h) FEDERAL RESERVE BANK. Nothing herein stated shall limit the
right of any Bank to assign any interest herein and in any Note to a
Federal Reserve Bank.
SECTION 12.4 COSTS, EXPENSES AND TAXES. The Borrower agrees, whether or
not any Loan is made hereunder, to pay on demand all costs and expenses of the
following persons (including the reasonable fees and expenses of counsel and
paralegal for such persons who may
39
be employees of such persons), incurred in connection with the following
matters: (i) the Agent and Norwest Bank Minnesota, National Association in
connection with the preparation, execution and delivery of the Loan Documents
and the preparation, negotiation and execution of any and all amendments to each
thereof and (ii) the Agent and the Banks in connection with the enforcement of
the Loan Documents. The Borrower agrees to pay, and save the Banks harmless
from all liability for, any stamp or other taxes which may be payable with
respect to the execution or delivery of the Loan Documents. The Borrower agrees
to indemnify and hold the Banks harmless from any loss or expense which may
arise or be created by the acceptance of telephonic or other instructions for
making Loans or disbursing the proceeds thereof. The obligations of the
Borrower under this SECTION 12.4 shall survive any termination of this
Agreement.
SECTION 12.5 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; PROVIDED, HOWEVER, that
any notice to the Agent under ARTICLE II and SECTION 12.2 hereof shall be deemed
to have been given only when received by the Agent.
SECTION 12.6 SUCCESSORS. This Agreement shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks. The Borrower shall not assign its rights
or duties hereunder without the written consent of the Banks.
SECTION 12.7 SEVERABILITY. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 12.8 SUBSIDIARY REFERENCES. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
SECTION 12.9 CAPTIONS. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
SECTION 12.10 ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding between the Borrower, the Banks and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
SECTION 12.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
40
SECTION 12.12 EXISTING AGREEMENT. The Borrower, Norwest Bank Minnesota,
National Association ("Norwest") and First Bank hereby confirm and acknowledge
that that certain Restated and Amended Revolving Credit Agreement, dated as of
June 20, 1994, as thereafter amended (the "Existing Agreement"), is terminated.
All interest and fees due thereunder shall be paid upon effectiveness of this
Agreement, and the first Loan made hereunder shall repay the principal of the
Loans outstanding thereunder. Norwest and First Bank agree that that certain
Participation Agreement, dated as of August 9, 1996, pursuant to which Norwest
purchased a participation interest in loans, letters of credit and commitments
of First Bank under the Existing Agreement, is terminated, and any participation
that Norwest has funded thereunder may be converted, upon the making of the
first Loan hereunder, into a direct loan by Norwest to the Borrower under this
Agreement.
SECTION 12.13 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
SECTION 12.14 CONSENT TO JURISDICTION. AT THE OPTION OF THE BANKS, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT.
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IN THE EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT, THE BANKS AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
MERRILL CORPORATION
By /s/ Kay A. Barber
-------------------------------------------
Kay A. Barber
Vice President - Finance, Chief Financial
Officer and Treasurer
By /s/ Steven J. Machov
-------------------------------------------
Steven J. Machov
Vice President, General Counsel
and Secretary
One Merrill Circle
St. Paul, Minnesota 55108
Attention: Mr. Dale Kepel
Director of Reporting
Telephone: (612) 649-1276
Fax: (612) 649-3857
Commitment:
- -----------
$26,666,666.67 FIRST BANK NATIONAL ASSOCIATION,
as Agent and as a Bank
By /s/ Kathleen A. Skow
-------------------------------------------
Kathleen A. Skow
Senior Vice President
601 Second Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Ms Kathleen A. Skow
Telephone: (612) 973-0529
Fax: (612) 973-0823
42
$13,333,333.33 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Lynn S. Hultstrand
-------------------------------------------
Lynn S. Hultrtrand
Vice President
Sixth & Marquette, 11th Floor
Minneapolis, MN 55479-0091
Attention: Mr. Jason S. Paulnock
Telephone: (612) 667-1602
Fax: (612) 667-4144
43