EXHIBIT 10.19
Amended and Restated Loan Agreement by and among CoreStates
Bank, N.A. and Congress Financial Corporation (Central), as Lenders,
Congress Financial Corporation (Central), as Agent of Lenders, and
Haynes International, Inc., as Borrower.
[Execution Copy]
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
CORESTATES BANK, N.A.
CONGRESS FINANCIAL CORPORATION (CENTRAL)
AS LENDERS
CONGRESS FINANCIAL CORPORATION (CENTRAL)
AS AGENT FOR LENDERS
AND
HAYNES INTERNATIONAL, INC.
AS BORROWER
DATED: AUGUST 23, 1996
TABLE OF CONTENTS
-------------------
Page
SECTION 1. DEFINITIONS 1
SECTION 2. ACKNOWLEDGEMENT AND
RESTATEMENT
2.1 Existing Obligations 16
2.2 Acknowledgement of Security Interest 16
2.3 Existing Congress Agreement 17
2.4 Restatement 17
SECTION 3. CREDIT FACILITIES
3.1 Loans 17
3.2 Letter of Credit Accommodations 18
3.3 Increase in Maximum Credit 20
3.4 Availability Reserves 21
3.5 Commitments 21
SECTION 4. INTEREST AND FEES
4.1 Interest 22
4.2 Closing Fee 23
4.3 Servicing Fee 23
4.4 Unused Line Fee 24
4.5 Changes in Laws and Increased Costs of Loans 24
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations 25
5.2 Conditions Precedent to All Loans and Letter of Credit Accommodations 26
SECTION 6. GRANT OF SECURITY 26
INTEREST
SECTION 7. COLLECTION AND
ADMINISTRATION
7.1 Borrower's Loan Account 27
7.2 Statements 27
7.3 Collection of Accounts 28
7.4 Payments 28
7.5 Sharing of Payments, Etc. 29
7.6 Authorization to Make Loans 30
7.7 Settlement Procedures 30
7.8 Use of Proceeds 32
SECTION 8. COLLATERAL REPORTING
AND COVENANTS
8.1 Collateral Reporting 32
8.2 Accounts Covenants 32
8.3 Inventory Covenants 34
8.4 Equipment Covenants 34
8.5 Power of Attorney 35
8.6 Right to Cure 35
8.7 Access to Premises 36
SECTION 9. REPRESENTATIONS AND
WARRANTIES
9.1 Corporate Existence, Power and Authority; Subsidiaries 36
9.2 Financial Statements; No Material Adverse Change. 36
9.3 Chief Executive Office; Collateral Locations. 36
9.4 Priority of Liens; Title to Properties 37
9.5 Tax Returns 37
9.6 Litigation 37
9.7 Compliance with Other Agreements and Applicable Laws 37
9.8 Employee Benefits. 37
9.9 Environmental Compliance 38
9.10 Capitalization; Senior Notes 39
9.11 Redemption of Existing Notes 40
9.12 Accuracy and Completeness of Information. 41
9.13 Survival of Warranties; Cumulative 41
SECTION 10. AFFIRMATIVE AND
NEGATIVE COVENANTS
10.1 Maintenance of Existence 41
10.2 New Collateral Locations 41
10.3 Compliance with Laws, Regulations, Etc. 42
10.4 Payment of Taxes and Claims 43
10.5 Insurance 43
10.6 Financial Statements and Other Information 44
10.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc 45
10.8 Encumbrances 45
10.9 Indebtedness 46
10.10 Loans, Investments, Guarantees, Etc 50
10.11 Dividends and Redemptions 52
10.12 Transactions with Affiliates 54
10.13 Proceeds of Borrower Debt Offering; Redemption of Existing Notes. 54
10.14 Compliance with ERISA 55
10.15 Adjusted Net Worth 56
10.16 Excess Availability 56
10.17 Costs and Expenses 56
10.18 Further Assurances 57
SECTION 11. EVENTS OF DEFAULT AND
REMEDIES
11.1 Events of Default 57
11.2 Remedies 58
SECTION 12.
JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
12.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver 61
12.2 Waiver of Notices 62
12.3 Amendments and Waivers 62
12.4 Waiver of Counterclaims 63
12.5 Indemnification 63
SECTION 13. THE AGENT
13.1 Appointment, Powers and Immunities 63
13.2 Reliance by Agent 63
13.3 Events of Default 64
13.4 Rights as a Lender 64
13.5 Indemnification 64
13.6 Non-Reliance on Agent and Other Lenders 65
13.7 Failure to Act 65
13.8 Resignation of Agent 65
13.9 Consents and Releases of Collateral under Financing Agreements 66
13.10 Collateral Matters 66
SECTION 14. TERM OF AGREEMENT;
MISCELLANEOUS
14.1 Term 66
14.2 Senior Indebtedness 68
14.3 Notices 68
14.4 Partial Invalidity 68
14.5 Successors and Assigns 68
14.6 Assignments and Participations 68
14.7 Confidentialy 70
14.8 Modification of Agreement 71
14.9 Entire Agreement 71
INDEX TO
EXHIBITS AND SCHEDULES
- ------------------------
Exhibit A Information Certificate
Schedule 1.43 Existing Senior Note Collateral
Schedule 1.85 Redemption Escrow Accounts
Schedule 3.3 Fixed Asset Collateral
Schedule 9.4 Existing Liens
Schedule 9.8 Pension Plans
Schedule 9.9 Environmental Matters
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated August 23,
1996 is entered into by and among CoreStates Bank, N.A., a national banking
association ("CoreStates"), Congress Financial Corporation (Central), an
Illinois corporation ("Congress", and together with CoreStates, each
individually, a "Lender" and, collectively, "Lenders"), Congress as agent for
Lenders (in such capacity, "Agent") and Haynes International, Inc., a Delaware
corporation ("Borrower").
W I T N E S S E T H :
WHEREAS, Borrower and Congress entered into certain financing
arrangements pursuant to which Congress made loans and advances and provided
other financial accommodations to Borrower as set forth in the Loan and
Security Agreement, dated August 11, 1994, between Borrower and Congress and
the other agreements, documents and instruments executed and/or delivered in
connection therewith;
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make loans and provide financial accommodations to Borrower on a pro rata
basis according to its Commitment (as defined below) and, in connection
therewith, Congress has assigned or is about to assign all of its right, title
and interest in and to the financing arrangements with Borrower to Agent and
Lenders as set forth in the Assignment and Assumption Agreement, dated of even
date herewith, between Congress, as assignor, and Agent and Lenders, as
assignees, and Borrower has acknowledged and consented to such assignment
pursuant to the Acknowledgment of Assignment, dated of even date herewith, by
Borrower to Congress, Agent and Lenders;
WHEREAS, Borrower has requested that the financing arrangements be
amended to increase the Maximum Credit, decrease the interest rate payable by
Borrower to Lenders, extend the term of the arrangements and be amended in
other respects and Agent and Lenders are willing to agree to increase the
Maximum Credit, decrease the interest rate, extend the term of the
arrangements and agree to such other amendments, subject to the terms and
conditions contained herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also
mean the singular and to the singular shall also mean the plural. All
references to Borrower, Agent and Lenders pursuant to the definitions set
forth in the recitals hereto, or to any other person herein, shall include
their respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
The words "ratable" or "ratably" or words of similar import when used in this
Agreement shall refer to a sharing or allocation based on the respective Pro
Rata Shares (as defined below) of Lenders. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived in accordance
with Section 12.3 or cured in a manner satisfactory to Agent as acknowledged
by Agent to Borrower in writing. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meaning customarily given
to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all of Borrower's now owned and hereafter
acquired or arising accounts, contract rights related thereto, and any other
rights to payment for the sale or lease of goods or rendition of services
whether or not they have been earned by performance and including all assets,
however arising, which are due to Borrower from any affiliate of Borrower.
1.2 "Adjusted Consolidated Interest Expense" shall mean, without
duplication, for any period, as applied to any person, the sum of (a) the
interest expense of such Person and its consolidated Subsidiaries for such
period, on a consolidated basis, including, without limitation, amortization
of debt discount, the net cost under interest rate contracts (including
amortization of discounts), the interest portion of any deferred payment
obligation and accrued interest, plus (b) the interest component of
obligations under Capital Leases paid, accrued and/or scheduled to be paid or
accrued by such person during such period, and all capitalized interest of
such person and its consolidated Subsidiaries, in each case as determined in
accordance with GAAP.
1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to
deposits of United States dollars in a non-United States or an international
banking office of Reference Bank used to fund a Eurodollar Rate Loan or any
Eurodollar Rate Loan made with the proceeds of such deposit, whether or not
the Reference Bank actually holds or has made any such deposits or loans. The
Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
1.4 "Adjusted Net Worth" shall mean as to any Person, at any time,
calculated in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to the sum of: (a) difference between: (i) the aggregate
net book value of all assets of such Person and its Subsidiaries, calculating
the book value of inventory for this purpose on a last-in-first-out basis,
after deducting from such book values all appropriate reserves in accordance
with GAAP (including all reserves for doubtful receivables, obsolescence,
depreciation and amortization) and (ii) the aggregate amount of the
indebtedness and other liabilities of such Person and its Subsidiaries,
including tax and other proper accruals plus (b) the principal amount of the
indebtedness then outstanding evidenced by the Senior Notes.
1.5 "Affiliate" shall mean with respect to any Person, (a) any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with, such Person; (b) any other Person which beneficially owns
or holds, directly or indirectly, five (5%) percent or more of any class of
voting stock of such Person; or (c) any other Person, five (5%) percent or
more of any class of the voting stock (or if such Person is not a corporation,
five (5%) percent or more of the equity interest) of which is beneficially
owned or held, directly or indirectly, by such Person. The term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used herein, means the possession, directly or
indirectly, of the power in any form to direct or cause the direction of the
management and policies of the Person in question.
1.6 "Agent" shall mean Congress in its capacity as agent on behalf of
Lenders pursuant to the terms hereof and any replacement or successor agent
hereunder.
1.7 "Annual Cash Amount" shall mean $1,000,000.
1.8 "Asset Sale" shall mean any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction), directly or indirectly, in
one or a series of related transactions, of (a) any Capital Stock of any
Subsidiary of Borrower; (b) all or substantially all of the properties or
assets of any division or line of business of Borrower or any of its
Subsidiaries; or (c) any other properties or assets of Borrower or any of its
Subsidiaries, other than in the ordinary course of business; provided, that,
the sale of any material portion of the facilities of Borrower in Kokomo,
Indiana, Arcadia, Louisiana or Openshaw, England shall be deemed to be not in
the ordinary course of business. For the purposes of this definition, the
term "Asset Sale" shall not include any transfer of properties and assets that
is governed by the provisions described under "Consolidation, Merger, Sale of
Assets" of the Senior Note Indenture (as in effect on the date hereof) or that
is of Borrower to any wholly-owned Subsidiary of Borrower, or of any
Subsidiary of Borrower to Borrower or to any wholly-owned Subsidiary of
Borrower or for which the fair market value of any transferred properties or
assets is less than $1,000,000.
1.9 "Assignee" shall have the meaning set forth in Section 14.6 hereof.
1.10 "Assignment Agreement" shall mean the Assignment and Assumption
Agreement, dated of even date herewith, by and among Congress as assignor and
Agent and Lenders as assignees, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.11 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Agent may from time to time establish and
revise in good faith reducing the amount of Loans and Letter of Credit
Accommodations which would otherwise be available to Borrower under the
lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Agent in good faith, do or are
reasonably likely to adversely affect either (i) the Collateral or any other
property which is security for the Obligations or its value, or the security
interests and other rights in the Collateral of Agent held for itself and the
ratable benefit of Lenders (including the enforceability, perfection and
priority thereof) or (ii) have a reasonable likelihood of adversely affecting
the business or assets of Borrower or any Obligor or (b) to reflect Agent's
good faith belief that any collateral report or financial information
furnished by or on behalf of Borrower or any Obligor to Agent is or may have
been incomplete, inaccurate or misleading in any material respect or (c) in
respect of any state of facts which Agent determines in good faith constitutes
an Event of Default or Agent determines in good faith has a reasonable
likelihood of constituting an Event of Default, with notice or passage of time
or both.
1.12 "Borrower Debt Offering" shall mean the initial offering by
Borrower to the public of the Senior Notes pursuant to the effective
registration statements under the Securities Act originally filed by Borrower
with the Securities and Exchange Commission on June 7, 1996, and on August 20,
1996, in each case as amended to the time of effectiveness.
1.13 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.14 "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the Commonwealth of Pennsylvania, and a
day on which the Reference Bank and Agent are open for the transaction of
business, except that if a determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also exclude any day on
which banks are closed for dealings in dollar deposits in the London interbank
market or other applicable Eurodollar Rate market.
1.15 "Capital Leases" shall mean, as applied to any Person, any leases
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such person as lessee which, in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such person.
1.16 "Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
partnership interests and any options or warrants with respect to any of the
foregoing.
1.17 "Change of Control" shall mean the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than fifty (50%) percent of
the total outstanding Voting Stock of Borrower; (b) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new
directors whose election to such board or whose nomination for election by the
shareholders of the Borrower, was approved by a vote of sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of such board of directors then in office; (c) Borrower
consolidates with, or merges with or into, another person (other than Parent)
or sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates
with, or merges with or into, Borrower, in any such event pursuant to a
transaction in which the outstanding Voting Stock of Borrower is converted
into or exchanged for cash, securities or other property, except for any such
transaction where (i) the outstanding Voting Stock of Borrower is converted
into or exchanged for (A) Voting Stock of the surviving or transferee
corporation (other than Capital Stock which by its terms or by the terms of
any instrument related thereto is or upon the occurrence of any event or
passage of time would be required to be redeemed prior to the stated maturity
of the Senior Notes or is redeemable at the option of the holder thereof at
any time prior to such stated maturity or is convertible into or exchangeable
for debt securities at any time prior to any such stated maturity at the
option of the holder thereof) or (B) cash, securities and other property in an
amount which could be paid by Borrower as a dividend or other distribution to
holders of any shares of Capital Stock of Borrower or payments on subordinated
indebtedness or any investment permitted under the Senior Note Indenture and
(ii) immediately after which no "person" or "group" (as such terms are used in
Section 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, is
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than fifty (50%) percent of the total Voting Stock of the
surviving or transferee corporation; or (d) Borrower is liquidated or
dissolved or adopts a plan of liquidation or dissolution (other than in a
transaction which complies with the provisions of Article VIII of the Senior
Note Indenture as in effect on the date hereof).
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 6 hereof.
1.20 "Commitment" shall have the meaning set forth in Section 3.5
hereof.
1.21 "Commitment Percentage" shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
respective signature (provided, that, prior to the Redemption Date, each
Lender's Commitment shall be fifty (50%) percent of the amount of such
Lender's Commitment set forth on the signature pages hereto below such
Lender's signature).
1.22 "Congress" shall mean Congress Financial Corporation (Central), an
Illinois corporation, in its individual capacity and its successors and
assigns.
1.23 "Consolidated Income Tax Expense" shall mean, for any period, as
applied to any person, the provision for Federal, State, local and foreign
income taxes of such person and its consolidated Subsidiaries for such period
as determined in accordance with GAAP.
1.24 "Consolidated Net Income" shall mean, for any period, as applied to
any person, the consolidated net income (or loss) of such person and its
consolidated Subsidiaries for such period as determined in accordance with
GAAP, adjusted, to the extent included in calculating such net income (loss),
by excluding, without duplication, (a) all extraordinary gains or losses (less
all fees and expenses relating thereto); (b) the portion of net income (or
loss) of such person and its consolidated Subsidiaries allocable to minority
interests in unconsolidated persons to the extent that cash dividends or
distributions have not actually been received by such person or one of its
consolidated Subsidiaries; (c) net income (or loss) of any person combined
with Borrower or any of its Subsidiaries on a "pooling of interests" basis
attributable to any period prior to the date of combination; (d) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan; (e) net gains or losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary
course of business; (f) the expenses recognized in connection with the payment
of the prepayment premiums related to the redemption of the Existing Notes as
required hereunder; (g) the expenses recognized in connection with the
termination of and repayment of amounts outstanding under the Existing
Congress Agreement; (h) the expenses recognized related to amortization of
fees and other charges in connection with the acquisition of the Capital Stock
of Borrower by MLGA Fund II, L.P. on August 31, 1989; (i) an amount equal to
the excess of (A) the interest expense incurred on the Existing Notes during
the period following the consummation of the Borrower Debt Offering and prior
to the Redemption Date over (B) the interest income earned on the proceeds
from the Borrower Debt Offering designated for the redemption of the Existing
Notes during the same period; or (j) the net income of any Subsidiary to the
extent that the declaration of dividends or similar distributions by such
Subsidiary of such income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary or its shareholders.
1.25 "Consolidated Non-Cash Charges" shall mean, for any period, as
applied to any person, the aggregate depreciation, amortization and other
non-cash charges of such person and its consolidated Subsidiaries for such
period, as determined in accordance with GAAP (excluding any non-cash charge
that requires an accrual or reserve for cash charges for any future period and
all non-cash charges incurred in connection with the valuation of inventory on
a last-in-first-out basis).
1.26 "CoreStates" shall mean CoreStates Bank, N.A., a national banking
association, and its successors and assigns.
1.27 "Credit Facility" shall mean, collectively, the secured Loans and
Letter of Credit Accommodations provided for hereunder or under the other
Financing Agreements.
1.28 "EBITDA" shall mean, for any period, as applied to Borrower, the
sum of the Consolidated Net Income, Adjusted Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-Cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, of Borrower
and its Subsidiaries on a consolidated basis, all determined in accordance
with GAAP.
1.29 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to satisfy the criteria set forth below as determined by
Agent in good faith. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than sixty (60) days after
the original due date thereof;
(c) such Accounts are not unpaid more than ninety (90) days after
the date of the original invoice for them;
(d) such Accounts comply with the terms and conditions contained in
Section 8.2(c) of this Agreement;
(e) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(f) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America, or, at Agent's
option, up to $5,000,000 of otherwise Eligible Accounts where the chief
executive offices of the account debtor(s) are located outside the United
States, if: (i) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent,
sufficient to cover such Account, in form and substance satisfactory to Lender
and, if required by Agent, the original of such letter of credit has been
delivered to Agent or Agent's agent and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Agent, or (ii) such
Account is subject to credit insurance payable to Agent, for itself and the
ratable benefit of Lenders, issued by an insurer and on terms and in an amount
acceptable to Agent or (iii) such Account is otherwise acceptable in all
respects to Agent (subject to such lending formula with respect thereto as
Agent may determine);
(g) such Accounts do not consist of progress billings, bill and
hold invoices or retainage invoices, except as to bill and hold invoices, if
Agent shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Agent confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay
such invoice;
(h) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against
such Accounts (except that to the extent the account debtor engages in
transactions which may give rise to a right of setoff, the portion of the
Accounts of such account debtor in excess of the amount at any time and from
time to time owing by Borrower to such account debtor may be deemed Eligible
Accounts);
(i) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(j) such Accounts are subject to the first priority, valid and
perfected security interest of Agent, for itself and the ratable benefit of
Lenders and any goods giving rise thereto are not, and were not at the time of
the sale thereof, subject to any liens except those permitted in this
Agreement;
(k) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an Affiliate of Borrower
directly or indirectly, including, without limitation, CabVal, a New York
general partnership or K.A.M. Specialties, Inc., a Florida corporation;
(l) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Agent's
request, the Federal Assignment of Claims Act of 1940, as amended or any
similar State or local law, if applicable, has been complied with in a manner
determined by Agent in good faith to be satisfactory;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(n) such Accounts of a single account debtor or its affiliates do
not constitute more than fifteen (15%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such percentage may
be deemed Eligible Accounts);
(o) such Accounts are not owed by an account debtor who has
Accounts unpaid more than sixty (60) days after the original due date of the
invoice for them which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
(p) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as determined in good faith by Agent from time to time based
on the good faith determination by Agent of the financial condition of the
account debtor and its ability to satisfy its obligations to Borrower (but the
portion of the Accounts not in excess of such credit limit may still be deemed
Eligible Accounts); and
(q) such Accounts are owed by account debtors deemed creditworthy
at all times by Agent, as determined by Agent in good faith.
General criteria for Eligible Accounts may be established and revised from
time to time by Agent in good faith based on events, conditions, circumstances
or risks which Agent in good faith determines are reasonably likely to affect
the Accounts, the value of the Accounts or the security interests and other
rights in the Accounts of Agent, for itself and the ratable benefit of
Lenders, and for which no Availability Reserve has been established. Any
Accounts which are not Eligible Accounts shall nevertheless be part of the
Collateral.
1.30 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower, raw
materials for such finished goods and work-in-process and semi-finished goods
which satisfy and continue to satisfy the criteria set forth below as
determined by Agent in good faith. In general, Eligible Inventory shall not
include (a) components which are not part of finished goods; (b) spare parts
for equipment; (c) packaging and shipping materials; (d) supplies used or
consumed in Borrower's business; (e) Inventory at premises other than those
owned and controlled by Borrower, except if Agent shall have received an
agreement in writing from the person in possession of such Inventory and/or
the owner or operator of such premises in form and substance satisfactory to
Agent, acknowledging the first priority security interest in the Inventory of
Agent, for itself and the ratable benefit of Lenders, waiving security
interests and claims by such person against the Inventory and permitting Agent
access to, and the right to remain on, the premises so as to exercise the
rights and remedies of Agent, for itself and the ratable benefit of Lenders,
and otherwise deal with the Collateral; (f) Inventory subject to a security
interest or lien in favor of any person other than Agent, for itself and the
ratable benefit of Lenders, except those permitted in this Agreement; (g) bill
and hold goods; (h) unserviceable, obsolete or slow moving Inventory; (i)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent, for itself and the ratable benefit of Lenders; (j)
returned, damaged and/or defective Inventory; or (k) Inventory purchased or
sold on consignment. General criteria for Eligible Inventory may be
established and revised from time to time by Agent in good faith based on
events, conditions, circumstances or risks which Agent in good faith
determines are reasonably likely to affect the Inventory, the value of the
Inventory or the security interests and other rights in the Inventory of
Agent, for itself and the ratable benefit of Lenders, and for which no
Availability Reserve has been established. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.31 "Employee Notes" shall mean, collectively, promissory notes issued
by Borrower payable to Parent from time to time to fund all or a portion of
the purchase price to be paid by Parent for Parent Common Stock, or options to
purchase Parent Common Stock, owned by existing or former employees of
Borrower; provided, that, each such note (a) shall bear interest at a rate not
to exceed one and one-half (1-1/2%) percent per annum in excess of the Prime
Rate in effect from time to time, (b) shall not require any principal payments
prior to six (6) months after the date on which this Agreement shall terminate
pursuant to Section 14.1(a) and (c) shall be subordinated in right of payment
to the full and final payment of all of the Obligations on terms and
conditions acceptable to Lender.
1.32 "Environmental Laws" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters,
as now or at any time hereafter in effect, applicable to Borrower's business
and facilities (whether or not owned by it), including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances,
materials or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes.
1.33 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used
in connection therewith, and substitutions and replacements thereof, wherever
located.
1.34 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to
time be amended, modified, recodified or supplemented, together with all
rules, regulations and interpretations thereunder or related thereto.
1.35 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.36 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.37 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by Borrower and
approved by Agent) on or about 9:00 a.m. (New York City time) two (2) Business
Days prior to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the Eurodollar Rate Loans
requested by and available to Borrower in accordance with this Agreement, with
a maturity of comparable duration to the Interest Period selected by Borrower.
1.38 "Excess Availability" shall mean the amount, as determined by Agent
calculated at any time, equal to: (a) the Total Availability minus (b) the
sum of: (i) the amount of all then outstanding and unpaid Obligations, plus
(ii) the aggregate amount of all trade payables of Borrower which are more
than thirty (30) days past due as of such time.
1.39 "Excess Refinancing Proceeds Account" shall mean Account No.
5299047, established and maintained by Borrower at The First National Bank of
Chicago, and shall include all notes, certificates of deposit, instruments,
securities and other personal property, if any, representing from time to time
the investment of the funds held in such account, and any proceeds thereof, to
the extent such investments constitute investments permitted in Section
10.10(b) hereof.
1.40 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.41 "Existing Congress Agreement" shall mean the Loan and Security
Agreement, dated August 11, 1994, between Congress and Borrower and all
amendments thereto, including, without limitation, Amendment No. 1 to Loan and
Security Agreement, dated February 9, 1995, between Borrower and Congress and
Amendment No. 2 to Loan and Security Agreement, dated February 12, 1996,
between Borrower and Congress.
1.42 "Existing Notes" shall mean collectively, the Existing Senior Notes
and the Existing Subordinated Notes.
1.43 "Existing Senior Note Collateral" shall mean, collectively, all of
the property and assets pledged to the Existing Senior Note Trustee by the
Borrower pursuant to the "Collateral Documents" (as defined in the Existing
Senior Note Indenture as in effect on the date hereof) as set forth in
Schedule 1.43 hereto.
1.44 "Existing Senior Note Collateral Account" means account no.
92200803 maintained by Borrower with Key Bank, National Association, formerly
known as Society National Bank, Indiana.
1.45 "Existing Senior Note Indenture" shall mean the Indenture, dated as
of July 1, 1993, by and between the Existing Senior Note Trustee and Borrower,
as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.46 "Existing Senior Note Trustee" shall mean Mellon Bank, F.S.B., a
federal savings bank, in its capacity as trustee under the Existing Senior
Note Indenture, and any successor trustee appointed pursuant to the terms of
the Existing Senior Note Indenture.
1.47 "Existing Senior Notes" shall mean collectively, the 11-1/4% Senior
Secured Notes due 1998, Series B, issued by Borrower in the aggregate
principal amount of $50,000,000 pursuant to the Existing Senior Note
Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.48 "Existing Subordinated Note Indenture" shall mean the Indenture,
dated as of August 31, 1989, among the Existing Subordinated Note Trustee and
Haynes Acquisition Corporation, a Delaware corporation, as supplemented by a
First Supplement to Indenture, dated August 31, 1989, a Second Supplement to
Indenture, dated February 2, 1990, a Third Supplement to Indenture, dated
February 9, 1995 and a Fourth Supplement to Indenture, dated January 31, 1996,
in each case between the Existing Subordinated Note Trustee and Borrower (for
itself and as successor by merger to Haynes Acquisition Corporation), as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.49 "Existing Subordinated Notes" shall mean, collectively, the 13-1/2%
Senior Subordinated Notes due 1999 issued by Borrower in the aggregate
principal amount of $100,000,000 pursuant to the Existing Subordinated Note
Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.50 "Existing Subordinated Note Trustee" shall mean Fleet National Bank
of Connecticut, as successor to Shawmut Bank, Connecticut, National
Association, as successor to The Connecticut National Bank, a national banking
association, in its capacity as trustee under the Existing Subordinated Note
Indenture, and any successor trustee appointed pursuant to the terms of the
Existing Subordinated Note Indenture.
1.51 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 11.1 hereof.
1.52 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any Obligor in connection with this Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.53 "Foreign Subsidiary" shall mean a Subsidiary of Borrower that is
organized under the laws of a jurisdiction outside of the United States of
America or the District of Columbia and that has its principal place of
business outside the United States of America.
1.54 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination consistently
applied, except that, for purposes of Section 10.15 hereof, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the audited financial
statements delivered to Agent prior to the date hereof.
1.55 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including, without limitation any that are or become classified as hazardous
or toxic under any Environmental Law).
1.56 "Information Certificate" shall mean the Information Certificate of
Borrower constituting Exhibit A hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Agent and Lenders in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.57 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of thirty (30) days, sixty (60) days, or ninety (90) days duration as Borrower
may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.
1.58 "Interest Rate" shall mean, subject to Section 4.1 hereof, as to
Prime Rate Loans, a rate of three-quarters of one (3/4%) percent per annum in
excess of the Prime Rate and, as to Eurodollar Rate Loans, a rate of two and
three-quarters (2 3/4%) percent per annum in excess of the Adjusted Eurodollar
Rate (based on the Eurodollar Rate applicable for the Interest Period selected
by Borrower as in effect three (3) Business Days after the date of receipt by
Agent of the request of Borrower for such Eurodollar Rate Loans in accordance
with the terms hereof, whether such rate is higher or lower than any rate
previously quoted to Borrower); provided, that, the Interest Rate shall mean
the rate of two and three- quarters (2 3/4%) percent per annum in excess of
the Prime Rate as to Prime Rate Loans and the rate of four and three-quarters
(4 3/4%) percent per annum in excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Loans, at Agent's option, without notice, (a) for the period
(i) on and after the date of termination or non-renewal hereof and until such
time as all Obligations are indefeasibly paid in full (notwithstanding entry
of any judgment against Borrower), or (ii) the date of the occurrence of any
Event of Default and for so long as such Event of Default is continuing as
determined by Agent and (b) on the Loans at any time outstanding in excess of
the amounts available to Borrower under Section 3 (whether or not such
excess(es), arise or are made with or without Agent's or any Lender's
knowledge or consent and whether made before or after an Event of Default).
1.59 "Inventory" shall mean all of Borrower's now owned and hereafter
acquired inventory, goods, merchandise, and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work-in-process, semi-finished goods, finished
goods, returned and repossessed goods, and materials and supplies of any kind,
nature or description which are or might be consumed in Borrower's business or
used in connection with the manufacture, packing, shipping, advertising,
selling or finishing of such inventory, goods, merchandise and such other
personal property, and all documents of title or other documents representing
them.
1.60 "LC Limit" shall mean (a) at all times prior to the Redemption
Date, the amount equal to: (i) $10,000,000 minus (ii) the aggregate amount of
the indebtedness of Borrower and its Subsidiaries outstanding at such time in
respect of surety bonds, reimbursement obligations in respect of standby
letters of credit which are issued for purposes similar to those for which
surety bonds are issued and appeal bonds required in the ordinary course of
business or in connection with the enforcement of rights or claims of Borrower
or any Subsidiary of Borrower (but not including any such reimbursement
obligations arising in connection with the Letter of Credit Accommodations)
and (b) at all times on and after the Redemption Date, the amount equal to
$10,000,000.
1.61 "LC Loans" shall mean the loans now or hereafter made by Agent or
any Lender to or for the benefit of Borrower at any time prior to the
Redemption Date arising pursuant to payment made by Agent or any Lender to any
beneficiary or issuer of any of the Letter of Credit Accommodations as set
forth in Section 3.2 hereof.
1.62 "Letter of Credit Accommodations" shall mean, with respect to the
Credit Facility, the letters of credit or other guarantees which are from
time to time either (a) issued or opened by Agent or any Lender for the
account of Borrower or any Obligor or (b) with respect to which Agent or any
Lender has agreed to indemnify the issuer or guaranteed to the issuer the
performance by Borrower of its obligations to such issuer.
1.63 "Loans" shall mean the Revolving Loans and the LC Loans.
1.64 "Maximum Credit" shall mean the amount of $50,000,000, except,
that, at all times prior to the Redemption Date, the term "Maximum Credit"
shall mean $25,000,000.
1.65 "Mortgage Documents" shall mean, individually and collectively,
each of the following (as the same may hereafter exist and may thereafter be
amended, modified, supplemented, extended, renewed, restated or replaced):
(a) the Mortgage, Security Agreement, Assignment of Leases and Rents and
Financing Statement by Borrower in favor of Lender with respect to the Real
Property and related assets of Borrower in Kokomo, Howard County, Indiana and
the Environmental Disclosure Document for Transfer of Real Property prepared
by Borrower in connection with such Real Property, and (b) the Collateral
Mortgage Note in the amount of $50,000,000 issued by Borrower, the Act of
Collateral Pledge Agreement by Borrower in favor of Lender and the Act of
Collateral Mortgage by Borrower in favor of Lender with respect to the Real
Property and related assets of Borrower in Arcadia, Bienville Parish,
Louisiana.
1.66 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.67 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by Borrower to Agent or any Lender
and/or any of their affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but
for the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Agent or any
Lender.
1.68 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrower.
1.69 "Parent" shall mean Haynes Holdings, Inc., a Delaware corporation,
and its successors and assigns.
1.70 "Parent Common Stock" shall mean the Capital Stock of Parent,
consisting of its common stock, par value $0.01 per share.
1.71 "Participant" shall have the meaning set forth in Section 14.6
hereof.
1.72 "Payment Account" shall have the meaning set forth in Section 7.3
hereof.
1.73 "Permitted Holders" shall mean MLGA Fund II, L.P., a Delaware
limited partnership and its Affiliates.
1.74 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited
liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.75 "Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates, or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the
best rate available at such bank.
1.76 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.77 "Pro Rata Share" shall mean, with respect to each Lender, its
proportionate share of the Loans and the risk under Letter of Credit
Accommodations, based on its Commitment Percentage.
1.78 "Public Equity Offering" shall mean any underwritten public
offering of common stock of Borrower or Parent pursuant to a registration
statement filed pursuant to the Securities Act which offering is consummated
after the date hereof.
1.79 "Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
1.80 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures and other improvements located thereon and all licenses,
easements and appurtenances and all leases and rents and condemnation awards
relating thereto, all as more particularly described in the Mortgage
Documents, located in Kokomo, Howard County, Indiana and Arcadia, Bienville
Parish, Louisiana.
1.81 "Receivables" shall mean the Accounts, together with: (a) all
interest, late charges, penalties, collection fees, and other sums which shall
be due and payable in connection with any Account; (b) proceeds of any letters
of credit issued in connection with any Account and naming Borrower as
beneficiary; (c) to the extent constituting proceeds of, related to or arising
in connection with Accounts or Inventory, contract rights, chattel paper,
instruments, notes, general intangibles and all forms of obligations owing to
Borrower (and including obligations owing to Borrower by its Subsidiaries and
Affiliates); (d) guarantees and other security for any of the foregoing and
rights of stoppage in transit, replevin, and reclamation; and (e) other rights
or remedies of an unpaid vendor, lienor or secured party.
1.82 "Records" shall mean all of Borrower's present and future books,
records, ledger cards, data processing records, computer software and other
property and general intangibles at any time evidencing or relating to the
Receivables and Inventory and other personal property referred to in Sections
6.1(a), 6.1(b), 6.1(c), 6.1(d) and Section 6.1(f) hereof.
1.83 "Redeemable Capital Stock" means any Capital Stock that, either by
its terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of any event or passage of
time would be, required to be redeemed prior to the date specified in the
Senior Note Indenture as the fixed date on which the principal of the Senior
Notes is due and payable or is redeemable at the option of the holder thereof
at any time prior to any such date specified in the Senior Note Indenture, or
is convertible into or exchangeable for debt securities at any time prior to
any such date specified in the Senior Note Indenture at the option of the
holder thereof.
1.84 "Redemption Date" shall have the meaning set forth in Section 3.3
hereof.
1.85 "Redemption Escrow Accounts" shall mean the deposit accounts
described on Schedule 1.85 hereto in which the proceeds of the Borrower Debt
Offering shall be held prior to the Redemption Date.
1.86 "Reference Bank" shall mean CoreStates, or such other bank as Agent
may from time to time designate.
1.87 "Required Lenders" shall mean, as of any date of determination
thereof, Lenders holding more than fifty (50%) percent of the aggregate
outstanding principal amount of Loans and outstanding Letter of Credit
Accommodations, or, if there are no Loans or Letter of Credit Accommodations
outstanding, then such term shall mean Lenders having aggregate Commitment
Percentages of more than fifty (50%) percent.
1.88 "Revolving Loan Limit" shall mean $20,000,000.
1.89 "Revolving Loans" shall mean the loans now or hereafter made to or
for the benefit of Borrower by Lenders or, at Agent's option, by Agent for the
ratable account of Lenders, on a revolving basis pursuant to the Credit
Facility (involving advances, repayments and readvances) as set forth in
Section 3.1 hereof.
1.90 "Sale and Leaseback Transaction" shall mean any transaction or
series of related transactions pursuant to which Borrower or a Subsidiary of
Borrower sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, of such property or asset
to Borrower or such Subsidiary.
1.91 "Securities Act" shall mean the Securities Act of 1933, as the same
now exists or may hereafter from time to time be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder related thereto.
1.92 "Senior Note Indenture" shall mean the Indenture, dated of even
date herewith, by and between the Senior Note Trustee and Borrower, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.93 "Senior Notes" shall mean, collectively, the 11 5/8% Senior Notes
due 2004, issued by Borrower in the aggregate principal amount of $140,000,000
pursuant to the Senior Note Indenture, as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
1.94 "Senior Note Trustee" shall mean National City Bank, a national
banking association, in its capacity as trustee under the Senior Note
Indenture, and any successor trustee appointed pursuant to the terms of the
Senior Note Indenture.
1.95 "Subscription Agreement" shall mean the Stock Subscription
Agreement, dated as of August 31, 1989, by and among Borrower, Parent and the
persons named therein or added as a party thereto, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.96 "Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the election
of the board of directors of such corporation (irrespective of whether, at the
time, Capital Stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time,
directly or indirectly, owned by such Person and/or one or more Subsidiaries
of such Person.
1.97 "Total Availability" shall mean (a) at all times prior to the
Redemption Date, the amount equal to: (i) the sum of (A) sixty (60%) percent
of the Value of Eligible Inventory consisting of finished goods and raw
materials for such finished goods plus (B) forty-five (45%) percent of the
Value of Eligible Inventory consisting of work-in-process and semi-finished
goods (the "WIP Amount") plus (C) eighty-five (85%) percent of the Net Amount
of Eligible Accounts minus (ii) any Availability Reserves; provided, that, for
purposes of determining Total Availability at all times prior to the
Redemption Date, at no time shall the WIP Amount exceed $10,000,000 and (b) at
all times on and after the Redemption Date, the amount equal to: (i) the sum
of (A) eighty-five (85%) percent of the Net Amount of Eligible Accounts, plus
(B) sixty (60%) percent of the Value of Eligible Inventory consisting of
finished goods and raw materials for such finished goods, plus (C) forty-five
(45%) percent of the Value of Eligible Inventory consisting of work-in-process
and semi-finished goods, minus (ii) any Availability Reserves.
1.98 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value.
1.99 "Voting Stock" shall mean Capital Stock of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time stock of any other class or classes shall have or might have voting power
by reason of the happening of any contingency.)
SECTION 2. ACKNOWLEDGEMENT AND RESTATEMENT
2.1 Existing Obligations. Borrower hereby acknowledges, confirms and
agrees that Borrower is indebted to Lenders (as assignees of Congress pursuant
to the Assignment Agreement) for Loans to Borrower under the Existing Congress
Agreement, as of the close of business on August 22, 1996, in the aggregate
principal amount of $13,562,147 and the aggregate amount of $2,774,553 in
respect of Letter of Credit Accommodations, together with all interest accrued
and accruing thereon (to the extent applicable), and all costs, expenses and
other charges relating thereto, all of which are unconditionally owing by
Borrower to Lenders, without offset, defense or counterclaim of any kind,
nature or description whatsoever.
2.2 Acknowledgement of Security Interest. Borrower hereby
acknowledges, confirms and agrees that (a) Agent, for itself and the ratable
benefit of Lenders, has and shall continue to have a security interest in and
lien upon the Collateral heretofore granted to Agent as assignee of Congress
under the Assignment Agreement pursuant to the Existing Congress Agreement, as
well as any Collateral granted hereunder or under the other Financing
Agreements or otherwise granted to or held by Agent or any Lender, and (b) the
liens and security interests of Agent in the Collateral shall be deemed to be
continuously granted and perfected from the earliest date of the granting and
perfection of such liens and security interests, whether directly to Agent or
to Agent as assignee of Congress under the Assignment Agreement or otherwise.
2.3 Existing Congress Agreement. Borrower hereby acknowledges,
confirms and agrees that: (a) the Existing Congress Agreement has been duly
executed and delivered by Borrower and is in full force and effect as of the
date hereof; (b) the agreements and obligations of Borrower contained in the
Existing Congress Agreement constitute the legal, valid and binding
obligations of Borrower enforceable against it in accordance with its terms
and Borrower has no valid defense to the enforcement of such obligations; and
(c) Agent and Lenders are entitled to all of the rights, remedies and benefits
provided for in or arising pursuant to the Existing Congress Agreement.
2.4 Restatement.
(a) Except as otherwise stated in Section 2.2 hereof and this
Section 2.4, as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Congress
Agreement are hereby amended and restated in their entirety, and as so amended
and restated, replaced and superseded, by the terms, conditions, agreements,
covenants, representations and warranties set forth in this Agreement, except
that nothing herein or in the other Financing Agreements shall impair or
adversely affect the continuation of the liability of Borrower for the
Obligations heretofore incurred and the security interests, liens and other
interests in the Collateral heretofore granted, pledged and/or assigned by
Borrower to Agent (whether directly to Agent or to Agent as assignee of
Congress under the Assignment Agreement or otherwise).
(b) The amendment and restatement contained herein shall not, in
any manner, be construed to constitute payment of, or impair, limit, cancel or
extinguish, or constitute a novation in respect of any of the obligations,
liabilities and indebtedness of Borrower evidenced by or arising under the
Existing Congress Agreement, and the liens and security interests securing
such other obligations, liabilities and indebtedness, which shall not in any
manner be impaired, limited, terminated, waived or released.
(c) All loans, advances and other financial accommodations under
the Existing Congress Agreement and all other Obligations of Borrower to
Congress outstanding and unpaid as of the date hereof pursuant to the Existing
Congress Agreement or otherwise shall be deemed Obligations of Borrower
pursuant to the terms hereof, and shall constitute and be deemed either
Revolving Loans, Letter of Credit Accommodations or LC Loans to Borrower to
the same extent and in the same amount as such Obligations were deemed to be
under the Existing Congress Agreement.
SECTION 3. CREDIT FACILITIES
3.1 Loans.
(a) Subject to, and upon the terms and conditions contained herein,
each of Lenders severally (and not jointly) agrees to fund its Pro Rata Share
of Revolving Loans to Borrower from time to time under the Credit Facility in
amounts requested by Borrower up to:
(i) at all times prior to the Redemption Date, the lesser
of: (A) the amount equal to (1) the Total Availability minus (2) the
outstanding Letter of Credit Accommodations and LC Loans or (B) the Revolving
Loan Limit, and
(ii) at all times on and after the Redemption Date, the
lesser of: (A) the Total Availability or (B) the Maximum Credit.
(b) Agent may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrower, (i) reduce the lending formula
with respect to Eligible Accounts to the extent that Agent determines in good
faith that: (A) the dilution with respect to the Accounts for any period
(based on the ratio of (1) the aggregate amount of reductions in Accounts
other than as a result of payments in cash to (2) the aggregate amount of
total sales) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels, or
(B) the general creditworthiness of account debtors has declined or (ii)
reduce the lending formula(s) with respect to Eligible Inventory to the extent
that Agent determines in good faith that: (A) the number of days of the
turnover of the Inventory for any period has changed in any material respect
or (B) the liquidation value of the Eligible Inventory, or any category
thereof, has decreased in any material respect, or (C) the nature and quality
of the Inventory has deteriorated in any material respect. In determining
whether to reduce the lending formula(s), Agent may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Accounts, Eligible Inventory or in establishing Availability
Reserves.
(c) Except in Agent's discretion, (i) the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall
not exceed the Maximum Credit as then in effect and (ii) at all times prior to
the Redemption Date, the aggregate amount of the Revolving Loans shall not
exceed the Revolving Loan Limit. In the event that the outstanding amount of
any component of the Loans, or the aggregate amount of the outstanding Loans
and Letter of Credit Accommodations, exceeds the amounts available under the
lending formulas, the Revolving Loan Limit, the LC Limit or the Maximum
Credit, as applicable, such event shall not limit, waive or otherwise affect
any rights of Agent and Lenders in that circumstance or on any future
occasions and Borrower shall, upon demand by Agent, which may be made at any
time or from time to time, immediately repay to Agent, for the ratable benefit
of Lenders, the entire amount of any such excess(es) for which payment is
demanded.
3.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of Borrower, pursuant to the Credit Facility, Agent agrees, for
the ratable risk of each Lender according to its Pro Rata Share, to provide or
arrange for Letter of Credit Accommodations in accordance with its customary
procedures and practices for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof up to: (i) at all times
prior to the Redemption Date, the lesser of: (A) the amount equal to (1) the
Total Availability minus (2) the outstanding Revolving Loans and (B) the LC
Limit as then in effect, and (ii) at all times on and after the Redemption
Date, the LC Limit as then in effect. All Letter of Credit Accommodations
shall be for standby letters of credit which are issued for purposes similar
to those for which surety bonds are issued and appeal bonds required in the
ordinary course of business or in connection with the enforcement of rights or
claims of Borrower or any Subsidiary of Borrower. Any payments made by Agent
or Lenders to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations prior to the Redemption Date shall constitute
LC Loans to Borrower pursuant to this Section 3.
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Agent, for the benefit of Lenders, a letter of credit
fee at a rate equal to one and three-quarters (1-3/4%) percent per annum on
the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
amount equal to the Total Availability minus the then outstanding amount of
the Loans, subject to the Maximum Credit and the LC Limit, is equal to or
greater than one hundred (100%) percent of the face amount of the proposed
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Agent or any Lender with respect thereto. Effective on the
issuance of each Letter of Credit Accommodation, an Availability Reserve shall
be established in an amount equal to one hundred (100%) percent of the face
amount of such Letter of Credit Accommodation and all other commitments and
obligations made or incurred by Agent or any Lender with respect thereto.
(d) Except in Agent's discretion, the aggregate amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent and Lenders in connection therewith and
the LC Loans shall not at any time exceed the LC Limit. At any time an Event
of Default exists or has occurred, Agent may require Borrower to either
furnish cash collateral to secure the reimbursement obligations to the issuer
in connection with any Letter of Credit Accommodations or furnish cash
collateral to Agent, for itself and the ratable benefit of Lenders, for the
Letter of Credit Accommodations, and in either case, the Loans otherwise
available to Borrower shall not be reduced as provided in Section 3.2(c) to
the extent of such cash collateral.
(e) Borrower shall indemnify and hold Agent and Lenders harmless
from and against any and all losses, claims, damages, liabilities, costs and
expenses which Agent or any Lender may suffer or incur in connection with any
Letter of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation. Borrower
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed Borrower's agent. Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrower
hereby releases and holds Agent and Lenders harmless from and against any
acts, waivers, errors, delays or omissions, whether caused by Borrower, by any
issuer or correspondent or otherwise with respect to or relating to any Letter
of Credit Accommodation. The provisions of this Section 3.2(e) shall survive
the payment of Obligations and the termination or non-renewal of this
Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrower any right or authority to pledge the credit of Agent or any Lender in
any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrower shall be bound by any interpretation
made in good faith by Agent, or any other issuer or any correspondent under or
in connection with any Letter of Credit Accommodation or any documents, drafts
or acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrower. Agent shall have the sole and
exclusive right and authority to, and Borrower shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any
instructions as to acceptance or rejection of any documents or goods or (C)
execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders, and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters
of credit included in the Collateral. Agent may take such actions either in
its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall
be deemed to have been granted or undertaken by Borrower to Agent and Lenders.
Any duties or obligations undertaken by Agent and Lenders to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or
any other agreement by Agent or any Lender in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed
to have been undertaken by Borrower to Agent or the applicable Lender(s) and
to apply in all respects to Borrower.
3.3 Increase in Maximum Credit. The Maximum Credit shall increase from
$25,000,000 to $50,000,000 on the date of the redemption by Borrower of the
Existing Notes (the "Redemption Date"), provided, that, each of the following
conditions is satisfied in a manner reasonably satisfactory to Agent:
(a) the Existing Notes shall be redeemed on the date set forth in
the written notices of redemption given on the date hereof to the holders of
the Existing Notes in accordance with the applicable provisions of the
Existing Senior Note Indenture and the Existing Subordinated Note Indenture;
(b) the initial Loans to Borrower on the Redemption Date shall be
used to pay the amount required to be paid by Borrower to redeem the Existing
Notes as provided for herein, after all of the net cash proceeds received by
Borrower from the Borrower Debt Offering have been used to redeem the Existing
Notes;
(c) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that on the Redemption Date, the sum of (i)
the then remaining proceeds of the net cash proceeds received by Borrower from
the Borrower Debt Offering together with any interest or dividends thereon
(all of which shall be available without restriction or condition for payment
to the holders of the Existing Notes) plus (ii) the amount equal to (A) the
Excess Availability as of such date minus (B) $5,000,000, is equal to or
greater than the amount required to pay in full all principal, interest,
premiums and any other amounts required to be paid to redeem the Existing
Notes in accordance with the applicable provisions of the Existing Senior Note
Indenture and the Existing Subordinated Note Indenture; and
(d) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Agent has valid perfected and first
priority security interests in and mortgages and liens upon the Real Property,
the Equipment and the related assets as described on Schedule 3.3 hereto,
subject only to the security interests and liens permitted herein or in the
other Financing Agreements;
(e) all requisite corporate action and proceedings in connection
with the grant to Agent of a security interest in and mortgage and lien upon
the Real Property, the Equipment and the related assets described on Schedule
3.3 hereto, shall be reasonably satisfactory in form and substance to Agent,
and Agent shall have received all information and copies of all documents,
including, without limitation, records of requisite corporate actions and
proceeds which Agent may have reasonably requested in connection therewith,
such documents where requested by Agent or its counsel to be certified by
appropriate corporate officers or governmental authorities;
(f) Agent shall have received, in form and substance reasonably
satisfactory to Agent, a valid and effective title insurance policy issued by
a company and agent acceptable to Agent (i) insuring the priority, amount and
sufficiency of the appropriate Mortgage Documents, (ii) insuring against
matters that would be disclosed by surveys and (iii) containing any legally
available endorsements, assurances or affirmative coverage requested by Agent
for protection of its interests;
(g) Agent shall have received, in form and substance reasonably
satisfactory to Agent, an amendment to this Agreement to amend the definition
of Collateral to include the Real Property, the Equipment and the related
assets described on Schedule 3.3 hereto and such other matters as Agent may
reasonably request, duly authorized, executed and delivered by Borrower;
(h) Agent shall have received, in form and substance reasonably
satisfactory to Agent, an equipment security agreement granting to Agent, for
the ratable benefit of Lenders, a security interest in and lien upon the
Equipment and related assets described on Schedule 3.3 hereto, and containing
such other terms and provisions with respect thereto as Agent may reasonably
require, related Uniform Commercial Code financing statements, the Mortgage
Documents and such other agreements, documents and instruments as Agent may
reasonably require in connection therewith, in each case duly authorized,
executed and delivered by Borrower;
(i) Agent shall have received, in form and substance reasonably
satisfactory to Agent, such opinion letters of counsel to Borrower with
respect to the agreements delivered to Lender pursuant to Section 3.3(h) above
and such other matters related thereto as Agent may reasonably request; and
(j) no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred.
3.4 Availability Reserves. All Loans otherwise available to Borrower
pursuant to the lending formulas and subject to the Maximum Credit and other
applicable limits hereunder shall be subject to Agent's continuing right to
establish and revise Availability Reserves as provided in this Agreement.
3.5 Commitments. The aggregate amount of each Lender's share of the
Loans and Letter of Credit Accommodations shall not exceed the amount set
forth below such Lender's signature on the signature pages hereto, as the same
may from time to time be amended with the written acknowledgment of Agent.
Such amount for each Lender is referred to herein as such Lender's
"Commitment", provided, that, prior to the Redemption Date, (a) each Lender's
Commitment shall be fifty (50%) percent of such amount and (b) the aggregate
amount of each Lender's share of the Loans and Letter of Credit Accommodations
shall not exceed fifty (50%) percent of the amount set forth below such
Lender's signature on the siganture pages hereto.
SECTION 4. INTEREST AND FEES
4.1 Interest.
(a) Borrower shall pay to Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest accruing hereunder on and
after the date of any Event of Default or termination or non-renewal hereof
shall be payable on demand.
(b) Borrower may from time to time request that Prime Rate Loans be
converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from Borrower shall
specify the amount of the Prime Rate Loans which will constitute Eurodollar
Rate Loans (subject to the limits set forth below) and the Interest Period to
be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, provided, that, (i) no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default exists or has occurred and is continuing, (ii) no party hereto
shall have sent any notice of termination or non-renewal of this Agreement,
(iii) Borrower shall have complied with such customary procedures as are
established by Agent and specified by Agent to Borrower from time to time for
requests by Borrower for Eurodollar Rate Loans, (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of
the Eurodollar Rate Loans at any time requested by Borrower shall not exceed
the amount equal to seventy-five (75%) percent of the lowest principal amount
of the Loans which it is anticipated will be outstanding during the applicable
Interest Period, in each case as determined by Agent (but with no obligation
of Agent and Lenders to make such Revolving Loans) and (vii) Agent shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available
to Agent through the Reference Bank and can be readily determined as of the
date of the request for such Eurodollar Rate Loan by Borrower. Any request by
Borrower to convert Prime Rate Loans to Eurodollar Rate Loans or to continue
any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Agent, Lenders and Reference Bank
shall not be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as
if Agent, Lenders and Reference Bank had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice
by Agent to Borrower, convert to Prime Rate Loans in the event that (i) an
Event of Default or an act, condition or event which with the notice or
passage of time or both would constitute an Event of Default, shall exist,
(ii) this Agreement shall terminate or not be renewed, or (iii) the aggregate
principal amount of the Prime Rate Loans which have previously been converted
to Eurodollar Rate Loans or existing Eurodollar Rate Loans continued, as the
case may be, at the beginning of an Interest Period shall at any time during
such Interest Period exceed either (A) the aggregate principal amount of the
Loans then outstanding, or (B) Loans then available to Borrower under Section
3 hereof. Borrower shall pay to Agent, for itself and the ratable benefit of
Lenders, upon demand by Agent (or Agent may, at its option, charge any loan
account of Borrower) any amounts required to compensate Agent, Lenders, the
Reference Bank or any Participant for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a result of the
conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the
foregoing.
(d) Interest shall be payable by Borrower to Agent, for itself and
the ratable benefit of Lenders, monthly in arrears not later than the first
day of each calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non- contingent Obligations (other than Eurodollar Rate Loans) shall increase
or decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrower to Agent, for itself and the ratable benefit of Lenders
exceed the maximum amount or the rate permitted under any applicable law or
regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
(e) In the event that the EBITDA of Borrower for any four (4)
consecutive fiscal quarters (treated as a single accounting period) ending on
or after September 30, 1996 calculated based on the financial statements of
Borrower for such period which are delivered to Agent in accordance with
Section 9.6 hereof is greater than $34,000,000 (which as to the four (4)
consecutive fiscal quarters ending September 30, 1996 shall be calculated
based on the drafts of the audited financial statements to be provided by
Borrower to Agent), then effective as of the first day of the month after the
date of the receipt by Agent of such financial statements the Interest Rate
based on the Prime Rate and the Adjusted Eurodollar Rate shall each be reduced
by one-quarter of one (1/4%) percent per annum (except such reduction shall be
effective as of the end of the applicable Interest Period as to any then
outstanding Eurodollar Rate Loans) and for so long thereafter as the EBITDA of
Borrower shall be greater than $34,000,000 for the immediately preceding four
(4) consecutive quarters (treated as a single accounting period). In the
event that the EBITDA of Borrower for any four (4) consecutive fiscal quarters
of Borrower shall thereafter be less than or equal to $34,000,000, the
Interest Rate shall increase to the percentages set forth in Section 1.58
hereof effective as of the first day of the month after the date of receipt by
Agent of the financial statements of Borrower as described above until such
time (if ever) as the EBITDA of Borrower for any four (4) consecutive fiscal
quarters (treated as a single accounting period) again exceeds $34,000,000
calculated based on the financial statements of Borrower for such period.
4.2 Closing Fee. Borrower shall pay to Agent, for the benefit of
Lenders, as a closing fee the amount of $375,000, which shall be fully earned
as of and payable on the date hereof.
4.3 Servicing Fee. Borrower shall pay to Agent, for its own account,
monthly a servicing fee in an amount equal to $3,000 in respect of Agent's
services for each month (or part thereof) during the term of the Credit
Facility and for so long thereafter as any of the Obligations are outstanding,
which fee shall be fully earned as of and payable in advance on the date
hereof and on the first day of each month hereafter.
4.4 Unused Line Fee. Borrower shall pay to Agent, for the benefit of
Lenders, monthly an unused line fee at all times prior to the Redemption Date,
at a rate equal to three-eighths of one (3/8%) percent per annum calculated
upon the amount by which the Maximum Credit (as then in effect) exceeds the
average daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) and at
all times on and after the Redemption Date, at a rate equal to three-eighths
of one (3/8%) percent per annum calculated on the amount by which $40,000,000
exceeds the average daily principal balance of the outstanding Loans and
Letter of Credit Accommodations during the immediately preceding month (or
part thereof), in each case while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears.
4.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Agent to Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Agent, any Lender, Reference Bank or any Participant to
make or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Agent, any Lender, Reference Bank or any Participant of making
or maintaining any Eurodollar Rate Loans by an amount deemed by Agent to be
material, or (C) reduce the amounts received or receivable by Agent in respect
thereof, by an amount deemed by Agent to be material or (ii) the cost to
Agent, any Lender, Reference Bank or any Participant of making or maintaining
any Eurodollar Rate Loans shall otherwise increase by an amount deemed by
Agent to be material. Borrower shall pay to Agent, for itself and the ratable
benefit of Lenders, upon demand by Agent (or Agent may, at its option, charge
any loan account of Borrower) any amounts required to compensate Agent, any
Lender, the Reference Bank or any Participant for any loss (including loss of
anticipated profits), cost or expense incurred by such person as a result of
the foregoing, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such person to make or maintain the Eurodollar Rate Loans or
any portion thereof. A certificate of Agent setting forth the basis for the
determination of such amount necessary to compensate Agent as aforesaid shall
be delivered to Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Agent, other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 7.3 or any other payments made with the proceeds of Collateral,
Borrower shall pay to Agent upon demand by Agent (or Agent may, at its option,
charge any loan account of Borrower) any amounts required to compensate Agent,
any Lender, the Reference Bank or any Participant for any additional loss
(including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such person to make or
maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lenders (or
Agent on behalf of Lenders) making the initial Loans and providing the initial
Letter of Credit Accommodations hereunder:
(a) Agent shall have received evidence, in form and substance
satisfactory to Agent, that (i) Borrower has validly issued and sold the
Senior Notes pursuant to the Borrower Debt Offering and the transactions
contemplated in connection with such offering have been consummated in
compliance with all applicable laws and regulations and all necessary consents
and approvals in connection therewith have been obtained and are in full force
and effect, (ii) the Senior Notes and all agreements, documents and
instruments relating thereto have been duly authorized, executed and delivered
by the parties thereto and (iii) Borrower has received from or on behalf of
the holders of the Senior Notes cash or other immediately available funds in
the aggregate amount of not less than approximately $132,000,000 constituting
the net cash proceeds after transaction costs paid on the date hereof of the
issuance of the Senior Notes pursuant to the Borrower Debt Offering, and (iv)
such net cash proceeds have been deposited in the Redemption Escrow Accounts
and such amounts are held in such accounts free and clear of any right of
setoff, lien, claim, security interest or other encumbrance and there are no
restrictions, limitations or conditions on the right of Borrower to withdraw
or use such funds, except as otherwise provided herein;
(b) Agent shall have received the Assignment Agreement, duly
authorized, executed and delivered by the parties thereto;
(c) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory
in form and substance to Agent, and Agent shall have received all information
and copies of all documents, including, without limitation, records of
requisite corporate action and proceedings which Agent may have requested in
connection therewith, such documents where requested by Agent or its counsel
to be certified by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of Agent's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor in any material respect to perform its
obligations hereunder or under any of the other Financing Agreements to which
it is a party or of Agent or Lenders to enforce the Obligations or realize
upon the Collateral;
(e) Agent shall have completed a field review of the Records and
such other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrower, the results of which
shall be satisfactory to Agent, not more than three (3) Business Days prior to
the date hereof;
(f) Agent shall have received, in form and substance satisfactory
to Agent and Lenders, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement
and the other Financing Agreements, including, without limitation,
acknowledgements by lessors, processors, mortgagees and warehousemen of the
security interests of Agent in the Collateral, waivers by such persons of any
security interests, liens or other claims by such persons to the Collateral
and agreements permitting Agent access to, and the right to remain on, the
premises to exercise the rights and remedies of Agent and Lenders and
otherwise deal with the Collateral;
(g) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent and Lenders, and certificates of
insurance policies and/or endorsements naming Agent, for itself and the
ratable benefit of Lenders, as loss payee;
(h) Agent shall have received, in form and substance satisfactory
to Agent, such opinion letters of counsel to Borrower with respect to the
redemption of the Existing Notes, the Borrower Debt Offering, the Financing
Agreements and such other matters related thereto as Agent may reasonably
request; and
(i) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent and Lenders in form and substance satisfactory to Agent.
5.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Lenders (or Agent on behalf of Lenders) making Loans and/or providing Letter
of Credit Accommodations to Borrower, including the initial Loans and Letter
of Credit Accommodations and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto; and
(b) no Event of Default and no act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making
of such Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.
SECTION 6. GRANT OF SECURITY INTEREST
6.1 To secure payment and performance of all Obligations, Borrower
hereby grants to Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the ratable benefit of Lenders,
and also confirms, reaffirms and restates its prior grant to Agent, for itself
and the ratable benefit of Lenders, as assignee of Congress under the
Assignment Agreement, of a continuing security interest in, a lien upon, and a
right of setoff against, in each case as security, the following property and
interests in property of Borrower, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
(a) all Receivables;
(b) all Inventory;
(c) all monies, securities and other personal property, now or
hereafter held or received by, or in transit to, Agent, any Lender or any of
their Affiliates or a bailee of Agent, any Lender or any of their Affiliates
from or for Borrower, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, including, without limitation, all of Borrower's
deposit accounts, credits and balances with Agent, any Lender or any of their
Affiliates at any time existing;
(d) all of Borrower's deposit accounts (other than the Senior Note
Collateral Account and the Excess Refinancing Proceeds Account prior to the
Redemption Date and at all times the Redemption Escrow Accounts) with any
financial institutions with which Borrower maintains deposits;
(e) all Records; and
(f) all accessions to, substitutions for and replacements, products
and proceeds of any of the foregoing, and all proceeds of such proceeds and
products, including, without limitation, all cash and credit balances, all
payments under any indemnity, warranty, or guaranty payable with respect to
any of the foregoing, all proceeds of insurance, and all money and other
personal property obtained as a result of any claims against third parties or
any legal action or proceeding with respect to any of the foregoing.
6.2 Notwithstanding anything contained herein to the contrary, the
Collateral shall not include the following: (a) prior to the Redemption Date,
the Senior Note Collateral Account, (b) prior to the Redemption Date, the
Excess Refinancing Proceeds Account and the amounts on deposit therein on the
date hereof, constituting certain of the proceeds from the loans to Borrower
under the Credit Agreement, dated as of August 31, 1989, by and among
Borrower, certain financial institutions identified therein and Bank of
America National Trust and Savings Association, as agent for such financial
institutions and earnings thereon and all notes, certificates of deposit,
instruments, securities and other personal property, if any, representing from
time to time the investment of the funds held in such account, and any
proceeds thereof, to the extent such investments constitute investments
permitted under Section 10.10(b) hereof, and (c) the Redemption Escrow
Accounts and the amounts on deposit therein on the date hereof to the extent
constituting proceeds of the Borrower Debt Offering and interest and dividends
thereon.
SECTION 7. COLLECTION AND ADMINISTRATION
7.1 Borrower's Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrower and (c) all other appropriate debits
and credits as provided in this Agreement, including, without limitation,
fees, charges, costs, expenses and interest. All entries in the loan
account(s) shall be made in accordance with Agent's customary practices as in
effect from time to time.
7.2 Statements. Agent shall render to Borrower each month a statement
setting forth the balance in Borrower's loan account(s) maintained by Agent
for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall be
subject to subsequent adjustment by Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrower and
conclusively binding upon Borrower as an account stated except to the extent
that Agent receives a written notice from Borrower of any specific exceptions
of Borrower thereto within thirty (30) days after the date such statement has
been mailed by Agent. Until such time as Agent shall have rendered to
Borrower a written statement as provided above, the balance in Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing to Agent
by Borrower to Agent and Lenders.
7.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrower shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Agent, providing that all items received or
deposited in the Blocked Accounts are the property of Agent and Lenders
according to their interests hereunder, that the depository bank has no lien
upon, or right to setoff against, the Blocked Accounts, the items received for
deposit therein, or the funds from time to time on deposit therein and that
the depository bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis, all funds received or deposited into the Blocked
Accounts to such bank account of Agent as Agent may from time to time
designate for such purpose ("Payment Account"). Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected
by Agent, whether on the Accounts or as proceeds of Inventory or other
Collateral shall be the property of Agent and Lenders according to their
interests hereunder.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) Business Day following the date of
receipt of immediately available funds by Agent in the Payment Account. For
purposes of calculating the amount of the Loans available to Borrower such
payments will be applied (conditional upon final collection) to the
Obligations on the Business Day of receipt by Agent in the Payment Account, if
such payments are received within sufficient time (in accordance with Agent's
usual and customary practices as in effect from time to time) to credit
Borrower's loan account on such day, and if not, then on the next Business
Day.
(c) Borrower and all of its shareholders, directors, employees,
agents, subsidiaries and other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent and Lenders according to their interests
hereunder, any monies, checks, notes, drafts or any other payment relating to
and/or proceeds of Accounts or other Collateral which come into their
possession or under their control and immediately upon receipt thereof, shall
deposit or cause the same to be deposited in the Blocked Accounts, or remit
the same or cause the same to be remitted, in kind, to Agent. In no event
shall the same be commingled with Borrower's own funds. Borrower agrees to
reimburse Agent and Lenders on demand for any amounts owed or paid to any bank
at which a Blocked Account is established or any other bank or person involved
in the transfer of funds to or from the Blocked Accounts arising out of Agent
or Lenders' payments to or indemnification of such bank or person. The
obligation of Borrower to reimburse Agent and Lenders for such amounts
pursuant to this Section 7.3 shall survive the termination or non-renewal of
this Agreement.
7.4 Payments.
(a) All Obligations shall be payable to the Payment Account as
provided in Section 7.3 or such other place as Agent may designate from time
to time. Agent may apply payments received or collected from Borrower or for
the account of Borrower (including, without limitation, the monetary proceeds
of collections or of realization upon any Collateral) to such of the
Obligations, whether or not then due, in such order and manner as Agent
determines. Borrower shall make all payments in respect of the Obligations as
set forth in Section 10.9(f)(v)(A)(1) hereof. At Agent's option, all
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Financing Agreements may be charged directly to
the loan account(s) of Borrower. Borrower shall make all payments to Agent on
the Obligations free and clear of, and without deduction or withholding for or
on account of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or conditions of any
kind.
(b) In addition, and not in limitation of the obligations of
Borrower to make any other payments hereunder or under the other Financing
Agreements, on or before the Redemption Date, Borrower shall pay to Lender for
application to the Obligations all amounts held in the Excess Refinancing
Proceeds Account. Borrower shall not use any of the funds held in such
account as of the date hereof for any other purpose.
(c) If after receipt of any payment of, or proceeds of Collateral
applied to the payment of, any of the Obligations, Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Agent or such Lender. Borrower shall be liable to pay to Agent and each
Lender, and does hereby indemnify and hold Agent and each Lender harmless for
the amount of any payments or proceeds surrendered or returned. This Section
7.4 shall remain effective notwithstanding any contrary action which may be
taken by Agent in reliance upon such payment or proceeds.
(d) This Section 7.4 shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
7.5 Sharing of Payments, Etc.
(a) Borrower agrees that, in addition to (and without limitation
of) any right of setoff, banker's lien or counterclaim Agent or a Lender may
otherwise have, each Lender shall be entitled, at its option (but subject, as
among Agent and Lenders, to the provisions of Section 13.3(b) hereof), to
offset balances held by it for the account of Borrower at any of its offices,
in dollars or in any other currency, against any principal of or interest on
any Loans owed to such Lender or any other amount payable to such Lender
hereunder, that is not paid when due (regardless of whether such balances are
then due to Borrower), in which case it shall promptly notify Borrower and
Agent thereof; provided, that, such Lender's failure to give such notice shall
not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement or any other Financing Agreement through
the exercise of any right of setoff, banker's lien or counterclaim or similar
right or otherwise (other than from Agent as provided herein), and, as a
result of such payment, such Lender shall have received more of its Pro Rata
Share of the principal of or interest on the Loans or such other amounts then
due hereunder or thereunder by Borrower to such Lender than the percentage
thereof received by any other Lender, it shall promptly pay to Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from
such other Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or such interest due thereon, as
the case may be) in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all Lenders shall share the
benefit of such excess payment (net of any expenses that may be incurred by
such Lender in obtaining or preserving such excess payment) in accordance with
their respective Pro Rata Shares. Amounts received by Agent under this
Section 7.5(b) hereof shall be treated as a payment received from Borrower
under Section 7.5(b) hereof. To such end all Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent with
this Section 7.5, all rights of setoff, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu
of a setoff to which this Section 7.5 applies, such Lender shall, to the
extent practicable, assign such rights to Agent for the benefit of Lenders
and, in any event, exercise its rights in respect of such secured claim in a
manner consistent with the rights of Lenders entitled under this Section 7.5
to share in the benefits of any recovery on such secured claim.
7.6 Authorization to Make Loans. Agent is authorized to make the Loans
and provide the Letter of Credit Accommodations, for the account and risk of
Lenders, based upon telephonic or other instructions received from anyone
purporting to be an officer of Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations.
If a beneficiary draws under any of the Letter of Credit Accommodations,
Agent, for the account and risk of Lenders, is authorized to make an LC Loan
to Borrower in an amount equal to the amount drawn under such Letter of Credit
Accommodation and to pay the proceeds of such LC Loan to the beneficiary of
such Letter of Credit Accommodation or to the issuer of such Letter of Credit
Accommodation in satisfaction of such draw. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the
requested advance Loan to be made or Letter of Credit Accommodations
established (which day shall be a Business Day) and the amount of the
requested Loan or Letter of Credit Accommodation, as the case may be.
Requests received after 11:00 a.m. Chicago time on any day shall be deemed to
have been made as of the opening of business on the immediately following
Business Day. All Loans and Letter of Credit Accommodations under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, Borrower when deposited to the credit of
Borrower or otherwise disbursed or established in accordance with the
instructions of Borrower or in accordance with the terms and conditions of
this Agreement.
7.7 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Agent and Lenders, Agent
shall, subject to the terms of Section 7.7 below, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to Borrower's loan
account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without any requirement of prior notice to Lenders of the proposed
Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section 7.7, the amount of each Lender's Pro Rata Share of
the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00
P.M. (Chicago time) on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at
any time or from time to time to make the above described adjustments at
intervals more frequent than weekly. Agent shall deliver to each of the
Lenders after the end of each week, or at such lesser period or periods as
Agent shall determine, a summary statement of the amount of outstanding Loans
for such period (such week or lesser period or periods being hereinafter
referred to as a "Settlement Period"). If the summary statement is sent by
Agent and received by a Lender prior to 12:00 Noon (Chicago time) then such
Lender shall make the settlement transfer described in this Section by no
later than 2:00 P.M. (Chicago time) on the day such summary statement was
sent, and if such summary statement is sent by Agent and received by a Lender
after 12:00 Noon (Chicago time), such Lender shall make such settlement
transfer by no later than 2:00 P.M. (Chicago time) on the next Business Day
following the date of receipt. If, as of the end of any Settlement Period,
the amount of a Lender's Pro Rata Share of the outstanding Loans is more than
such Lender's Pro Rata Share of the outstanding Loans as of the end of the
previous Settlement Period, then such Lender shall forthwith (but in no event
later than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase;
alternatively, if the amount of a Lender's Pro Rata Share of the outstanding
Loans in any Settlement Period is less than the amount of such Lender's Pro
Rata Share of the outstanding Loans for the previous Settlement Period, Agent
shall forthwith transfer to such Lender by wire transfer in immediately
available funds the amount of the decrease. The obligation of each of the
Lenders to transfer such funds and effect such settlement shall be irrevocable
and unconditional and without recourse to or warranty by Agent. Each of Agent
and Lenders agrees to mark its books and records at the end of each Settlement
Period to show at all times the dollar amount of its Pro Rata Share of the
outstanding Loans and Letter of Credit Accommodations.
(c) To the extent that Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment
of any Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section 7.7. In lieu of
weekly or more frequent settlements, Agent may at any time require each Lender
to provide Agent with immediately available funds representing its Pro Rata
Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
(d) Because Agent, on behalf of Lenders, may be advancing or may be
repaid Loans prior to the time when Lenders will actually advance or be repaid
Loans, interest and fees with respect to the outstanding Loans shall be
allocated by Agent to each Lender (including Agent), and the amount of each
Lender's (including Agent's) Pro Rata Share shall be computed daily, in
accordance with the amount of the outstanding Loans actually advances by and
repaid to each Lender (including Agent) on each day during each Settlement
Period and shall accrue from and including the date such Loans are advanced by
Agent to but excluding the date such Loans are repaid by Borrower in
accordance with the terms of this Agreement or actually settled by the
applicable Lender as described in this Section 7.7. Provided that such Lender
has made all payments required to be made by it under this Agreement and the
other Financing Agreements, Agent will pay to such Lender, by wire transfer to
such Lender not later than 12:00 noon (Chicago time) on or about the tenth
(10th) day of each month, such Lender's Pro Rata Share of interest and fees
actually received and collected from Borrower for the benefit of Lenders.
(e) Nothing in this Section 7.7 or elsewhere in this Agreement or
the other Financing Agreements shall be deemed to require Agent to advance
funds on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitment hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
7.8 Use of Proceeds. The initial Loans hereunder shall arise pursuant
to the assignment by Congress to Agent and Lenders of the loans outstanding
under the existing financing arrangements of Borrower with Congress as set
forth in the Assignment Agreement. All other Loans made or Letter of Credit
Accommodations provided by Agent or Lenders to Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating,
working capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof, except, that, on the Redemption Date, after
all of the net cash proceeds received by Borrower from the Borrower Debt
Offering have been used to redeem the Existing Notes as provided for herein,
certain of the proceeds of the Loans may be used to pay the amounts required
to be paid by Borrower to redeem the Existing Notes as provided for herein not
to exceed $17,500,000. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Loans to be considered a "purpose credit" within
the meaning of Regulation G of the Board of Governors of the Federal Reserve
System, as amended.
SECTION 8. COLLATERAL REPORTING AND COVENANTS
8.1 Collateral Reporting. Borrower shall provide Agent with the
following documents in a form satisfactory to Agent: (a) on a regular basis as
required by Agent, a schedule of Accounts; (b) on a monthly basis or more
frequently as Agent may request, (i) perpetual inventory reports, (ii)
inventory reports by category and (iii) agings of accounts payable, (c) upon
Agent's request, (i) copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and bank
statements, (ii) copies of shipping and delivery documents, and (iii) copies
of purchase orders, invoices and delivery documents for Inventory acquired by
Borrower; (d) agings of accounts receivable on a monthly basis or more
frequently as Agent may request; and (e) such other reports as to the
Collateral as Agent shall request from time to time. If any of Borrower's
records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Agent and to follow Agent's
instructions with respect to further services at any time that an Event of
Default exists or has occurred and is continuing.
8.2 Accounts Covenants.
(a) Borrower shall notify Agent promptly of: (i) any material delay
in Borrower's performance of any of its obligations to any account debtor or
the assertion of any claims, offsets, defenses or counterclaims by any account
debtor, or any disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information relating to the
financial condition of any account debtor obtained by Borrower pursuant to the
diligent exercise by Borrower of its credit procedures in accordance with past
practices and (iii) any event or circumstance which, to Borrower's knowledge,
would cause the Account not to satisfy the criteria for Eligible Accounts set
forth herein. No credit, discount, allowance or extension or agreement for
any of the foregoing shall be granted to any account debtor without Agent's
consent, except in the ordinary course of Borrower's business in accordance
with practices and policies previously disclosed in writing to Agent. So long
as no Event of Default exists or has occurred and is continuing, Borrower
shall settle, adjust or compromise any claim, offset, counterclaim or dispute
with any account debtor. At any time that an Event of Default exists or has
occurred and is continuing, Agent shall, at its option, have the exclusive
right to settle, adjust or compromise any claim, offset, counterclaim or
dispute with account debtors or grant any credits, discounts or allowances.
(b) Borrower shall promptly report to Agent any return of Inventory
by an account debtor. At any time that Inventory is returned, reclaimed or
repossessed, the related Account shall not be deemed an Eligible Account to
the extent of the portion of the Account which relates to the sale by Borrower
to the account debtor of the returned, reclaimed or repossessed Inventory. In
the event any account debtor returns Inventory when an Event of Default exists
or has occurred and is continuing, Borrower shall, upon Agent's request, (i)
hold the returned Inventory in trust for Agent, (ii) segregate all returned
Inventory from all of its other property, (iii) dispose of the returned
Inventory solely according to Agent's instructions, and (iv) not issue any
credits, discounts or allowances with respect thereto without Agent's prior
written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Agent or schedule thereof delivered to Agent shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Agent pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Agent
in accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of Borrower's
business in accordance with practices and policies previously disclosed to
Agent, (iv) there shall be no setoffs, deductions, contras, defenses,
counterclaims or disputes existing or asserted with respect thereto except as
reported to Agent in accordance with the terms of this Agreement, (v) none of
the transactions giving rise thereto will violate any applicable State or
Federal law or regulation, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation will be
legally enforceable in accordance with its terms.
(d) Agent shall have the right at any time or times, in Agent's
name or in the name of a nominee of Agent, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments which Borrower now owns or may at any time
acquire as a payment on or with respect to any Account immediately upon
Borrower's receipt thereof, except as Agent may otherwise agree.
(f) Agent may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Agent and that Agent has a security
interest therein, for itself and the ratable benefit of Lenders, and Agent may
direct any or all accounts debtors to make payment of Accounts directly to
Agent, for itself and the ratable benefit of Lenders, (ii) extend the time of
payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Accounts or other obligations included in the Collateral and thereby discharge
or release the account debtor or any other party or parties in any way liable
for payment thereof without affecting any of the Obligations, (iii) demand,
collect or enforce payment of any Accounts or such other obligations, but
without any duty to do so, and neither Agent nor any Lender shall be liable
for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its and Lenders' interests. At any time that an Event of Default exists or
has occurred and is continuing, at Lender's request, all invoices and
statements sent to any account debtor shall state that the Accounts and such
other obligations have been assigned to Agent, for itself and the ratable
benefit of Lenders, and are payable directly and only to Agent, for itself and
the ratable benefit of Lenders, and Borrower shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require.
8.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to
Agent, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Agent may request on or after an Event of Default, and promptly
following such physical inventory shall supply Agent with a report in the form
and with such specificity as may be reasonably satisfactory to Agent
concerning such physical count; (c) Borrower shall not remove any Inventory
from the locations set forth or permitted herein, without the prior written
consent of Agent, except for sales of Inventory in the ordinary course of
Borrower's business and except to move Inventory directly from one location
set forth or permitted herein to another such location; (d) upon Agent's
request, Borrower shall, at its expense, no more than once in any twelve (12)
month period, but at any time or times as Agent may request on or after an
Event of Default, deliver or cause to be delivered to Agent written reports or
appraisals as to the Inventory in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent or upon
which Agent is expressly permitted to rely; (e) Borrower shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including, but not limited to, the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate Borrower to repurchase such Inventory; (h)
Borrower shall keep the Inventory in good and marketable condition; and (i)
Borrower shall not, without prior written notice to Agent, acquire or accept
any Inventory on consignment or approval, except, that, Borrower may acquire
or accept Inventory on consignment; provided, that, each of the following
conditions is satisfied: (i) the aggregate value of such Inventory shall not
exceed $4,000,000 at any time, (ii) the consignor of such Inventory shall not
have any claim or interest in any Receivables, (iii) all of such consigned
Inventory shall, at all times, be reported to Agent as consigned Inventory
(and not included in any reports as Inventory of Borrower), and (iv) such
consigned Inventory shall, at all times, be conspicuously labelled or
otherwise marked as "consigned" Inventory and shall be physically separated
from Inventory owned by Borrower in designated segregated areas of Borrower's
facilities used solely for the purpose of storing such consigned Inventory.
8.4 Equipment Covenants. With respect to the Equipment: (a) upon
Agent's request, Borrower shall, at its expense, at any time or times as Agent
may request on or after an Event of Default, deliver or cause to be delivered
to Agent written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Agent by an appraiser acceptable to Agent; (b)
Borrower shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted); (c) Borrower shall use
the Equipment with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with all applicable
laws; (d) the Equipment is and shall be used in Borrower's business and not
for personal, family, household or farming use; (e) Borrower shall not remove
any Equipment from the locations set forth or permitted herein except to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrower assumes all responsibility and liability arising
from the use of the Equipment.
8.5 Power of Attorney. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in Borrower's or Agent's name,
to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as Agent deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for delivery
of Borrower's mail to an address designated by Agent (after two (2) days prior
written notice to Borrower), and open and dispose of all mail addressed to
Borrower, and (ix) do all acts and things which are necessary, in Agent's
determination, to fulfill Borrower's obligations under this Agreement and the
other Financing Agreements and (b) at any time for the purpose of exercising
its rights hereunder, under the other Financing Agreements and under
applicable law, as determined in good faith by Agent (including, without
limitation, the handling and monitoring of the Collateral and proceeds of the
Collateral, exercising its remedies hereunder, under the other Financing
Agreements and applicable law, and protecting its rights in the Collateral):
(i) take control in any manner of any item of payment or proceeds thereof,
(ii) have access to any lockbox or postal box into which Borrower's mail is
deposited, (iii) endorse Borrower's name upon any items of payment or proceeds
thereof with respect to the Collateral and deposit the same in the Agent's
account for application to the Obligations, (iv) endorse Borrower's name upon
any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other
Collateral, (v) sign Borrower's name on any verification of Accounts and
notices thereof to account debtors and (vi) execute in Borrower's name and
file any UCC financing statements or amendments thereto. Borrower hereby
releases Agent and each Lender and their officers, employees and designees
from any liabilities arising from any act or acts under this power of attorney
and in furtherance thereof, whether of omission or commission, except as a
result of Agent's or any Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
8.6 Right to Cure. Agent may, at its option, (a) cure any default by
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Agent's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto. Agent may add any amounts so expended to the Obligations and
charge Borrower's account therefor, such amounts to be repayable by Borrower
on demand. Agent shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation
or liability of Borrower. Any payment made or other action taken by Agent
under this Section shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed accordingly.
8.7 Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrower, (a) Agent or its designee shall have
complete access to all of Borrower's premises during normal business hours and
after notice to Borrower, or at any time and without notice to Borrower if an
Event of Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower
shall promptly furnish to Agent such copies of such books and records or
extracts therefrom as Agent may request, and (c) use during normal business
hours such of Borrower's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or
has occurred and is continuing for the collection of Accounts and realization
of other Collateral.
SECTION 9. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrower hereunder:
9.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower
is a corporation duly organized and in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure
to so qualify would not have a material adverse effect on Borrower's financial
condition, results of operation or business or the rights of Agent or any
Lender, in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within Borrower's
corporate powers, have been duly authorized and are not in contravention of
law or the terms of Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower or its property are bound.
This Agreement and the other Financing Agreements constitute legal, valid and
binding obligations of Borrower enforceable in accordance with their
respective terms. Borrower does not have any Subsidiaries except as set forth
on the Information Certificate.
9.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered
by Borrower to Agent or Lenders have been prepared in accordance with GAAP and
fairly present in all material respects the financial condition and the
results of operation of Borrower as at the dates and for the periods set forth
therein. Except as disclosed in any interim financial statements furnished by
Borrower to Agent and Lenders prior to the date of this Agreement, there has
been no material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrower, since the date of the most
recent audited financial statements furnished by Borrower to Agent and Lenders
prior to the date of this Agreement.
9.3 Chief Executive Office; Collateral Locations. The chief executive
office of Borrower and Borrower's Records concerning Accounts are located only
at the address set forth below and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Borrower to establish new
locations in accordance with Section 10.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrower and
sets forth the owners and/or operators thereof and to the best of Borrower's
knowledge, the holders of any mortgages on such locations.
9.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Agent, for itself and the ratable benefit of Lenders, under
this Agreement and the other Financing Agreements constitute valid and
perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 9.4 hereto and the
other liens permitted under Section 9.8 hereof. Borrower has good and
marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Agent, for itself and the ratable benefit of Lenders,
and such others as are specifically listed on Schedule 9.4 hereto or permitted
under Section 10.8 hereof.
9.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to
be filed by it (without requests for extensions of Federal, State or local
income taxes except as previously disclosed in writing to Agent). All
information in such tax returns, reports and declarations is complete and
accurate in all material respects. Borrower has paid or caused to be paid all
taxes due and payable or claimed due and payable in any assessment received by
it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and
payable and whether or not disputed.
9.6 Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to
the best of Borrower's knowledge threatened, against or affecting Borrower,
its assets or business and there is no action, suit, proceeding or claim by
any Person pending, or to the best of Borrower's knowledge threatened, against
Borrower or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against Borrower
would result in any material adverse change in the assets, business or
prospects of Borrower or would impair the ability of Borrower to perform its
obligations hereunder or under any of the other Financing Agreements to which
it is a party or of Agent to enforce any Obligations or realize upon any
Collateral.
9.7 Compliance with Other Agreements and Applicable Laws. Borrower is
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets
are bound and Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority.
9.8 Employee Benefits.
(a) Borrower has not engaged in any transaction in connection with
which Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency
described in Section 9.8(c) hereof and any deficiency with respect to vested
accrued benefits described in Section 9.8(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by Borrower to be incurred with respect to any employee
benefit plan of Borrower or any of its ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(b) of ERISA) or any other
event or condition with respect to any employee benefit plan of Borrower or
any of its ERISA Affiliates which presents a risk of termination of any such
plan by the Pension Benefit Guaranty Corporation.
(c) As of the last day of the most recent fiscal year of such plan,
full payment has been made of all amounts which Borrower or any of its ERISA
Affiliates is required under Section 302 of ERISA and Section 412 of the Code
to have paid under the terms of each employee benefit plan as contributions to
such plan , and no accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any employee benefit plan, including any penalty or tax described
in Section 9.8(a) hereof and any deficiency with respect to vested accrued
benefits described in Section 9.8(d) hereof.
(d) As of the last day of the most recent fiscal year of such plan,
the current value of all vested accrued benefits under all employee benefit
plans maintained by Borrower that are subject to Title IV of ERISA does not
exceed the current value of the assets of such plans allocable to such vested
accrued benefits, including any penalty or tax described in Section 9.8(a)
hereof and any accumulated funding deficiency described in Section 9.8(c)
hereof. The terms "current value" and "accrued benefit" have the meanings
specified in ERISA.
(e) Neither Borrower nor any of its ERISA Affiliates is or has ever
been obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA,
except as set forth on Schedule 9.8 hereof.
9.9 Environmental Compliance.
(a) Except as set forth on Schedule 9.9 hereto, Borrower has not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off its premises (whether or not
owned by it) in any manner which at any time violates any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of Borrower comply in all material
respects with all Environmental Laws and all licenses, permits, certificates,
approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 9.9 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
to the best of Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law
by Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or
any other environmental, health or safety matter, which affects Borrower in
any material respect or its business, operations or assets or any properties
at which Borrower has transported, stored or disposed of any Hazardous
Materials in any material respect.
(c) Borrower has no material liability (contingent or otherwise) in
connection with a release, spill or discharge, actual or to the best of
Borrower's knowledge threatened, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrower has all licenses, permits, certificates, approvals or
similar authorizations required to be obtained or filed in connection with the
operations of Borrower under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in
full force and effect.
9.10 Capitalization; Senior Notes.
(a) All of the issued and outstanding shares of Capital Stock of
Borrower are directly and beneficially owned and held as of the date hereof by
Parent and have been duly authorized and are fully paid and non-assessable,
free and clear of all claims, liens, pledges and encumbrances of any kind
(other than, prior to the Redemption Date, the lien in favor of the Existing
Senior Note Trustee for the benefit of the holders of the Existing Senior
Notes under the Existing Senior Note Indenture). As of the date hereof,
ninety and six-tenths (90.6%) percent of all of the issued and outstanding
shares of Capital Stock of Parent are directly and beneficially owned and held
by MLGA Fund II, L.P.
(b) The Senior Notes have been duly authorized, issued and
delivered by Borrower and all agreements, documents and instruments related
thereto, including, but not limited to, the Senior Note Indenture, have been
duly authorized, executed and delivered and the transactions contemplated
thereunder performed in accordance with their terms by the respective parties
thereto in all material respects, including the fulfillment (not merely the
waiver except as disclosed in writing to Agent) of all conditions precedent
set forth therein. All actions and proceedings required by the Senior Notes
and the agreements, documents and instruments related thereto, applicable law
or regulation have been taken and the transactions required thereunder have
been duly and validly taken and consummated.
(c) The execution and delivery of the Senior Notes, the Senior Note
Indenture and any of the instruments and documents to be delivered pursuant
thereto, and the consummation of the transactions therein contemplated, and
compliance with the provisions thereof, does not violate and will not violate
any law or regulation or any order or decree of any court or governmental
instrumentality in any material respect or does or will conflict with or
result in the breach of, or constitute a default in any material respect
under, any indenture, mortgage, deed of trust, agreement or instrument to
which Borrower or any of its Affiliates is a party or may be bound, or result
in the creation or imposition of any lien, charge or encumbrance upon any of
the property of Borrower (except as specifically contemplated or permitted
hereunder or under the other Financing Agreements) or violate any provision of
the Certificate of Incorporation or By-Laws of Borrower or any of its
Affiliates.
(d) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the issuance
of the Senior Notes and the transactions described therein and no governmental
or other action or proceeding has been threatened or commenced, seeking any
injunction, restraining order or other order which seeks to void or otherwise
modify the Senior Notes, the Senior Note Indenture or the transactions
described therein. Borrower has delivered, or caused to be delivered, to
Agent, true, correct and complete copies of the Senior Note Indenture, the
Senior Notes and all other agreements, documents and instruments existing as
of the date hereof relating thereto.
(e) All net cash proceeds from the Borrower Debt Offering are held
in the Redemption Escrow Accounts free and clear of all claims, liens, pledges
and encumbrances of any kind, nature or description whatsoever. The proceeds
from the Borrower Debt Offering are not subject to any restrictions or
conditions relative to the transfer or use thereof (except as provided for
herein) and Borrower has the right to transfer and deliver the proceeds from
the Borrower Debt Offering, free and clear of any liens, encumbrances,
restrictions or conditions. The proceeds from the Borrower Debt Offering are
not subject to setoff, counterclaim, defense, allowance or adjustment or to
dispute, objection or complaint.
(f) Borrower is solvent and will continue to be solvent after the
creation of the Obligations, the security interests of Agent and the other
transactions contemplated hereunder, is able to pay its debts as they mature
and has (and has reason to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business and all
businesses in which it is about to engage. The assets and properties of
Borrower at a fair valuation and at their present fair salable value are, and
will be, greater than the indebtedness of Borrower, including subordinated and
contingent liabilities computed at the amount which, to the best of Borrower's
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.
9.11 Redemption of Existing Notes.
(a) As of the date hereof, Borrower has notified the Existing
Senior Note Trustee and the Existing Subordinated Note Trustee of the
redemption date for each of the Existing Senior Notes and the Existing
Subordinated Notes, respectively, and that all of the principal amount of the
Existing Notes are to be redeemed and such notice has been given in the form
of the officer's certificate and as otherwise required under the terms of the
Existing Senior Note Indenture and Existing Subordinated Note Indenture,
respectively. The Existing Senior Note Trustee and the Existing Subordinated
Note Trustee have each agreed that the receipt of such notice by each of them
as of the date hereof is satisfactory notice to have the Existing Notes
redeemed on the date which is thirty (30) days after the date hereof.
(b) As of the date hereof, Borrower has mailed or cause to be
mailed a notice of redemption to each holder of the Existing Notes, which
notice identifies the notes to be redeemed, the redemption date and otherwise
complies with the requirements of Section 3.03 of the Existing Senior Notes
Indenture and Section 3.03 of the Existing Subordinated Note Indenture. The
redemption date set forth in such notice is September 23, 1996. As of the
date hereof, Borrower has segregated and holds in trust money which when added
to the Loans anticipated by Borrower to be available hereunder to be used for
such purpose (not to exceed $17,500,000) will be sufficient to pay the
redemption price of and accrued interest and premiums on all of the Existing
Notes on the Redemption Date. The portion of such money which will not be
borrowed hereunder is held in the Redemption Escrow Accounts until such time
as it shall be paid to each holder of the Existing Notes.
(c) The redemption of the Existing Notes has been duly authorized
by Borrower. All actions and proceedings required by the Existing Senior Note
Indenture and the Existing Subordinated Note Indenture and the agreements,
documents and instruments related thereto, and applicable law or regulation,
for the redemption of the Existing Notes on the date which is thirty (30) days
after the date hereof in accordance with the terms thereof have been taken.
(d) The issuance of the redemption notices with respect to the
Existing Notes and the redemption of the Existing Notes does not violate and
will not violate any law or regulation or order or decree of any court or
governmental instrumentality and does not and will not conflict with or result
in the breach of, or constitute a default in any respect under any indenture,
mortgage, deed of trust, agreement or instrument to which Borrower or any of
its Affiliates is a party or may be bound. Borrower has taken, or caused to
be taken, all actions and proceedings required to redeem and repay all
obligations, liabilities and indebtedness of Borrower evidenced by or arising
under or in connection with the Existing Notes, including, but not limited to,
appropriate shareholder and board approvals and notices to trustees or other
representatives of the holders of the Existing Notes, in accordance with the
terms and conditions of the Existing Senior Note Indenture and Existing
Subordinated Note Indenture and any related agreements, documents and
instruments and all applicable laws and regulations. No court of competent
jurisdiction has issued any injunction, restraining order or other order which
prohibits the redemption of the Existing Notes or repayment of the
obligations, liabilities and indebtedness of Borrower evidenced by or arising
under or in connection with the Existing Notes, and no governmental action or
proceeding has been threatened or commenced, seeking to prevent or in any way
limit the redemption or repayment thereof. Borrower has delivered, or caused
to be delivered, to Agent, true, correct and complete copies of all notices,
documents and agreements relating to the redemption and repayment of such
obligations, liabilities and indebtedness.
9.12 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Agent or Lenders in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without limitation, all
information in the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and
does not omit any material fact necessary in order to make such information
not misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse effect on the business,
assets or prospects of Borrower, which has not been fully and accurately
disclosed to Agent and Lenders in writing.
9.13 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Agent and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless
of any investigation made or information possessed by Agent and Lenders. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now
or hereafter give, or cause to be given, to Agent and Lenders.
SECTION 10. AFFIRMATIVE AND NEGATIVE COVENANTS
10.1 Maintenance of Existence. Borrower shall, and shall cause each
Subsidiary to, at all times preserve, renew and keep in full force and effect
its corporate existence and rights and franchises with respect thereto
(provided, that, Borrower may merge with and into Parent to the extent
permitted in Section 10.7(a) hereof) and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed to
be conducted. Borrower shall give Agent thirty (30) days prior written notice
of any proposed change in its corporate name, which notice shall set forth the
new name and Borrower shall deliver to Agent a copy of the amendment to the
Certificate of Incorporation of Borrower providing for the name change
certified by the Secretary of State of the jurisdiction of incorporation of
Borrower as soon as it is available.
10.2 New Collateral Locations. Borrower may open any new location
within the continental United States provided Borrower (a) gives Agent thirty
(30) days prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and
delivered, to Agent such agreements, documents, and instruments as Agent may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements.
10.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, at all times, comply in all material respects
with all laws, rules, regulations, licenses, permits, approvals and orders
applicable to it and duly observe in all material respects all requirements of
any Federal, State or local governmental authority, including, without
limitation, ERISA, the Occupational Safety and Health Act of 1970, as amended,
the Fair Labor Standards Act of 1938, as amended, and all statutes, rules,
regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including, without limitation, all
of the Environmental Laws.
(b) Borrower shall establish and maintain, at its expense, a system
to assure and monitor its continued compliance with all Environmental Laws in
all of its operations, which system shall include annual reviews of such
compliance by employees or agents of Borrower who are familiar with the
requirements of the Environmental Laws. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial
investigations shall be promptly furnished, or caused to be furnished, by
Borrower to Agent. Borrower shall take prompt and appropriate action to
respond to any non-compliance with any of the Environmental Laws and shall
regularly report to Agent on such response.
(c) Borrower shall give both oral and written notice to Agent
immediately upon Borrower's receipt of any notice of, or Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material which
violates or may violate any Environmental Law or requires any report thereof
under any Environmental Law or (ii) any investigation, proceeding, complaint,
order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by Borrower or (B)
the release, spill or discharge, threatened or actual, of any Hazardous
Material or (C) the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or
(D) any other environmental, health or safety matter, which directly affects
Borrower or its business, operations or assets or any properties at which
Borrower transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever
Agent reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of Borrower in order to avoid any
material non-compliance, with any Environmental Law, upon Agent's request
Borrower shall at Borrower's expense: (i) cause an independent environmental
engineer acceptable to Agent to conduct such tests of the site where
Borrower's non-compliance or alleged non-compliance with such Environmental
Laws has occurred as to such non-compliance and prepare and deliver to Agent a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Agent a supplemental
report of such engineer whenever the scope of such non-compliance, or
Borrower's response thereto or the estimated costs thereof, shall change in
any material respect; provided, that, in the event Borrower shall fail to
comply with Agent's request, Agent may take any of the actions described in
this Section 10.3(d) at Borrower's expense.
(e) Borrower shall indemnify and hold harmless Agent and Lenders,
their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees
and legal expenses) directly or indirectly arising out of or attributable to
the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including, without limitation, the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Borrower and
the preparation and implementation of any closure, remedial or other required
plans. Borrower shall cooperate in all respects with Agent and Lenders in
connection with such indemnification by Borrower of Agent and Lenders and the
other persons as provided herein, including, but not limited to, promptly
delivering or causing to be delivered to Agent and Lenders such information as
Agent and Lenders may, in good faith, request, and allowing Agent and Lenders
or their representatives or agents access during normal business hours upon
one (1) day prior notice to any of the premises, personnel or books and
records of Borrower as Agent and Lenders may require, at Borrower's expense.
All covenants and indemnifications in this Section 10.3(e) shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.
10.4 Payment of Taxes and Claims. Borrower shall, and shall cause each
Subsidiary to, duly pay and discharge all taxes, assessments, contributions
and governmental charges upon or against it or its properties or assets,
except for taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its books. Borrower
and its Subsidiaries shall be liable for any tax or penalties imposed on Agent
or any Lender as a result of the financing arrangements provided for herein
and Borrower agrees to indemnify and hold Agent and each Lender harmless with
respect to the foregoing, and to repay to Agent and each Lender on demand the
amount thereof, and until paid by Borrower such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrower or its Subsidiaries to pay any income or
franchise taxes attributable to the income of Agent or any Lender from any
amounts charged or paid hereunder to Agent or any Lender. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
10.5 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Agent as to
form, amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Agent as Agent shall require as proof of such insurance, and,
if Borrower fails to do so, Agent is authorized, but not required, to obtain
such insurance at the expense of Borrower. All such insurance policies shall
provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrower shall cause Agent and each Lender to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Borrower shall obtain non-contributory
lender's loss payable endorsements to all such insurance policies in form and
substance satisfactory to Agent. Such lender's loss payable endorsements
shall specify that the proceeds of such insurance shall be payable to Agent,
for itself and the ratable benefit of Lenders, as their interests may appear
and further specify that Agent, for itself and the ratable benefit of Lenders,
shall be paid regardless of any act or omission by Borrower or any of its
affiliates. At its option, Agent may apply any insurance proceeds received by
Agent at any time to the cost of repairs or replacement of Collateral and/or
to payment of the Obligations, whether or not then due, in any order and in
such manner as Agent may determine or hold such proceeds as cash collateral
for the Obligations.
10.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and its Subsidiaries
in accordance with GAAP and Borrower shall furnish or cause to be furnished to
Agent: (i) within thirty (30) days after the end of each fiscal month,
monthly unaudited consolidated financial statements, and unaudited
consolidating financial statements (including in each case balance sheets,
statements of income and loss and statements of shareholders' equity), all in
reasonable detail, fairly presenting in all material respects the financial
position and the results of the operations of Borrower and its Subsidiaries as
of the end of and through such fiscal month and (ii) within ninety (90) days
after the end of each fiscal year, audited consolidated financial statements
and audited consolidating financial statements of Borrower and its
Subsidiaries (including in each case balance sheets, statements of income and
loss, statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its
Subsidiaries as of the end of and for such fiscal year, together with the
opinion of independent certified public accountants, which accountants shall
be an independent accounting firm selected by Borrower and reasonably
acceptable to Agent that such financial statements have been prepared in
accordance with GAAP, and present fairly in all material respects the results
of operations and financial condition of Borrower and its Subsidiaries as of
the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Agent in writing of the details
of (i) any material loss or damage to any of the Collateral not otherwise
reported by Agent to Borrower pursuant to the terms hereof, or any
investigation, action, suit, proceeding or claim relating to the Collateral or
any other property which is security for the Obligations or which would result
in any material adverse change in Borrower's business, properties, assets,
goodwill or condition, financial or otherwise and (ii) the occurrence of any
Event of Default or act, condition or event which, with the passage of time or
giving of notice or both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent copies of all reports which Borrower
sends to its stockholders generally and copies of all reports and registration
statements which Borrower files with the Securities and Exchange Commission,
any national securities exchange or the National Association of Securities
Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Agent and
Lenders such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrower, as Agent may, from time to time,
reasonably request. Agent and Lenders are hereby authorized to deliver a copy
of any financial statement or any other information relating to the business
of Borrower to any court or other government agency or, subject to Section
14.7 hereof, to any Participant or Assignee or prospective Participant or
Assignee. Borrower hereby irrevocably authorizes and directs all accountants
or auditors to deliver to Agent and Lenders, at Borrower's expense, copies of
the financial statements of Borrower and any reports or management letters
prepared by such accountants or auditors. Any documents, schedules, invoices
or other papers delivered to Agent and Lenders may be destroyed or otherwise
disposed of by Agent and Lenders one (1) year after the same are delivered to
Agent and Lenders except as otherwise designated by Borrower to Agent and
Lenders in writing.
10.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, except,
that Borrower may merge with and into Parent, provided, that, (i) as of the
effective date of the merger and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred, (ii)
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments relating to such merger, including, but not limited
to, the certificate of merger as filed with the appropriate Secretary of
State, (iii) the surviving entity shall immediately upon the effectiveness of
the merger expressly assume in writing pursuant to an agreement, in form and
substance satisfactory to Agent, all of the Obligations and the Financing
Agreements and execute and deliver such other agreements, documents and
instruments as Agent may request in connection therewith, (iv) the surviving
entity shall, immediately before and immediately after giving effect to such
transaction or series of transactions, have a Adjusted Net Worth (including,
without limitation, any indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions)
equal to or greater than the Adjusted Net Worth of Borrower immediately prior
to such transaction or series of transactions and (v) the surviving entity
shall not become obligated with respect to any indebtedness, nor any of its
property become subject to any lien, unless Borrower could incur such
indebtedness or create such lien hereunder; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any stock or indebtedness to any other Person or any of its assets to any
other Person (except for (i) sales of Inventory in the ordinary course of
business, (ii) the sale by Borrower of its approximately 100 acres of
undeveloped farm land in Kokomo, Indiana, (iii) the disposition of worn-out or
obsolete Equipment or Equipment no longer used in the business of Borrower,
and (iv) the sale by Borrower and its Subsidiaries of fixed assets (other than
sales of fixed assets as permitted in Sections 10.7(b)(ii) and (iii) above)
with an aggregate net book value not exceeding $750,000 in any fiscal year of
Borrower or its Subsidiaries; or
(c) form or acquire any Subsidiaries; or
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
10.8 Encumbrances. Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever
on any of its assets or properties, including, without limitation, the
Collateral, except:
(a) the security interests and liens of Agent, for itself and the
ratable benefit of Lenders;
(b) liens securing the payment of taxes not yet payable or liens
for taxes not in excess of $250,000, the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower and with respect to which adequate reserves have been set aside on
its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes or imposed under ERISA or any Environmental Laws) arising in
the ordinary course of Borrower's business to the extent: (i) such liens
secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and
being defended at the sole cost and expense and at the sole risk of the
insurer or being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of real property which do not interfere in any
material respect with the use of such real property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair the
value of the real property which may be subject thereto;
(e) purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on real estate not to exceed
$5,000,000 in the aggregate at any time outstanding so long as such security
interests and mortgages do not apply to any property of Borrower other than
the Equipment or real estate so acquired, and the indebtedness secured thereby
does not exceed the cost of the Equipment or real estate so acquired, as the
case may be;
(f) prior to the Redemption Date, the security interests and liens
in favor of the Existing Senior Note Trustee on the Existing Senior Note
Collateral to secure the indebtedness permitted under Section 10.9(d) below,
provided, that, as of the Redemption Date such security interests and liens
shall be released and terminated in a manner satisfactory to Lender;
(g) liens incurred or deposits made in the ordinary course of the
business of Borrower to the extent required in connection with workers'
compensation, unemployment insurance, social security and other similar laws
consistent with the past practices of Borrower prior to the date hereof;
(h) liens to secure the performance of tenders, contracts (other
than contracts for the payment of money) or leases, or surety and appeal bonds
in each case incurred in the ordinary course of business consistent with the
past practices of Borrower prior to the date hereof; and
(i) the security interests and liens set forth on Schedule 9.4
hereto.
10.9 Indebtedness. Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any obligations or indebtedness, except:
(a) the Obligations;
(b) trade obligations and normal accruals in the ordinary course of
business not more than thirty (30) days past due, or with respect to which
Borrower or any Subsidiary, as the case may be, is contesting in good faith
the amount or validity thereof by appropriate proceedings diligently pursued
and available to Borrower and with respect to which adequate reserves have
been set aside on its books;
(c) purchase money indebtedness (including Capital Leases) to the
extent not incurred or secured by liens (including Capital Leases) in
violation of any other provision of this Agreement;
(d) prior to the Redemption Date, indebtedness of Borrower
evidenced by the Existing Senior Notes issued by Borrower pursuant to the
Existing Senior Note Indenture; provided, that,
(i) such indebtedness shall not exceed the aggregate principal
amount of $50,000,000 (less the aggregate amount of all repayments or
repurchases of principal in respect thereof) plus interest thereon at the rate
set forth in Existing Senior Notes (as in effect on the date hereof) and
prepayment or redemption premiums with respect thereto as set forth in the
Existing Senior Notes (as in effect on the date hereof),
(ii) Borrower shall not make any payments in respect of such
indebtedness, except, that, by no later than September 23, 1996, Borrower
shall redeem all of the Existing Senior Notes in accordance with the terms of
the Existing Senior Note Indenture and repay all of such indebtedness with a
portion of the proceeds received by Borrower from the issuance of the Senior
Notes pursuant to the Borrower Debt Offering and after the application of such
proceeds from the issuance of the Senior Notes, with proceeds of Loans
hereunder, and on and after the Redemption Date, Borrower shall have no
further obligations, liabilities and indebtedness under or in connection with
the Existing Senior Notes, the Existing Senior Note Indenture or any related
agreements, documents or instruments, all of which shall be cancelled and
terminated and of no further force and effect,
(iii) Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of the Existing
Senior Notes, the Existing Senior Note Indenture or any related agreement,
document or instrument,
(B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, except for the redemption and repayment of all of such indebtedness
in accordance with the terms set forth in Section 10.9(d)(ii) above,
(iv) Borrower has sent a notice of redemption as required under and
in accordance with the terms of the Existing Senior Note Indenture and
Borrower shall not revoke, rescind, modify or terminate such notice or take
any other action which would adversely affect the ability or the right of
Borrower to redeem the Existing Senior Notes or repay such indebtedness in
accordance with the terms set forth in Section 10.9(d)(ii) above, and
(v) Borrower shall furnish to Agent all notices, demands or other
materials concerning such indebtedness either received by Borrower or on its
behalf, promptly after receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(e) prior to the Redemption Date, indebtedness of Borrower
evidenced by the Existing Subordinated Notes issued by Borrower pursuant to
the Existing Subordinated Note Indenture, provided, that,
(i) such indebtedness is and shall at all times remain unsecured,
(ii) the Obligations constitute and shall at all times constitute
"Senior Indebtedness" as such term is defined in the Existing Subordinated
Note Indenture,
(iii) such indebtedness shall not exceed $90,000,000 (less the
aggregate amount of all repayments or repurchases of principal in respect
thereof) plus interest thereon at the rate set forth in the Existing
Subordinated Notes (as in effect on the date hereof) and prepayment or
redemption premiums with respect thereto as set forth in the Existing
Subordinated Notes (as in effect on the date hereof),
(iv) such indebtedness is subject to, and subordinate in right of
payment to, the right of Agent and Lenders to receive the prior payment in
full of all of the Obligations to the extent set forth in Section 10.02 of the
Existing Subordinated Note Indenture (as in effect on the date hereof),
(v) Borrower shall not make any payments in respect of such
indebtedness, except, that, by no later than September 23, 1996, Borrower
shall redeem all of the Existing Subordinated Notes in accordance with the
terms of the Existing Subordinated Note Indenture and repay all of such
indebtedness with a portion of the proceeds received by Borrower from the
issuance of the Senior Notes pursuant to the Borrower Debt Offering and after
the application of such proceeds from the issuance of the Senior Notes, with
proceeds of Loans hereunder, and on and after the Redemption Date, Borrower
shall have no further obligations, liabilities and indebtedness under or in
connection with the Existing Subordinated Notes, the Existing Subordinated
Note Indenture or any related agreements, documents and instruments, all of
which shall be cancelled and terminated and of no further force and effect,
(vi) Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change any terms of the Existing
Subordinated Notes, the Existing Subordinated Note Indenture or any related
agreement, document or instrument, or
(B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, except for the redemption and repayment of all of such indebtedness
in accordance with the terms set forth in Section 10.9(e)(v) above,
(vii) Borrower has sent a notice of redemption as required under and
in accordance with the terms of the Existing Subordinated Note Indenture and
Borrower shall not revoke, rescind, modify or terminate such notice or take
any other action which would adversely affect the ability or the right of
Borrower to redeem the Existing Subordinated Notes or repay such indebtedness
in accordance with the terms set forth in Section 10.9(e)(v) above,
(viii) Borrower shall furnish to Agent all notices, demands or other
materials in connection with such indebtedness either received by Borrower or
on its behalf, promptly after the receipt thereof, or sent by Borrower or on
its behalf, concurrently with the sending thereof, as the case may be;
(f) indebtedness of Borrower evidenced by the Senior Notes issued
by Borrower pursuant to the Senior Note Indenture; provided, that,
(i) such indebtedness shall not exceed the aggregate principal
amount of $140,000,000 (less the aggregate amount of all repayments or
purchases of principal in respect thereof) plus interest thereon at the rate
set forth in the Senior Notes (as in effect on the date hereof or as hereafter
amended to reduce such rate) and prepayment and redemption premiums with
respect thereto as set forth in the Senior Notes (as in effect on the date
hereof or as amended to reduce such prepayment or redemption premiums or defer
or extend the due date of any payment thereunder),
(ii) Lender shall have received true, correct and complete copies of
the Senior Note Indenture and all related agreements, documents and
instruments,
(iii) Borrower shall only make regularly scheduled payments of
principal and interest, or to the extent permitted under Section 10.9(f)(v)
below, other payments, in respect of such indebtedness in accordance with the
terms of the Senior Notes as in effect on the date hereof,
(iv) Borrower shall not, directly or indirectly, amend, modify,
alter or change the terms of the Senior Notes, the Senior Note Indenture or
any related agreements, documents or instruments, except that Borrower may,
after not less than ten (10) Business Days prior written notice to Lender,
amend or modify the terms thereof so long as: (A) either (1) such amendment
or modification does not in any manner adversely affect Lender or any rights
of Lender as determined in good faith by Lender and confirmed by Lender to
Borrower in writing or (2) Lender has consented in writing to such amendment
or modification, and (B) such amendment or modification does not relate to the
terms of payment of the indebtedness evidenced thereby, the amount of such
indebtedness, the interest rate or any fees or charges or any collateral with
respect thereto or make any terms thereof more restrictive or burdensome than
as in effect on the date hereof, as determined in good faith by Lender and
confirmed by Lender to Borrower in writing,
(v) Borrower shall not, directly or indirectly, redeem, retire,
defease, purchase or otherwise acquire such indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, or make any other
payments in respect thereof, except:
(A) purchases of Senior Notes required to be made under the
terms of the Senior Note Indenture (as in effect on the date hereof): (1) to
the extent of net cash proceeds received by Borrower from an Asset Sale and
including any Sale and Leaseback Transaction, provided, that, any such net
cash proceeds shall first be applied to the Obligations to the extent such
assets sold or otherwise disposed of pursuant to the Asset Sale constitute
Collateral, (2) as a result of a Change in Control or (3) to the extent of net
cash proceeds received by Borrower from a Public Equity Offering up to the
maximum of thirty-five (35%) percent of the initial aggregate principal amount
of the Senior Notes at a redemption price equal to one hundred eleven and six
hundred twenty-five thousandths (111.625%) percent of the principal amount
thereof plus accrued and unpaid interest to the redemption date, provided,
that, after giving effect thereto, at least $85,000,000 aggregate principal
amount of Senior Notes remain outstanding,
(B) purchases of Senior Notes at the option of Borrower in
open market transactions, provided, that, each of the following conditions is
satisfied as determined by Agent as of the date of each such purchase and
after giving effect thereto: (1) no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default, shall exist or have occurred, (2) either: (aa) the amounts used to
pay for the purchase of the Senior Notes consist only of the net cash proceeds
received by Borrower from a Public Equity Offering or (bb) there are no Loans
outstanding, (3) Excess Availability shall be not less than $5,000,000, (4)
Lender shall have received not less than two (2) Business Days prior written
notice of the intent of Borrower to make any such purchases,
(vi) Borrower shall furnish to Lender all notices, demands or other
materials concerning such indebtedness either received by Borrower or on its
behalf, promptly after receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
(g) indebtedness of each Foreign Subsidiary in an aggregate amount
not to exceed $2,000,000 at any one time outstanding (such amount to be
determined at the date of incurrence and without regard to subsequent
fluctuations in exchange rates); provided, that, (i) indebtedness of all
Foreign Subsidiaries shall not exceed $6,000,000 in the aggregate at any one
time outstanding (such amount to be determined at the date of incurrence and
without regard to subsequent fluctuations in exchange rates) and (ii) none of
such indebtedness shall be secured by any property of Borrower or any of its
Subsidiaries, other than property of Foreign Subsidiaries;
(h) indebtedness arising after the date hereof evidenced by the
Employee Notes; provided, that, Borrower should deliver to Agent true, correct
and complete copies of any Employee Notes promptly upon the execution thereof
by Borrower;
(i) indebtedness of Borrower to its Subsidiaries arising pursuant
to loans by such Subsidiaries to Borrower permitted pursuant to Section 10.10
below; and
(i) indebtedness of Subsidiaries of Borrower to other Subsidiaries
of Borrower arising pursuant to loans by such Subsidiaries to such other
Subsidiaries permitted pursuant to Section 9.10 below.
10.10 Loans, Investments, Guarantees, Etc. Borrower shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the stock or
indebtedness or all or a substantial part of the assets or property of any
person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the indebtedness, performance, obligations or
dividends of any Person or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in (i) readily marketable obligations of or
obligations guaranteed by the United States of America or issued by any agency
thereof and backed by the full faith and credit of the United States of
America, (ii) readily marketable direct obligations issued by any state of the
United States of America or any political subdivision thereof having a rating
in one of the two highest rating categories obtainable from either Moody's
Investors Service, Inc. or Standard & Poor's Corporation, (iii) commercial
paper having a rating in one of the two highest rating categories of Moody's
Investors Services, Inc. or Standard & Poor's Corporation, (iv) certificates
of deposit issued by, bankers' acceptances and deposit accounts of, and time
deposits with, commercial banks of recognized standing chartered in the United
States of America or Canada with capital, surplus and undivided profits
aggregating in excess of $500,000,000, (v) agreements to sell or repurchase
securities of the kind described in clauses (i) and (ii) above, and (vi)
shares of money market funds that invest solely in investments of the kind
described in clauses (i) through (v) above; provided, that, as to any of the
foregoing, unless waived in writing by Lender, Borrower shall take such
actions as are deemed necessary by Agent to perfect the security interest of
Agent, for itself and ratably on behalf of Lenders in such investments (other
than such investments in the Senior Note Collateral Account and the Excess
Refinancing Proceeds Account);
(c) the existing equity investments of Borrower as of the date
hereof in its Subsidiaries as of the date hereof;
(d) prior to the Redemption Date, the investments of Borrower in
the Existing Senior Note Collateral Account and the Existing Excess
Refinancing Proceeds Account; provided, that, (i) Borrower shall not, and
shall not permit any Subsidiary to, after the date hereof, make any payments
into or deposits of any further cash or other property into the Existing
Excess Refinancing Proceeds Account, (ii) Borrower shall not, and shall not
permit any Subsidiary to, after the date hereof, make any payments into or
deposits of any further cash or other property into the Existing Senior Note
Collateral Account except as required under the terms of the Existing Senior
Note Indenture as in effect on the date hereof and (iii) as of the Redemption
Date, all such investments shall not be subject to any security interest, lien
or other claim in connection with the Existing Senior Notes or the Existing
Senior Note Indenture;
(e) loans by any Subsidiary of Borrower to Borrower or loans by any
Subsidiary of Borrower to any other Subsidiary of Borrower (and, as to any
loans to Borrower, Borrower shall not repay all or any portion of such loans
without the prior written consent of Agent);
(f) stock or obligations issued to Borrower by any Person (or the
representative of such Person) in respect of indebtedness of such Person owing
to Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by Borrower
as Agent may request;
(g) obligations of account debtors to Borrower arising from
Accounts which are past due evidenced by a promissory note made by such
account debtor payable to Borrower; provided, that, promptly upon the receipt
of the original of any such promissory note by Borrower, such promissory note
shall be endorsed to the order of Agent, for itself and ratably on behalf of
Lenders, by Borrower and promptly delivered to Agent as so endorsed;
(h) loans and advances by Borrower or its Subsidiaries to employees
of Borrower or its Subsidiaries not to exceed the principal amount of $100,000
in the aggregate at any time outstanding for: (i) reasonable and necessary
work-related travel or other ordinary business expenses to be incurred by such
employees in connection with their work for Borrower and (ii) reasonable and
necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(i) guarantees by any Subsidiary of Borrower of the Obligations in
favor of Agent, for itself and the ratable benefit of Lenders; and
(j) the guarantees set forth in the Information Certificate.
10.11 Dividends and Redemptions. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, declare or pay any dividends
on account of shares of any class of capital stock of Borrower now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums
for such purpose, or redeem, retire, defease, purchase or otherwise acquire
any shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than common
stock or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to
do any of the foregoing, except, that:
(a) any Subsidiary of Borrower may declare and pay any dividends or
make any other distributions to its shareholders in respect of shares of any
class of capital stock; and
(b) Borrower may declare and pay any dividends or make any other
distributions to its shareholders in respect of shares of any class of Capital
Stock, provided, that, each of the following conditions is satisfied, as
determined in good faith by Agent:
(i) no Event of Default shall have occurred and be continuing
and such declaration and payment of dividends or other distribution to its
shareholders shall not be an event which is, or after notice or lapse of time
or both, would be, an event of default under the terms of any indebtedness of
Borrower or its Subsidiaries,
(ii) immediately before and immediately after giving effect to
such transaction on a pro forma basis, Borrower could incur $1.00 of
additional indebtedness (other than Permitted Indebtedness as such term is
defined in the Senior Note Indenture) under the terms of Section 10.8 of the
Senior Note Indenture,
(iii) on the date of any such payment and after giving effect
thereto, Excess Availability shall be not less than $5,000,000, and
(iv) the aggregate amount of all such dividends or other such
distributions to its shareholders declared or made after the date hereof shall
not exceed the sum of: (A) fifty (50%) percent of the aggregate cumulative
Consolidated Net Income of Borrower accrued on a cumulative basis during the
period beginning on the first day of Borrower's fiscal quarter commencing
prior to the date hereof and ending on the last day of Borrower's last fiscal
quarter ending prior to the date of the payment of the dividends or other such
distributions to its shareholders (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, minus one hundred (100%) percent of
such loss), plus (B) the aggregate net cash proceeds received after the date
hereof by Borrower as capital contributions to Borrower (other than from any
of its Subsidiaries), plus (C) the aggregate net cash proceeds received after
the date hereof by Borrower from the issuance or sale (other than to any of
its Subsidiaries) of its shares of Qualified Capital Stock or any options,
warrants or rights to purchase such shares of Qualified Capital Stock of
Borrower (except, in each case, to the extent such proceeds are used to
purchase, redeem or otherwise retire Capital Stock or other indebtedness),
plus (D) the aggregate net cash proceeds received after the date hereof by
Borrower (other than from any of its Subsidiaries) upon the exercise of any
options or warrants to purchase shares of Qualified Capital Stock of Borrower,
plus (E) the aggregate net cash proceeds received after the date hereof by
Borrower from debt securities or Redeemable Capital Stock that have been
converted into or exchanged for Qualified Capital Stock of Borrower, to the
extent such debt securities or Redeemable Capital Stock are originally sold
for cash, plus the aggregate net cash proceeds received by Borrower at the
time of such conversion or exchange, provided, that, any such aggregate cash
proceeds used by Borrower to redeem or repurchase Senior Notes shall not be
included in the amounts provided for herein;
(c) Borrower may declare and pay dividends or make other
distributions to Parent in respect of the shares of Capital Stock of Borrower
owned by Parent to permit Parent to pay Federal, State and local income taxes
applicable to Borrower and its Subsidiaries; provided, that, (i) such payments
shall not exceed the lesser of (A) actual payments by Parent for Federal,
State and local income taxes and (B) the amount of taxes which would have been
payable by Borrower if it were the parent of a separate affiliated group of
which its Subsidiaries were members and (ii) the proceeds of such dividends or
other distributions shall be used by Parent to pay such taxes within five (5)
business days after the receipt of such proceeds by Parent;
(d) Borrower may declare and pay dividends or make other
distributions to Parent in respect of the shares of Capital Stock of Borrower
owned by Parent to pay franchise taxes and reasonable administrative expenses
(including reasonable professional fees and expenses) that benefit Borrower or
its Subsidiaries; provided, that, (i) no Event of Default, or act, condition
or event which with notice or passage of time or both would constitute an
Event of Default shall exist or have occurred, (ii) the aggregate amount of
all such franchise taxes and administrative expenses paid in any fiscal year
of Borrower shall not exceed $130,000, (iii) such administrative expenses
shall not include any amounts for management services rendered by Morgan Lewis
Githens & Ahn, Inc., or its Affiliates or management services provided by
third parties which are duplicative of any such services rendered by Morgan
Lewis Githens & Ahn, Inc., or its Affiliates for the benefit of Borrower or a
Subsidiary of Borrower, and (iv) the proceeds of such dividends or other
distributions shall be used by Parent to pay such taxes and expenses within
five (5) business days after the receipt of such proceeds by Parent;
(e) Borrower may declare and pay dividends or make other
distributions to Parent in respect of the shares of Capital Stock of Borrower
owned by Parent to permit the repurchase of Parent Common Stock or options to
purchase Parent Common Stock from employees of Borrower (other than employees
who are Affiliates or employees of MLGAL Partners L.P. (the sole general
partner of MLGA Fund II, L.P.) or any successor partnership into which it is
reorganized and its Affiliates); provided, that, (i) no Event of Default or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred, (ii) such
dividends or other distributions shall be in the form of cash or Employee
Notes and the amount of cash expended for all such repurchases in any fiscal
year of Borrower shall not exceed the Annual Cash Amount for such fiscal year
plus the unexpended Annual Cash Amount, if any, for the immediately preceding
fiscal year (it being understood that a repurchase in a specified fiscal year
shall be charged first to the unexpended Annual Cash Amount, if any,
pertaining to the preceding fiscal year and then to the Annual Cash Amount, if
any, pertaining to such fiscal year), (iii) each such repurchase is occasioned
by the death, permanent disability or termination of employment of the holder
of Parent Common Stock or options to purchase Parent Common Stock pursuant to
the Subscription Agreement, (iv) such repurchase occurs during the time during
which Borrower has an option to repurchase such shares under such Subscription
Agreement and the amount of the repurchase price specified in such
Subscription Agreement (subject to any adjustment to such purchase price
thereunder resulting from a future recapitalization (or transaction in the
nature of a recapitalization) of the Borrower), (v) if Employee Notes have
been issued in connection with the repurchase of Parent Common Stock or
options to purchase Parent Common Stock in accordance with the foregoing, any
unexpended Annual Cash Amount that is available to the Borrower for the
payment of dividends or other distributions to Parent pursuant to this Section
10.11(e) may be used to repay such Employee Notes (without any prepayment
premium), and the Annual Cash Amount available to the Borrower for the payment
of such distributions shall be reduced by the amount of the principal paid in
connection with the prepayment of such Employee Notes, and (vi) the proceeds
of such dividends or other distributions are used by Parent to repurchase
Parent Common Stock or options to purchase Parent Common Stock as provided
above within five (5) Business Days after the receipt of such proceeds by
Parent.
10.12 Transactions with Affiliates. Borrower shall not enter into any
transaction for the purchase, sale or exchange of property or the rendering of
any service to or by any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair
and reasonable terms no less favorable to the Borrower than Borrower would
obtain in a comparable arm's length transaction with an unaffiliated person;
provided, that, the foregoing shall not apply to any transfer by any
Subsidiary of Borrower of the properties or assets of such Subsidiary to
Borrower or any other Subsidiary of Borrower. Any cash or other property or
consideration required to be paid or furnished by Borrower to any Subsidiary
of Borrower as a result of such transfer of properties or assets to Borrower
shall be on fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person.
10.13 Proceeds of Borrower Debt Offering; Redemption of Existing
Notes.
(a) All net cash proceeds from the issuance and sale by Borrower of
the Senior Notes pursuant to the Borrower Debt Offering shall be segregated
from all other funds of Borrower and held in trust in the Redemption Escrow
Accounts, which accounts have been established and shall be used solely for
the purpose of holding such funds. In no event shall the funds held in such
accounts be commingled with Borrower's own funds. Borrower shall not, and
shall not permit any of its Subsidiaries or Affiliates to, withdraw any
amounts held in the Redemption Escrow Accounts, except for the purpose solely
of the redemption or repayment in full of all obligations, liabilities and
indebtedness of Borrower evidenced or arising under or in connection with
Existing Notes in accordance with the terms thereof and in accordance with the
terms of the Existing Senior Note Indenture, the Existing Subordinated Note
Indenture and all related agreements, documents and instruments. No consent
or approval of any governmental or regulatory authority, nor any consent or
approval of any other third party is or shall be necessary for the payment of
the amounts held in such account to the holders of the Existing Notes for the
payment and satisfaction in full of such indebtedness. Borrower shall give
the Existing Senior Note Trustee and Existing Subordinated Note Trustee the
irrevocable and express right and authorization to withdraw the amounts on
deposit in the account for the purpose of the redemption or repayment of all
such obligations. Borrower shall not create, incur, assume or suffer to exist
any right of setoff, pledge, lien, security interest, charge or other
encumbrance or claim of any nature whatsoever on or with respect to any of the
amounts on deposit in such account or any restriction, limitation or condition
relative to the transfer thereof other than as set forth herein.
(b) By no later than September 23, 1996, Borrower shall redeem or
cause the redemption of the Existing Notes and the payment and unconditional
satisfaction in full of all obligations, liabilities and indebtedness of
Borrower evidenced by or arising under or in connection with the Existing
Notes, the Existing Senior Note Indenture and the Existing Subordinated Note
Indenture and all related agreements, documents and instruments as required
under the terms hereof. All amounts required to be paid to so redeem the
Existing Notes (excluding expenses) shall not exceed $148,500,000 and shall be
paid from the funds held in the Redemption Escrow Accounts which constitute
the proceeds received by Borrower from the issuance of the Senior Notes
pursuant to the Borrower Debt Offering and from proceeds of certain Loans
hereunder on the terms and conditions provided for herein.
(c) On the Redemption Date, Agent shall receive evidence, in form
and substance reasonably satisfactory to Agent, that (i) all of the Existing
Senior Notes shall have been redeemed in accordance with the terms of the
Existing Senior Note Indenture and all obligations, liabilities and
indebtedness of Borrower evidenced by or arising under or in connection with
the Existing Senior Notes, the Existing Senior Note Indenture and all related
agreements, documents and instruments have been paid and satisfied in full in
an amount not to exceed $55,500,000, (ii) all of the Existing Senior Notes
have been redeemed with a portion of the net cash proceeds received by
Borrower from the Borrower Debt Offering, together with interest or dividends
thereon, and together with the proceeds of the initial Loans on the Redemption
Date in accordance with the terms and conditions contained herein, (iii) the
Existing Senior Notes and the Existing Senior Note Indenture have been
cancelled and terminated and are of no further force and effect and Borrower
and its Affiliates have no further obligations, liabilities or indebtedness in
connection therewith, and (iv) the Existing Senior Note Trustee and the
holders of the Existing Senior Notes have terminated and released any and all
of their respective security interests or other interests pursuant to such
arrangements in and to any assets and properties of Borrower and any Obligor,
and shall have delivered termination and release documents to effectuate the
same, including, but not limited to, UCC-3 termination statements for all
financing statements previously filed by or on behalf of any of them and
satisfactions and releases of mortgages, deed to secure debt and deeds of
trust for all mortgages, deeds to secure debt and deeds of trust previously
filed by or on behalf of any of them.
(d) On the Redemption Date, Agent shall receive evidence, in form
and substance reasonably satisfactory to Agent, that (i) all of the Existing
Subordinated Notes have been redeemed in accordance with the terms of the
Existing Subordinated Note Indenture and all obligations, liabilities and
indebtedness of Borrower evidenced by or arising under or in connection with
the Existing Subordinated Notes have been paid and satisfied in full in an
amount not to exceed $93,000,000, (ii) all of the Existing Subordinated Notes
have been redeemed with a portion of the net cash proceeds received by
Borrower from the Borrower Debt Offering, together with any interest or
dividends thereon, and together with the proceeds of the initial Loans on the
Redemption Date in accordance with the terms and conditions contained herein
and (iii) the Existing Subordinated Notes and the Existing Subordinated Note
Indenture have been cancelled and terminated and are of no further force and
effect and Borrower and its Affiliates have no further obligations,
liabilities or indebtedness in connection therewith.
10.14 Compliance with ERISA.
(a) Borrower shall not with respect to any "employee pension
benefit plans" maintained by Borrower or any of its ERISA Affiliates: (i)
terminate any of such employee pension benefit plans so as to incur any
liability to the Pension Benefit Guaranty Corporation established pursuant to
ERISA, (ii) allow or suffer to exist any prohibited transaction involving any
of such employee pension benefit plans or any trust created thereunder which
would subject Borrower or such ERISA Affiliate to a tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA, (iii) fail to pay to any such employee pension benefit plan any
contribution which it is obligated to pay under Section 302 of ERISA, Section
412 of the Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any
such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (vi) incur any withdrawal liability with
respect to any multiemployer pension plan.
(b) As used in this Section 10.14, the term "employee pension
benefit plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in
ERISA, and the term "prohibited transaction" shall have the meaning assigned
to it in Section 4975 of the Code and ERISA.
10.15 Adjusted Net Worth. Borrower shall, at all times, maintain
Adjusted Net Worth of not less than $1,000,000.
10.16 Excess Availability. At all times prior to the Redemption Date,
the Excess Availability shall be, after giving effect to any Loans and Letter
of Credit Accommodations requested by Borrower, not less than the amount equal
to: (a) the aggregate redemption price and all other amounts required to
redeem the Existing Notes, and pay and satisfy in full all of the obligations,
liabilities and indebtedness of Borrower evidenced by or arising under or in
connection with the Existing Notes minus (b) the amounts held in the
Redemption Escrow Accounts constituting proceeds received by Borrower from the
issuance of the Senior Notes pursuant to the Borrower Debt Offering which
shall be available to pay the redemption price and all other amounts required
to redeem the Existing Notes and pay and satisfy in full all of the
obligations, liabilities and indebtedness of Borrower evidenced by or arising
under or in connection with the Existing Notes. For purposes of this Section
10.16, the Maximum Credit used in the calculation of Excess Availability shall
be $50,000,000.
10.17 Costs and Expenses. Borrower shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's
rights of Agent, for itself and the ratable benefit of Lenders, in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial
Code financing statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b) costs and
expenses and fees for title insurance and other insurance premiums,
environmental audits, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees; (c) costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (d) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and
liens of Agent, for itself and the ratable benefit of Lenders, selling or
otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending
any claims made or threatened against Agent and/or Lenders arising out of the
transactions contemplated hereby and thereby (including, without limitation,
preparations for and consultations concerning any such matters); (g) all
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent during the course of periodic field examinations of the
Collateral and Borrower's operations, plus a per diem charge at the rate of
$600 per person per day for Agent's examiners in the field and office; and (h)
the fees and disbursements of counsel (including legal assistants) to Agent
and Lenders in connection with any of the foregoing.
10.18 Further Assurances. At the request of Agent at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof, of Agent, for itself and the ratable
benefit of Lenders, in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing
Agreements. Agent may at any time and from time to time request a certificate
from an officer of Borrower representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied. In the event of such request by Agent, each Lender may, at its
option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied. Where
permitted by law, Borrower hereby authorizes Agent and Lenders to execute and
file one or more UCC financing statements signed only by Agent or any of
Lenders.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES
11.1 Events of Default. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations or fails
to perform any of the terms, covenants, conditions or provisions contained in
this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact made by
Borrower to Agent and Lenders in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any
material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent and any or all of Lenders;
(d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $500,000 in any one case or in excess of
$1,000,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower
or any Obligor or any of their assets;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or Borrower or any Obligor, which is a
partnership or corporation, dissolves or suspends or discontinues doing
business;
(f) Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law
or in equity) is filed against Borrower or any Obligor or all or any part of
its properties and such petition or application is not dismissed within thirty
(30) days after the date of its filing or Borrower or any Obligor shall file
any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a
law or equity) is filed by Borrower or any Obligor or for all or any part of
its property; or
(i) any default by Borrower or any Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing
to any person other than Agent or any of Lenders, or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter
of credit, indemnity or similar type of instrument in favor of any person
other than Agent or any of Lenders (including, without limitation, the
Existing Senior Note Indenture, the Existing Subordinated Note Indenture and
the Senior Note Indenture), which default continues for more than the
applicable cure period, if any, with respect thereto, or any default by
Borrower or any Obligor under any material contract, lease, license or other
obligation to any person other than Lender, which default continues for more
than the applicable cure period, if any, with respect thereto;
(j) a Change of Control shall occur;
(k) the indictment or threatened indictment of Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings (other than proceedings contemplated by
Section 11.1(g) hereof) against Borrower or any Obligor, pursuant to which
statute or proceedings the penalties or remedies sought or available include
forfeiture of any of the property of Borrower or such Obligor;
(l) there shall be a material adverse change in the business or
assets or the occurrence of any event or condition which, in Agent's good
faith determination, has a reasonable likelihood of resulting in a material
adverse change in the business or assets of Borrower or any Obligor after the
date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
11.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the Uniform Commercial Code
and other applicable law, all of which rights and remedies may be exercised
without notice to or consent by Borrower or any Obligor, except as such notice
or consent is expressly provided for hereunder or required by applicable law.
All rights, remedies and powers granted to Agent and Lenders hereunder, under
any of the other Financing Agreements, the Uniform Commercial Code or other
applicable law, are cumulative, not exclusive and enforceable, in Agent's
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a
court of equity for an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing Agreements. Agent
and Lenders may, at any time or times, proceed directly against Borrower or
any Obligor to collect the Obligations without prior recourse to the
Collateral. Agent, for itself and the ratable benefit of Lenders, is hereby
granted a license or other right to use, without charge, the Borrower's
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion (i)
accelerate the payment of all Obligations and demand immediate payment thereof
to Agent (provided, that, upon the occurrence of any Event of Default
described in Sections 11.1(g) and 11.1(h), all Obligations shall automatically
become immediately due and payable), (ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which any of
the Collateral may be located and take possession of the Collateral or
complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrower, at Borrower's expense, to assemble and
make available to Agent any part or all of the Collateral at any place and
time designated by Agent, (iv) collect, foreclose, receive, appropriate,
setoff and realize upon any and all Collateral, (v) remove any or all of the
Collateral from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition thereof or for
any other purpose, (vi) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including, without limitation, entering
into contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms
as Agent may deem reasonable, for cash, upon credit or for future delivery,
with Agent or any Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from
any right or equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Agent
upon credit terms or for future delivery, the Obligations shall not be reduced
as a result thereof until payment therefor is finally collected by Agent, for
itself and the ratable benefit of Lenders. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Agent to Borrower
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be made, shall
be deemed to be reasonable notice thereof and Borrower, to the extent
permitted by law, waives any other notice. In the event Agent institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required.
(c) In the event that Borrower is for any reason deemed domiciled
in or any of the Collateral is located in, the State of Louisiana or any
security interest created by this Agreement or any of the other Financing
Agreements is required to be governed by, and interpreted in accordance with,
the laws of the State of Louisiana, if an Event of Default occurs:
(i) Agent and Lenders shall have all remedies available to a
secured party under the Louisiana Commercial Laws Secured Transaction, La.
R.S. 10:9-101 et seq. in addition to the remedies provided in this Agreement
and any of the other Financing Agreements or any other applicable law.
(ii) For purposes of executory process under the laws of the
State of Louisiana, Borrower hereby acknowledges the Obligations and confesses
judgment in favor of Agent, for itself and the ratable benefit of Lenders, for
the full amount of the Obligations, including, without limitation, principal,
interest, expenses, reasonable attorneys' fees, and all other fees, and
consents that judgment be rendered and signed whether during term of court or
in vacation for the full amount of the Obligations.
(iii) Borrower hereby expressly waives, to the extent
permitted by Louisiana law: (A) the benefit of appraisement provided for in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure
conferring such benefits, (B) the demand and three (3) days delay accorded by
Articles 2639 and 2721 of the Louisiana Code of Civil Procedure, (C) the
notice of seizure required by Articles 2293 and 2721 of the Louisiana Code of
Civil Procedure, (D) the three (3) days delay provided in Articles 2331 and
2722 of the Louisiana Code of Civil Procedure, (E) the benefit of the other
provisions of Articles 2331, 2722 and 2723 of the Louisiana Code of Civil
Procedure, (F) the benefit of the provisions of any other articles of the
Louisiana Code of Civil Procedure not specifically mentioned above, and (G)
all rights of division and discussion with respect to the Obligations.
(iv) In the event Agent elects, at its option, to enter suit
via ordinaria on the Obligations, in addition to the foregoing confession of
judgment, Borrower hereby waives citation, other legal process, and legal
delays and hereby consents that judgment for all amounts due on the
Obligations, including, without limitation, principal, interest, expenses,
attorneys' fees and all other fees, be rendered and signed immediately,
whether during the court's term or during vacation.
(v) Pursuant to La. R.S. 9:5136 et seq., Borrower hereby
designates Agent or any employee, agent, or other person named by Agent at the
time of seizure to serve as keeper, pending judicial sale, of any Collateral
of which seizure is effected by Agent under the laws of the State of
Louisiana. The keeper's fees shall be determined by the court before which
the proceedings are pending and shall be secured by this Agreement and the
other Financing Agreements.
(vi) At any time on or after the occurrence of an Event of
Default, Agent and Lenders may proceed by summary process against Borrower to
obtain possession of any instruments and documents included in the Collateral
to exercise Agent's and Lender's right to sell the instruments and documents
pursuant to La.R.S. 10:9-503(1)(b), to enforce the instruments and documents
as provided by La. R.S. 10:9-207 and 9-502, or to obtain the endorsement of
Borrower on the instruments and documents. Agent and Lenders may sell, in the
manner and with the effect as provided by La. R.S. 10:9-504, the following
Collateral: (A) goods included in the Collateral or that are in Agent's or
any Lender's possession or that have been voluntarily delivered or surrendered
to Agent or any Lender by Borrower, either before or after an Event of Default
and (B) instruments, documents and Accounts included in the Collateral. To
the maximum extent permitted by applicable law, Borrower waives all claims,
damages and demands against Agent and Lender arising out of the repossession,
retention, or sale of the Collateral, except those resulting from actions
taken or not taken by Agent and Lenders that are found pursuant to a final
non-appealable order of a court of competent jurisdiction to constitute gross
negligence or wilful misconduct.
(vii) Borrower agrees that the Collateral may be sold at one
or more sales, whether judicial, public or private. Borrower agrees that in
the event of a judicial sale of Collateral, notice of the judicial sale given
pursuant to the Louisiana Revised Statutes and the Louisiana Code of Civil
Procedure is reasonable notification of the sale. In the event of a public
sale of the Collateral, Agent shall have the right to conduct the sale on
Borrower's premises or elsewhere and shall have the right to use Borrower's
premises without charge for such sale for such time or times as Agent may see
fit.
(viii) Agent and Lenders shall have the right to cause all and
singular the Collateral to be seized and sold under executory process without
appraisement, appraisement being hereby expressly waived, as an entirety or in
parcels, as Agent may determine, to the highest bidder for cash.
(d) Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of
the Collateral to payment of the Obligations, in whole or in part and in such
order as Agent may elect, whether or not then due. Borrower shall remain
liable to Agent for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the occurrence of an Event
of Default, Agent and Lenders may, at their option, without notice, (i) cease
making Loans or arranging for Letter of Credit Accommodations or reduce the
lending formulas or amounts of Loans and Letter of Credit Accommodations
available to Borrower and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made
by Agent or Lenders to Borrower.
SECTION 12. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
12.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Illinois
(without giving effect to principles of conflicts of law).
(b) Borrower, Agent and Lenders irrevocably consent and submit to
the non-exclusive jurisdiction of the Circuit Court of Cook County, Illinois
and the United States District Court for the Northern District of Illinois and
waive any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Agent
shall have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Agent deems necessary
or appropriate in order to realize on the Collateral or to otherwise enforce
its rights against Borrower or its property).
(c) To the extent permitted by law, Borrower hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by certified mail (return receipt requested) directed to
its address set forth on the signature pages hereof and service so made shall
be deemed to be completed five (5) days after the same shall have been so
deposited in the U.S. mails, or, at Agent's option, by service upon Borrower
in any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, Borrower shall appear in answer to such
process, failing which Borrower shall be deemed in default and judgment may be
entered by Agent against Borrower for the amount of the claim and other relief
requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. BORROWER, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT BORROWER, AGENT OR ANY OF LENDERS MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to
Borrower (whether in tort, contract, equity or otherwise) for losses suffered
by Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order binding on Agent, that the
losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Agent and each of Lenders shall
be entitled to the benefit of the rebuttable presumption that it acted in good
faith and with the exercise of ordinary care in the performance by it of the
terms of this Agreement.
12.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on Borrower which Agent may elect to give
shall entitle Borrower to any other or further notice or demand in the same,
similar or other circumstances.
12.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Agent. Agent shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Agent. Any such waiver shall be enforceable only to the extent specifically
set forth therein. A waiver by Agent of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Agent or any Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
12.4 Waiver of Counterclaims. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
12.5 Indemnification. Borrower shall indemnify and hold Agent, Lenders
and their directors, agents, employees and counsel, harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant
thereto, including, without limitation, amounts paid in settlement, court
costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may
be unenforceable because it violates any law or public policy, Borrower shall
pay the maximum portion which it is permitted to pay under applicable law to
Agent and/or the affected Lender(s) in satisfaction of indemnified matters
under this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 13. THE AGENT
13.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes Agent to act as its agent hereunder and under the
other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent
(a) shall have no duties or responsibilities except those expressly set forth
in this Agreement and in the other Financing Agreements, and shall not by
reason of this Agreement or any other Financing Agreement be a trustee or
fiduciary for any Lender; (b) shall not be responsible to Lenders for any
recitals, statements, representations or warranties contained in this
Agreement or in any other Financing Agreement, or in any certificate or other
document referred to or provided for in, or received by any of them under,
this Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to or provided
for herein or therein or for any failure by Borrower or any Obligor or any
other Person to perform any of its obligations hereunder or thereunder; and
(c) shall not be responsible to Lenders for any action taken or omitted to be
taken by it hereunder or under any other Financing Agreement or under any
other document or instrument referred to or provided for herein or therein or
in connection herewith or therewith, except for its own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction. Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it in good faith. Agent may deem and treat
the payee of any note as the holder thereof for all purposes hereof unless and
until the assignment thereof pursuant to an agreement (if and to the extent
permitted herein) in form and substance satisfactory to Agent shall have been
delivered to and acknowledged by Agent.
13.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent. As to any
matters not expressly provided for by this Agreement or any other Financing
Agreement, Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with
instructions given by Required Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Lenders and any action taken
or failure to act pursuant thereto shall be binding on all Lenders.
13.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
the Loans and Letter of Credit Accommodations hereunder, unless and until
Agent has received written notice from a Lender or Borrower specifying such
Event of Default or any unfulfilled condition precedent, and stating that such
notice is a "Notice of Default or Failure of Condition". In the event that
Agent receives such a Notice of Default or Failure of Condition, Agent shall
give prompt notice thereof to Lenders. Agent shall (subject to Section 13.7)
take such action with respect to any such Event of Default or failure of
condition precedent as shall be directed by Required Lenders; provided that,
unless and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to or by reason of such Event of Default or failure of
condition precedent, as it shall deem advisable in the best interest of
Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 5 of this
Agreement to the contrary, the Agent may, but shall have no obligation to,
continue to make Loans and issue or cause to be issued Letter of Credit
Accommodations for the ratable account and risk of Lenders from time to time
if Agent believes making such Loans or issuing or causing to be issued such
Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or
any Obligor or any of the Collateral or other property of Borrower or any
Obligor.
13.4 Rights as a Lender. With respect to its Commitment and the Loans
made and Letter of Credit Accommodations issued or caused to be issued by it
(and any successor acting as Agent), so long as the Agent shall be a Lender
hereunder, it shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Agent in its individual capacity as Lender hereunder. Congress (and
any successor acting as Agent) and its Affiliates may (without having to
account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of business with Borrower and Obligors (and any
of their Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from
Borrower and Obligors for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
13.5 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting the Obligations of
Borrower hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out
of this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent
is obligated to pay hereunder) or the enforcement of any of the terms hereof
or thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined
by a final non-appealable judgment of a court of competent jurisdiction.
13.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrower and any Obligors and has made its own decision
to enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Lender, 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 or
any of the other Financing Agreements. Agent shall not be required to keep
itself informed as to the performance or observance by Borrower or any Obligor
of any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of Borrower or any Obligor. Agent will
use reasonable efforts to provide Lenders with any information received by
Agent from Borrower which is required to be provided to Lenders hereunder,
with a copy of any Notice of Default or Failure of Condition received by Agent
from Borrower or any Lender and with a copy of any notice of an Event of
Default delivered by Agent to Borrower; provided, that, Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent's own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not have
any duty or responsibility to provide any Lender with any other credit or
other information concerning the affairs, financial condition or business of
Borrower or any of its Subsidiaries (or any of their affiliates) that may come
into the possession of Agent or any of its Affiliates.
13.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases
be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from Lenders of
their indemnification obligations under Section 13.5 hereof against any and
all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
13.8 Resignation of Agent. Subject to the appointment and acceptance of
a successor Agent as provided below, Agent may resign at any time by giving
notice thereof to Lenders and Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent with the
consent of Borrower, which consent shall not be unreasonably withheld,
conditioned or delayed. If no successor Agent shall have been so appointed by
the Required Lenders, and/or so consented to by Borrower and the appointment
accepted by such successor Agent within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on
behalf of Lenders, appoint (without the consent of Borrower) a successor Agent
that shall be a bank, commercial finance company or other financial
institution. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent in accordance with the terms hereof, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 13
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
13.9 Consents and Releases of Collateral under Financing Agreements.
Except as otherwise provided in Section 14.9 hereof with respect to certain
amendments or modifications to this Agreement, Agent may consent to any
modification, supplement or waiver under any of the Financing Agreements;
provided, that, without the prior consent of each Lender, Agent shall not
release any Collateral or otherwise terminate any security interest in or lien
upon any of the Collateral under any of the Financing Agreements, except that
no such consent shall be required, and Agent is hereby authorized (i) to
release any security interest in or lien upon any of the Collateral which is
the subject of a disposition permitted hereunder or under the other Financing
Agreements, or (ii) to release, in any fiscal year of Borrower, any security
interest in or lien upon any of the Collateral the value of which does not
exceed $5,000,000.
13.10 Collateral Matters.
(a) Except as otherwise expressly provided for in this Agreement,
Agent shall have no obligation whatsoever to any Lender or any other Person to
investigate, confirm or assure that the Collateral exists or is owned by
Borrower or any Obligor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular Availability Reserves are appropriate, or
that the liens and security interests granted to Agent herein or pursuant
hereto or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in
any of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent's own interest in the Collateral as a Lender and that Agent shall have
no duty or liability whatsoever to any other Lender, other than liability for
its own gross negligence or willful misconduct as determined by a final non-
appealable judgment of a court of competent jurisdiction.
(b) Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting the security interest of Agent in assets which, in
accordance with Article 9 of the Uniform Commercial Code can be perfected only
by possession. Should any Lender (other than Agent) obtain possession of any
such Collateral, such Lender shall notify Agent thereof and, promptly upon
Agent's request therefor, shall deliver such Collateral to Agent or in
accordance with Agent's instructions.
SECTION 14. TERM OF AGREEMENT; MISCELLANEOUS
14.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date which is the third
anniversary of the date of this Agreement (the "Renewal Date"), and from year
to year thereafter, unless sooner terminated pursuant to the terms hereof.
Agent or Borrower may terminate this Agreement and the other Financing
Agreements effective on the Renewal Date or on the anniversary of the Renewal
Date in any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall pay to
Agent, for itself, and the ratable benefit of Lenders, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to Agent
for itself and the ratable benefit of Lenders, in such amounts as Agent
determines are reasonably necessary to secure Agent and Lenders from loss,
cost, damage or expense, including attorneys' fees and legal expenses, in
connection with any contingent Obligations, including issued and outstanding
Letter of Credit Accommodations and checks or other payments provisionally
credited to the Obligations and/or as to which Agent and Lenders have not yet
received final and indefeasible payment. Such cash collateral shall be
remitted by wire transfer in Federal funds to such bank account of Agent, as
Agent may, in its discretion, designate in writing to Borrower for such
purpose. Interest shall be due until and including the next business day, if
the amounts so paid by Borrower to the bank account designated by Agent are
received in such bank account later than 12:00 noon, Chicago time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent's continuing security interest in the Collateral, for itself
and the ratable benefit of Lenders, and the rights and remedies of Agent
hereunder, under the other Financing Agreements and applicable law, shall
remain in effect until all such Obligations have been fully and finally
discharged and paid.
(c) If for any reason this Agreement is terminated prior to the end
of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's
lost profits as a result thereof, Borrower agrees to pay to Agent for the
benefit of Lenders upon the effective date of such termination, an early
termination fee in the amount set forth below if such termination is effective
in the period indicated:
Amounts Periods
(i) Three (3%) percent of the From the date hereof to and including
Maximum Credit August 23, 1997
(ii) Two (2%) percent of the From August 24, 1997 to and
Maximum Credit including August 23, 1998
(iii) One (1%) percent of the From August 24, 1998 to and
Maximum Credit including August 22, 1999
Such early termination fee shall be presumed to be the amount of damages
sustained by Lenders as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. The early
termination fee provided for in this Section 14.1 shall be deemed included in
the Obligations. In the event of the termination of this Agreement and the
other Financing Agreements prior to the Renewal Date and the full and final
repayment of all of the Obligations and the delivery of cash collateral for
contingent obligations, the early termination fee payable by Borrower to
Agent, for the benefit of Lenders, shall be reduced to an amount equal to
fifty (50%) percent of the early termination fee otherwise payable if each of
the following conditions is satisfied: (i) no Event of Default (or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default) shall exist or have occurred, (ii) Agent shall
have received not less than thirty (30) days prior written notice of the
intention of Borrower to so terminate this Agreement and the other Financing
Agreements and (iii) the full repayment of the Obligations is received upon
the consummation of the sale by Borrower of all of its assets or the sale by
the owners of Borrower of all of the Capital Stock of Borrower or pursuant to
a merger after giving effect to which the current owners of Borrower no longer
own or hold any Capital Stock of Borrower, in any case, in a bona fide arm's
length transaction and commercially reasonable prices and terms with a person
other than an Affiliate.
14.2 Senior Indebtedness. This Agreement, which is the instrument
creating and evidencing the Obligations and pursuant to which the same are
outstanding, hereby expressly provides that the Obligations are and shall be
in all respects senior in right of payment to the Securities (as such term is
defined in the Existing Subordinated Note Indenture) and the Obligations are
and shall be "Senior Indebtedness" (as such term is defined in the Existing
Subordinated Note Indenture).
14.3 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Agent and Lenders at their addresses set forth below
and to Borrower at its chief executive office set forth below, or to such
other address as any such party may designate by written notice to the other
in accordance with this provision, and (b) deemed to have been given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
14.4 Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
14.5 Successors and Assigns. This Agreement and the other Financing
Agreements shall be binding on and shall inure to the benefit of Borrower,
Agent, Lenders, and their respective successors and assigns, except as
otherwise provided herein or therein. Borrower may not assign, delegate,
transfer, hypothecate or otherwise convey its rights, benefits, obligations or
duties hereunder or under any of the Financing Agreements without the prior
express written consent of Agent and all Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by Borrower without
such prior express written consent shall be void. No Lender may assign its
rights and obligations under this Agreement (or any part thereof) without the
prior written consent of all Lenders and Agent, except as permitted under
Section 14.6(b) hereof. Any purported assignment by a Lender without such
prior express consent or compliance with Section 14.6(b) where applicable,
shall be void. The terms and provisions of this Agreement and the other
Financing Agreements are for the purpose of defining the relative rights and
obligations of Borrower, Agent and Lenders with respect to the transactions
contemplated hereby and there shall be no third party beneficiaries of any of
the terms and provisions of this Agreement or any of the other Financing
Agreements.
14.6 Assignments and Participations.
(a) Any Lender may, in the ordinary course of its commercial
banking or finance business and in accordance with applicable law, at any time
sell to one or more banks, commercial finance companies or other financial
institutions ("Participants"), participating interests in all or a portion of
its rights and obligations under this Agreement and the other Financing
Agreements (including all or a part of its interest in the Obligations). In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such obligations for all purposes under this Agreement and the
other Financing Agreements, and Borrower and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and the other Financing Agreements.
Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed
to share with Lenders the proceeds thereof as provided in Section 7.5 hereof.
Notwithstanding anything to the contrary contained herein, no Lender shall
grant any participation under which the Participant shall have rights to
approve any amendment to or waiver of or consent under this Agreement or the
other Financing Agreements, except with the consent of Agent.
(b) Any Lender may, in accordance with applicable law, at any time
and from time to time assign to any Lender or any of its Affiliates, or in
connection with the sale of its business or all or substantially all of its
loan portfolio, with the written consent of Agent to a bank, commercial
finance company or other financial institution (an "Assignee") all (or, with
the consent of Agent, less than all), of its Commitment, rights and
obligations under this Agreement and the other Financing Agreements, pursuant
to an assignment agreement, in form and substance satisfactory to Agent,
executed by such Assignee and such assigning Lender and delivered to Agent for
its acceptance and recording in its records. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined
pursuant to such assignment agreement, the Assignee thereunder shall be a
party hereto and, to the extent provided in such assignment agreement, (i)
have the rights and obligations of a Lender hereunder with a Commitment and
Commitment Percentage as set forth therein, and (ii) the assigning Lender
thereunder shall, to the extent provided in such assignment agreement, be
released from its obligations under this Agreement (and, in the case of an
assignment agreement covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto).
(c) Agent, on behalf of the Borrower, shall maintain at the address
of Agent referred to on the signature page of this Agreement, a copy of each
such assignment agreement delivered to it and a record of the names and
addresses of the Lenders and the Commitments of each Lender from time to time.
Such records maintained by Agent shall be conclusive, in the absence of
manifest error, and Borrower, Agent and Lenders may treat each Person whose
name appears in such records as the owner of a Loan or other Obligations
hereunder as the owner thereof for all purposes of this Agreement and the
other Financing Agreements, notwithstanding any notice to the contrary. The
Agent's records under this Section 14.6 shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of an assignment agreement executed by an
assigning Lender and an Assignee, Agent shall (i) promptly accept such
assignment agreement and (ii) on the effective date determined pursuant
thereto record the information contained therein in Agent's records and give
notice of such acceptance and recordation to Lenders and Borrower. On or
prior to such effective date, Borrower, at its own expense, shall execute and
deliver to Agent (in exchange for notes of the assigning Lender) new notes to
the order of such Assignee corresponding to the Commitment assumed by it
pursuant to such assignment agreement and, if the assigning Lender has
retained a Commitment hereunder, a new note to the order of the assigning
Lender in an amount equal to the Commitment retained by it hereunder. Such
new notes shall be dated the date hereof and shall otherwise be in the form of
the notes replaced thereby. The notes surrendered to Agent shall be returned
by Agent to Borrower marked "cancelled".
(e) Except as otherwise provided in this Section 14.6, no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Obligations owed to such Lender. Any Lender permitted to sell assignments and
participations under this Section 14.6 may furnish any information concerning
Borrower and its Subsidiaries and Affiliates in the possession of that Lender
from time to time to Assignees and Participants (including, prospective
Assignees and Participants).
(f) Borrower shall assist any Lender permitted to sell assignments
or participations under this Section 14.6 in whatever manner reasonably
necessary in order to enable or effect any such assignment or participation,
including (but not limited to) the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested
and the delivery of informational materials, appraisals or other documents
for, and the participation of relevant management in meetings and conference
calls with, potential Assignees or Participants. Borrower shall certify the
correctness, completeness and accuracy of all descriptions of Borrower and its
affairs provided, prepared or reviewed by Borrower that are contained in any
selling materials and all other information provided by it and included in
such materials.
14.7 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information
is furnished by Borrower to Agent or such Lender, provided, that, nothing
contained herein shall limit the disclosure of any such information: (i) to
the extent required by statute, rule, regulation, subpoena or court order,
(ii) to bank examiners and other regulators, auditors and/or accountants,
(iii) in connection with any litigation to which Agent or such Lender is a
party, (iv) to any Assignee or Participant (or prospective Assignee or
Participant) so long as such Assignee or Participant (or prospective Assignee
or Participant) shall have first agreed in writing to treat such information
as confidential in accordance with this Section 14.7, or (v) to counsel for
Agent or such Lender or any Participant or Assignee (or prospective
Participant or Assignee).
(b) In no event shall this Section 14.7 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 14.7 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender on a non-confidential basis from a
person other than Borrower, (iii) require Agent or any Lender to return any
materials furnished by Borrower to Agent or any Lender or (iv) prevent Agent
or any Lender from responding to routine informational requests in accordance
with the Code of Ethics for the Exchange of Credit Information promulgated by
The Robert Morris Associates or other applicable industry standards relating
to the exchange of credit information. The obligations of Agent and Lenders
under this Section 14.7 shall supersede and replace the obligations of Agent
or any Lender under any confidentiality letter signed prior to the date
hereof.
14.8 Modification of Agreement. Neither this Agreement nor any other
Financing Agreement nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by Agent and the Required Lenders; except, that, any
change, waiver, discharge or termination with respect to the following shall
require the consent of all Lenders: (a) the extension of the scheduled final
maturity of any Loan, or any portion thereof, or reduction in the rate or
extension of the time of payment of interest thereon or fees (other than as a
result of waiving or not requiring the applicability of any post-default
increase in interest rates or fees for outstanding Letter of Credit
Accommodations or increased interest rates on Loans in excess of the amounts
then available to Borrower), or reduction in the principal amount thereof, or
increase in the Commitment of any Lender over the amount thereof then in
effect or provided hereunder (it being understood that a waiver of any Event
of Default shall not constitute a change in the terms of any Commitment of any
Lender); (b) the release of a material amount of the Collateral (except as
expressly required by the Financing Agreements and except as permitted under
Section 13.9 hereof), (c) the amendment, modification or waiver of any
provision of this Section 14.8; (d) the reduction of any percentage specified
in the definition of Required Lenders; (e) the consent to the assignment or
transfer by Borrower of any of its rights and obligations under this
Agreement; or (f) the increase in the stated advance percentage under the
lending formulas contained in the definition of Total Availability. Any
Lender who does not consent to a proposed amendment, consent or waiver
requiring each Lender's approval, as contemplated by clauses (a) through (f)
above, agrees that, if such amendment, waiver or consent has been approved by
the Required Lenders, then, with the consent of the Agent, any other Lender or
Lenders shall have the right to purchase, in accordance with the terms
otherwise applicable to permitted assignment under Section 14.6, all of such
non-consenting Lender's Commitment and interests in the Loans (and in the
Collateral and the Financing Agreements) at their par value. No provision of
Section 13 may be amended without the prior written consent of Agent.
14.9 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any conflict between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused these presents to
be duly executed as of the day and year first above written.
BORROWER
- ----------------------------------------------
HAYNES INTERNATIONAL, INC.
By: /s/ J. F. Barker
Title:Vice President of Finance
- ----------------------------------------------
1020 West Park Avenue
Kokomo, Indiana 46904-9013
Attention: Chief Financial Officer
Telecopier No.: 317-456-6905
LENDERS
- ----------------------------------------------
CONGRESS FINANCIAL CORPORATION CORESTATES BANK, N.A.
(CENTRAL), in its individual capacity and
as Agent
By: /s/ Kenneth Sands By:/s/ Myron Landau
Title:Senior Vice President Title:Vice President
Address: Address:
- ---------------------------------------------- ----------------------------------
100 South Wacker Drive 1339 Chestnut Street
Chicago, Illinois 60606 Philadelphia, Pennsylvania 19107
Attention: Mr. William H. Bloom Attention: Mr. Myron Landau
Telecopier No.: 312-332-0424 Telecopier No.: (215) 973-2633
Commitment: Commitment:
- ---------------------------------------------- ----------------------------------
30,000,000 $ 20,000,000
Commitment Percentage:Commitment Percentage:
- ----------------------------------------------