LOAN AGREEMENT
AMONG
CSS INDUSTRIES, INC.,
THE LENDING INSTITUTIONS LISTED HEREIN,
CORESTATES BANK, N.A., AS THE ADMINISTRATIVE AGENT
AND
MERRILL LYNCH & CO., AS THE SYNDICATION AGENT
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DATED AS OF NOVEMBER 15, 1995
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND INTERPRETATION................................ 1
1.1 Terms Defined................................................. 1
1.2 Accounting Principles......................................... 20
SECTION 2. THE LOAN...................................................... 20
2.1 Revolving Line of Credit - Description ....................... 20
2.2 Letters of Credit ............................................ 22
2.3 Voluntary Reduction of Commitment ............................ 28
2.4 Advances, Conversions, Renewals and Payments ................ 28
2.5 Interest ..................................................... 32
2.6 Fees ......................................................... 36
2.7 Prepayments .................................................. 37
2.8 Use of Proceeds .............................................. 37
2.9 Special Provisions Governing LIBOR Based Rate Advances ....... 37
2.10 Capital Requirements, Etc .................................... 42
2.11 Mandatory Prepayments/Commitment Reductions .................. 43
2.12 Net Payments ................................................. 44
SECTION 3. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES ................. 46
3.1 Conditions Precedent to Closing............................... 46
3.2 Closing....................................................... 52
3.3 Conditions Precedent to all Advances.......................... 52
3.4 Waiver of Rights.............................................. 54
3.5 Delivery of Documents......................................... 54
SECTION 4. REPRESENTATIONS AND WARRANTIES................................ 54
4.1 Corporate Organization and Validity........................... 54
4.2 Places of Business............................................ 55
4.3 Pending Litigation............................................ 55
4.4 Title to Properties........................................... 55
4.5 Governmental Consent.......................................... 55
4.6 Taxes......................................................... 56
4.7 Financial Statements.......................................... 56
4.8 Full Disclosure............................................... 56
4.9 Subsidiaries.................................................. 57
4.10 Guarantees, Indebtedness, etc................................. 57
4.11 Government Regulations, etc................................... 57
4.12 Business Interruptions........................................ 59
4.13 Names. ...................................................... 59
4.14 Other Associations............................................ 60
4.15 Environmental Matters......................................... 60
4.16 Regulation O.................................................. 62
4.17 Capital Stock................................................. 62
4.18 Solvency...................................................... 63
4.19 Interrelatedness of the Borrower and the Guarantors........... 63
4.20 Purchase of Cleo. ........................................... 63
ii
SECTION 5. AFFIRMATIVE COVENANTS......................................... 64
5.1 Payment of Taxes and Claims................................... 64
5.2 Maintenance of Properties and Corporate Existence............. 64
5.3 Litigation.................................................... 65
5.4 Issue Taxes................................................... 65
5.5 Lender Accounts............................................... 66
5.6 Employee Benefit Plans........................................ 66
5.7 Financial and Business Information............................ 66
5.8 Officers' Certificates........................................ 68
5.9 Inspection.................................................... 69
5.10 Tax Returns and Reports....................................... 69
5.11 Information to Participants and Assignees..................... 69
5.12 Material Adverse Developments................................. 70
5.13 Additional Parties............................................ 70
5.14 Borrowing Base Certificate.................................... 70
5.15 Performance of Obligations. .................................. 71
5.16 Further Assurances............................................ 71
5.17 Evidence of Intercompany Indebtedness............................. 71
SECTION 6. NEGATIVE COVENANTS............................................ 72
6.1 Mergers....................................................... 72
6.2 Acquisitions; Creation of Subsidiaries........................ 72
6.3 Liens and Encumbrances........................................ 73
6.4 Transactions With Affiliates or Subsidiaries.................. 74
6.5 Guarantees.................................................... 75
6.6 Dividends and Redemptions..................................... 75
6.7 Loans and Investments......................................... 76
6.8 Use of Lenders' Name.......................................... 76
6.9 Amendment or Waivers of Certain Documents..................... 77
6.10 Sale and Lease-Backs.......................................... 77
6.11 Business Conducted............................................ 78
6.12 Indebtedness.................................................. 78
6.13 Restrictions on Fundamental Changes; Asset Sales.............. 78
6.14 Agreements Regarding Dividends................................ 79
6.15 Miscellaneous Covenants....................................... 79
SECTION 7. FINANCIAL COVENANTS............................................ 79
7.1 Fixed Charge Coverage Ratio.................................... 80
7.2 Minimum Consolidated Net Worth................................. 80
7.3 Ratio of Consolidated Total Debt to Consolidated
Capitalization............................................... 80
7.4 Ratio of Consolidated EBITDA to Consolidated Interest Expense.. 80
7.5 Minimum Consolidated EBITDA.................................... 81
7.6 Capital Expenditures........................................... 81
SECTION 8. DEFAULT....................................................... 81
8.1 Events of Default............................................. 81
8.2 Rights and Remedies on Default................................ 85
iii
8.3 Nature of Remedies............................................ 86
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8.4 Set-Off....................................................... 86
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SECTION 9. THE ADMINISTRATIVE AGENT...................................... 86
9.1 Appointment and Authorization................................. 86
9.2 General Immunity.............................................. 87
9.3 Consultation with Counsel..................................... 87
9.4 Documents..................................................... 87
9.5 Rights as a Lender............................................ 87
9.6 Responsibility of the Administrative Agent.................... 87
9.7 Collections and Disbursements. .............................. 88
9.8 Indemnification............................................... 90
9.9 Expenses. ................................................... 91
9.10 No Reliance................................................... 91
9.11 Reporting..................................................... 91
9.12 Removal of the Administrative Agent........................... 92
9.13 Action on Instructions of Lenders............................. 92
9.14 Several Obligations........................................... 92
9.15 Amendments.................................................... 93
SECTION 10. MISCELLANEOUS................................................. 94
10.1 GOVERNING LAW................................................. 94
10.2 Integrated Agreement.......................................... 94
10.3 Omission or Delay Not Waiver.................................. 94
10.4 Time.......................................................... 94
10.5 Expenses of the Administrative Agent, the
Syndication Agent and Lenders............................... 95
10.6 Brokerage..................................................... 95
10.7 Notices. .................................................... 96
10.8 Headings...................................................... 97
10.9 Survival...................................................... 97
10.10 Successors and Assigns........................................ 97
10.11 Counterparts.................................................. 99
10.12 Modification.................................................. 99
10.13 Signatories................................................... 99
10.14 Third Parties................................................. 99
10.15 Indemnification...............................................100
10.16 Discharge of Taxes, The Borrower's Obligations, Etc...........101
10.1 Withholding and Other Tax Liabilities.........................102
10.18 Consent to Jurisdiction; Venue................................103
10.19 Waivers.......................................................104
10.20 Severability..................................................105
10.21 Independence of Representations, Warranties and
Covenants...................................................105
10.22 Obligations Several; Independent Nature of
Lenders' Rights.............................................105
10.23 Prior Understandings..........................................105
10.24 Confidentiality...............................................105
iv
LOAN AGREEMENT
This Loan Agreement ("Agreement") is dated as of this 15th day of
November, 1995 by and among CSS Industries Inc., a Delaware corporation
("Borrower"), the lending institutions listed in Annex I attached hereto and
incorporated herein by reference (each a "Lender" and collectively, the
"Lenders"), CoreStates Bank, N.A., a national banking association, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and Merrill Lynch & Co., as the syndication agent (in such capacity, the
"Syndication Agent").
BACKGROUND
A. The Borrower desires to establish financing arrangements with the
Lenders and the Lenders are willing to make loans and extensions of credit to
the Borrower under the terms and provisions hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship in writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION.
1.1 Terms Defined. As used in this Agreement, the following terms have
the following respective meanings:
Accounts - All of the "accounts" (as that term is defined in Section
9-106 of the Uniform Commercial Code as in effect in the State of New York) of
the Borrower and each of its Subsidiaries, whether now existing or hereafter
arising.
Acquisition - The Borrower's purchase of 100% of the issued and
outstanding capital stock of Cleo from Gibson pursuant to the terms of the Stock
Purchase Agreement.
Acquisition Documents - The Stock Purchase Agreement, the Unsecured
Seller Note and all agreements, documents and instruments related thereto.
Adjusted LIBOR Rate - As applied to a LIBOR Based Rate Advance, for any
LIBOR Interest Period, the rate per annum (rounded upwards, if necessary to the
next 1/16 of 1%) determined pursuant to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
(1 - Reserve Percentage)
For purposes hereof, "LIBOR Rate" shall mean the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary to the next 1/16
of 1%) at which the Administrative Agent is offered deposits of United States
dollars in the London Interbank market on or about eleven o'clock (11:00) a.m.
London time two (2) Business Days prior to the commencement of such LIBOR
Interest Period on amounts substantially equal to such LIBOR Based Rate Advance
as to which the Borrower may elect the LIBOR Based Rate to be applicable with a
maturity of comparable duration to the LIBOR Interest Period selected by the
Borrower for such LIBOR Based Rate Advance.
Advance(s) - Any monies advanced or credit extended to the Borrower by
any Lender under the Revolving Credit, including without limitation, cash
Advances, Swing Line Advances and the issuance of Letters of Credit.
Affiliate - With respect to any Person (the "Specified Person"), (a)
any Person which directly or indirectly controls, or is controlled by, or is
under common control with, the Specified Person, and (b) any director or officer
(or, in the case of a Person which is not a corporation, any individual having
analogous powers) of the Specified Person or of a Person who is an Affiliate of
the Specified Person within the meaning of the preceding clause (a); provided,
however, that no Lender nor any Affiliate of any Lender shall be deemed to be an
Affiliate of the Borrower or any of its Subsidiaries. For purposes of the
preceding sentence, "control" of a Person shall mean (i) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise, and (ii) in any case shall include direct
or indirect ownership (beneficially or of record) of, or direct or indirect
power to vote, 25% or more of the outstanding shares of any class of capital
stock of such Person (or in the case of a Person that is not a corporation, 25%
or more of any class of equity interest).
Agents - The Administrative Agent and the Syndication Agent,
collectively.
Alternate Base Rate - A rate of interest equal to the greater of: (i)
the Prime Rate or (ii) one half of one (0.5%) percent per annum in excess of the
Fed Funds Rate. The calculation and determination of the rates described in
subsections (i) and (ii) above shall be made daily by the Administrative Agent
and such determination shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. Changes in the Alternate Base Rate shall become
effective on the same day as the Administrative Agent changes its Prime Rate or
a change occurs in the Fed Funds Rate, depending upon which rate is applicable
on that day to the Alternate Base Rate.
Alternate Base Rate Advance - Any Advance on which interest accrues at
the Alternate Base Rate.
Asset Sale - The sale, transfer or other disposition by the Borrower to
any Person or by any Subsidiary of the Borrower to any Person other than the
Borrower of (a) any of the existing or future capital stock or partnership
interests of any Subsidiary of the Borrower or (b) any other Property, now owned
or hereafter acquired, of any nature whatsoever in any transaction or series of
related transactions (including any or all assets and business of any division
or line of business and further including intangible assets) of the Borrower or
any of its Subsidiaries, excluding (i) sales, transfers or other dispositions of
inventory or other Property in the ordinary course of business of the Borrower
or any of its Subsidiaries or the trade-in or replacement of assets in the
ordinary course of business of the Borrower or any of its Subsidiaries and (ii)
sales of the real property and associated equipment described on Schedule
"1.1(a)" attached hereto and incorporated herein by reference.
Authorized Officer - Any executive officer of the Borrower.
Borrowing - The making, pursuant to a Notice of Borrowing and the terms
of this Agreement, of an Advance to the Borrower from all of the Lenders on a
pro rata basis on a given date (or resulting from conversions on a given date)
having, in the case of LIBOR Based Rate Advances, the same LIBOR Interest
Periods.
Borrowing Base - An amount equal to the sum of (i) 85% of Eligible
Accounts Receivable, (ii) 50% of Eligible Inventory and (iii) $20,000,000.00
during a one time period of one hundred fifty (150) consecutive days in each
calendar year ending not later than September 30 of each applicable year.
Borrowing Base Certificate - Section 5.14.
Borrowing Base Excess - Section 2.11(b)
Business Day - A day other than Saturday or Sunday when the
Administrative Agent is open for business in Philadelphia, Pennsylvania;
provided, that when used in connection with a LIBOR Based Rate Advance, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London or other relevant interbank market.
Cash Proceeds - With respect to any Asset Sale or Equity Offering, the
aggregate cash payments received by the Borrower and/or any of its Subsidiaries
from such Asset Sale or Equity Offering.
Change of Control - If (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), excluding Jack Farber
and/or any member(s) of his immediately family, and/or any trust under which
Jack Farber and/or any member(s) of his immediate family hold the legal and
equitable interests, 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 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 50% of the total voting power of
the issued and outstanding voting stock of the Borrower normally entitled to
vote in the election of directors of the Borrower or (b) during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority 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 the Board of Directors then in office.
Cleo - Cleo, Inc., a Tennessee corporation.
Closing - Section 3.2.
Closing Date - Section 3.2.
Commitment Fee - Section 2.6(b).
Confidential Memorandum - The Confidential Memorandum, dated October,
1995 and all supplemental material thereto prepared by or on behalf of the
Borrower and transmitted to the Lenders by or on behalf of the Borrower prior to
the Closing Date.
Consolidated Amortization Expense - For any Person, for any period, the
consolidated amortization expense of such Person for such period, determined on
a consolidated basis for such Person and its consolidated Subsidiaries.
Consolidated Capital Expenditures - For any Person, for any period, the
aggregate gross increase during that period in the property, plant or equipment
reflected in the consolidated balance sheet of such Person and its consolidated
Subsidiaries, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets (a) to the extent financed
from insurance proceeds paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced; provided,
however, that Consolidated Capital Expenditures shall in any event exclude the
purchase price paid in connection with the acquisition of any other Person
(including through the purchase of all of the capital stock or other ownership
interests of such Person or through merger or consolidation) to the extent
allocable to property, plant and equipment.
Consolidated Capitalization - For any Person, at any time, the sum of
such Person's (a) Consolidated Total Debt plus (b) Consolidated Net Worth,
determined on a consolidated basis for such Person and its consolidated
Subsidiaries.
Consolidated Depreciation Expense - For any Person, for any period, the
consolidated depreciation expense of such Person for such period, determined on
a consolidated basis for such Person and its consolidated Subsidiaries.
Consolidated EBITDA - For any Person, for any period, the difference
between (a) the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Tax Expense, (iii) Consolidated Interest Expense, (iv)
Consolidated Amortization Expense and (v) Consolidated Depreciation Expense
(with respect to clauses (ii) through (v), to the extent such amounts were
deducted in computing Consolidated Net Income) less (b) the amounts for such
period of after-tax net gains on sales of fixed assets and other after-tax
extraordinary gains to the extent included in Consolidated Net Income, excluding
sales in the ordinary course of business, all as determined on a consolidated
basis for such Person and its consolidated Subsidiaries. In addition to the
foregoing, for any measurement period that ends on or prior to September 30,
1996, Consolidated EBITDA for the Borrower shall be calculated (A) on a pro
forma basis by giving effect to the Acquisition as if it had occurred on the
first day of such period and (B) by adding to such calculation for the
measurement period ended (1) December 31, 1995, $7,007,000, (2) March 31, 1996,
$5,518,000, (3) June 30, 1996, $4,233,000 and (4) September 30, 1996,
$2,563,000, as such calculations are more fully set forth on Schedule "1.1(c)"
attached hereto and made part hereof.
Consolidated Interest Expense - For any Person, for any period, total
interest expense (including capitalized interest and interest attributable to
capital leases) of such Person and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of such Person and its Subsidiaries,
including all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, but excluding,
however, any amortization of deferred financing costs, all as determined on a
consolidated basis for such Person and its consolidated Subsidiaries. In
addition to the foregoing, for any measurement period that ends on or prior to
September 30, 1996, Consolidated Interest Expense shall be calculated by giving
pro forma effect to any Indebtedness incurred during such measurement period as
if it had been incurred as of the first day of the relevant period and by giving
pro forma effect to any Indebtedness permanently retired during such period as
if it had been retired on the first day of such period (it being understood that
any Indebtedness under a revolving credit facility, such as the Obligations,
shall not be deemed permanently retired unless the commitments in respect
thereof are permanently reduced).
Consolidated Net Income - For any Person, for any period, the net
income (or loss) of such Person and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined on a consolidated
basis for such Person and its consolidated Subsidiaries; provided, however, that
there shall be excluded (a) the income (or loss) of any other Person (other than
Subsidiaries of such Person) in which any third Person (other than such Person
or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of cash dividends or other cash distributions actually paid to such
Person or any of its Subsidiaries by such other Person during such period
(subject to clause (c) below), (b) the income (or loss) of any other Person
accrued prior to the date it becomes a consolidated Subsidiary of such Person or
is merged into or consolidated with such Person or any of its consolidated
Subsidiaries or such other Person's assets are acquired by such Person or any of
its consolidated Subsidiaries, except (with respect to a Subsidiary previously
accounted for on the equity basis of accounting) to the extent of the income (or
loss) actually paid to such Person or any of its Subsidiaries by such other
Person relating to such period in cash, and (c) the income of any consolidated
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by that consolidated Subsidiary of that
income is not at the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that consolidated Subsidiary, except to
the extent of the cash dividends or cash distributions actually paid to such
Person or any of its Subsidiaries by such other Person during such period;
provided, however, that income generated in connection with a waiver of any of
the provisions hereof shall not be included for any purposes herein.
Consolidated Net Worth - For any Person, at any time of determination
thereof, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit), exclusive of any write-ups of
such Person and its consolidated Subsidiaries, all as determined on a
consolidated basis for such Person and its consolidated Subsidiaries.
Consolidated Rental Payments - For any period, the aggregate amount of
all rents paid or to be incurred under all operating leases of the Borrower and
the Subsidiaries of the Borrower as lessees (net of sublease income).
Consolidated Tax Expense - For any Person, for any period, the
consolidated income tax expense of such Person for such period, determined on a
consolidated basis for such Person and its consolidated Subsidiaries.
Notwithstanding the foregoing, for any measurement period that ends on or prior
to September 30, 1996, solely for the purpose of clause (b)(iii) of the
definition of Fixed Charged Coverage Ratio, Consolidated Tax Expense shall be
calculated by annualizing the consolidated income tax expense of such Person
from the Closing Date to the end of the relevant measurement period.
Consolidated Total Debt - For any Person, on any date, without
duplication, the aggregate outstanding principal amount of Indebtedness (except
the items described in clauses (c), (f), (g) and (h) of the definition of
"Indebtedness" to the extent no obligation with respect to such items is
recorded on a balance sheet of such Person prepared in accordance with GAAP) of
such Person and its consolidated Subsidiaries including, without limitation, all
Obligations hereunder and the Unsecured Seller Note, all determined on a
consolidated basis after elimination of all intercompany items. Cash Advances,
Reimbursement Obligations (net of reimbursement obligations with respect to the
Tuggle Road Letter of Credit) and the Unsecured Seller Note shall be included in
the calculation of Consolidated Total Debt (a) as of March 31, June 30 and
September 30, 1996 by using the average of the daily outstanding amounts thereof
from the Closing Date to and including the date of determination thereof and (b)
at all times thereafter by using the average of the outstanding daily amounts
thereof during the respective four (4) quarter period ending on the date of
determination thereof.
CoreStates - CoreStates Bank, N.A.
Dated Sale Account(s) - Account(s) for which the original payment due
date is more than sixty (60) days from the invoice date.
Default - Any event, act, condition or occurrence which with notice, or
lapse of time or both, would constitute an Event of Default hereunder.
Eligible Accounts Receivable - As at any applicable date of
determination, the aggregate face amount of the Borrower's and its Subsidiaries'
Accounts, excluding (a) unpaid seller's rights (including rescission, replevin,
reclamation and stopping in transit); (b) rights to any goods, including
returned or repossessed goods; and (c) general reserves and credit balances held
by the Borrower or any of its Subsidiaries with respect to any Accounts or any
account debtor, less (without duplication) the aggregate amount of all reserves,
limits and deductions with respect to such Accounts set forth below or as
otherwise provided in this Agreement and less the aggregate amount of all
returns, discounts, claims, credits, charges (including warehouseman's charges)
and allowances of any nature with respect to such Accounts (whether issued,
owing, granted or outstanding). Unless otherwise approved in writing by the
Administrative Agent in its sole discretion (so long as the Majority Lenders do
not otherwise direct the Administrative Agent prior to or after any such
approval is given), no individual Account shall be deemed to be an Eligible
Account Receivable if:
(i) the Borrower or one of its Subsidiaries does not have legal and
valid title to the Account; or
(ii) the Account is not the valid, binding and legally enforceable
obligation of the account debtor subject, as to enforceability, only to (A)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws at
the time in effect affecting the enforceability of creditors' rights generally
and (B) judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(iii) the Account arises out of a sale made by the Borrower or one of
its Subsidiaries to an Affiliate of the Borrower or such Subsidiary; or
(iv) the Account or any portion thereof is unpaid more than ninety (90)
days (sixty (60) days for Dated Sale Accounts) after the original payment due
date or has been written off as uncollectible; or
(v) the Account, when aggregated with all other Accounts of the same
account debtor (or any Affiliate thereof) owing to the Borrower and its
Subsidiaries, exceeds twenty percent (20%) (or in the case of WalMart, exceeds
thirty (30%) percent) in face value of all Accounts of the Borrower and its
Subsidiaries then outstanding, to the extent of such excess; or
(vi) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors or if an involuntary case has been
commenced under the federal bankruptcy laws, as now constituted or hereafter
amended, or if any other petition or other application for relief under the
federal bankruptcy laws has been filed by or against the account debtor, or if
the account debtor has failed, suspended business, ceased to be solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or affairs
(except in the case of a sale to an account debtor which is a debtor under the
federal bankruptcy laws and has obtained debtor-in-possession financing approved
by the Bankruptcy Court, unless the Administrative Agent reasonably determines
such financing to be inadequate or the prospects for full payment by such
account debtor to be in doubt); or
(vii) the sale to the account debtor is on a consignment,
bill-and-hold, sale on approval, guaranteed sale or sale-and-return basis or
pursuant to any written agreement providing for repurchase or return rights not
in the ordinary course of business; or
(viii) the sale is to an account debtor outside the United States or
Canada or that is incorporated in or is primarily conducting business in any
jurisdiction located outside the United States or Canada, except to the extent
such Account (A) is supported by an irrevocable letter of credit (1) drawn on a
bank or other lending institution reasonably acceptable to the Administrative
Agent and (2) the terms of which are reasonably satisfactory to the
Administrative Agent or (B) when aggregated with all other foreign Accounts
which the Borrower certifies as being Eligible Accounts Receivable (other than
foreign Accounts to which subclause (A) is applicable) does not exceed
$5,000,000; or
(ix) the transaction giving rise to the Account does not comply in all
material respects with all applicable laws, rules and regulations of any
Governmental Authority;
(x) the goods giving rise to such Account have not been shipped under a
valid, subsisting purchase order from the account debtor and delivered to, or
have been rejected by, the account debtor or the services giving rise to such
Account have not been performed by the Borrower or have been rejected by the
account debtor, or the Account otherwise does not represent a final sale; or
(xi) more than fifty (50%) percent of the unpaid face amount of all
Accounts of the account debtor therein with an outstanding balance of $200,000
or more are not considered to be Eligible Accounts Receivable under this
Agreement, (to be measured on a company by company basis for the Borrower and
each of its Subsidiaries); or
(xii) the Account is being rebilled, which thereby extends the original
due date provided for by the prior billing.
Eligible Inventory (a) The gross amount of the Inventory of the
Borrower and its Subsidiaries, valued at the lower of cost (on a FIFO basis) or
market basis, specific identification basis or other basis acceptable under
GAAP, which (i) is owned solely by the Borrower or one of its Subsidiaries and
with respect to which the Borrower or one of its Subsidiaries has good, valid
and marketable title; (ii) is stored on property that is either (A) owned or
leased by the Borrower or one of its Subsidiaries or (B) owned or leased by a
warehouseman, processor or vendor that has contracted with the Borrower or one
of its Subsidiaries to store and/or process Inventory on such warehouseman's,
processor's or vendor's property; (iii) is (A) located in the United States or
(B) represents the lesser of (x) the amount of Inventory outside the United
States or (y) $5,000,000, (b) less any goods returned or rejected by the
Borrower's or one of its Subsidiary's customers and suppliers, and (c) less any
reserves reasonably required by the Administrative Agent for special order
goods.
Employee Benefit Plan - Section 4.11(c).
Environmental Authorizations - Section 4.15(a).
Environmental Laws - The common law and all applicable Federal, state,
local and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of the environment or
to health or safety as either relates to any Hazardous Material, including,
without limitation, laws relating to (a) emissions, discharges, releases or
threatened releases of Hazardous Materials into the environment (including
ambient air, indoor air, surface water, ground water, land surface or subsurface
strata), (b) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport, shipping or handling of Hazardous
Materials, and (c) underground and above-ground storage tanks, and related
piping, and emissions, discharges, releases or threatened releases therefrom.
Equity Offering - The sale by the Borrower of any of its capital stock
in any public or private transaction, except (a) any nonredeemable capital stock
of the Borrower issued in exchange for or upon conversion of any Indebtedness of
the Borrower or any of its Subsidiaries, (b) any issuance in connection with the
exercise of any stock options, (c) the issuance of nonredeemable capital stock
in connection with a Permitted Acquisition or (d) any capital stock issued in
connection with employee incentive plans.
ERISA - The Employee Retirement Income Security Act of 1972, as the
same may be amended, from time to time.
Event of Default - Section 8.1.
Exchange Act - The Securities Exchange Act of 1934, as amended,
together with all rules and regulations promulgated in connection therewith.
Existing Credit Facilities - The existing Indebtedness of the Borrower
and/or any or all of its Subsidiaries to be paid in full at Closing as set forth
in Section 2.8 (excluding outstanding Letters of Credit issued thereunder as set
forth on Schedule "2.2(a)") as fully described on Schedule "1.1(b)" attached
hereto.
Existing Debt of the Borrower - The Indebtedness of the Borrower and
its Subsidiaries as set forth on Schedule "4.10" attached hereto.
Expenses - Section 10.5.
Facility Limit - $195,000,000, as such amount may be reduced from time
to time pursuant to Section 2.3 or Section 2.11 herein.
Fed Funds Rate - On any day, the effective rate of interest charged by
the Federal Reserve Bank of New York for overnight federal funds in New York as
reported by the Federal Reserve Bank in New York for such day.
Financial Statements - Section 3.1(a)(ix).
Fixed Charge Coverage Ratio - For any period, the ratio of (a) the sum
of the Borrower's (i) Consolidated EBITDA for such period less (ii) Consolidated
Capital Expenditures for such period (for any period ending prior to December
31, 1997, Consolidated Capital Expenditures for any portion of such period
including the fiscal year ending December 31, 1996 shall not exceed the lesser
of (A) the actual Consolidated Capital Expenditures of the Borrower for such
year or (B) $12,900,000) plus (iii) Consolidated Rental Payments for such period
to (b) the sum of the (i) current portion of principal on all long-term
Indebtedness (excluding the Revolving Credit), plus (ii) Consolidated Interest
Expense (including the Revolving Credit), plus (iii) Consolidated Tax Expense,
plus (iv) Consolidated Rental Payments for such period.
Fronting Fee - Section 2.6(c)(ii).
Fronting Lender - CoreStates (or an Affiliate of CoreStates, if
applicable), as the issuer of Letters of Credit under this Agreement.
GAAP - Generally accepted accounting principles applied in a manner
consistent with the most recent audited financial statements of the Borrower
prepared as of December 31, 1994 and furnished to the Agents.
Gibson - Gibson Greetings, Inc., a Delaware corporation.
Governmental Authority - Any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator (to
the extent binding on the Borrower or any of its Subsidiaries), in each case
whether foreign or domestic.
Guarantee(s) - Guarantees substantially in the form of Exhibit "1.1(a)"
attached hereto and incorporated herein by reference.
Guarantors - Each of The Paper Magic Group, Inc., a Pennsylvania
corporation, Berwick Industries, Inc., a Florida corporation, Cleo, Inc., a
Tennessee corporation, Rapidforms, Inc., a New Jersey corporation, Philadelphia
Industries, Inc., a Delaware corporation, LLM Holdings, Inc., a Delaware
corporation, Rapdel, Inc., a Delaware corporation, The Paper Magic Group, Inc.,
a Delaware corporation, and each Person which executes a Guarantee after the
Closing Date.
Hazardous Materials - Any pollutant, contaminant, hazardous or toxic
substance, hazardous material, hazardous waste, hazardous constituent, asbestos
or asbestos-containing material, petroleum, including crude oil and any fraction
thereof, or other chemicals, substances or materials subject to regulation under
any Environmental Law.
Indebtedness - Of any Person, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) the deferred purchase price of assets or
services which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (c) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any
Property owned by such first Person, whether or not such Indebtedness has been
assumed by such first Person, (e) all capitalized lease obligations of such
Person, (f) all obligations of such Person to pay a specified purchase price for
goods or services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, (g) all obligations of such Person under interest rate
agreements, (h) all contingent obligations of such Person required to be
reflected on such Person's balance sheet prepared in accordance with GAAP, (i)
all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (j) all obligations of such Person upon which interest
charges are customarily paid, (k) current obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of such Person or any warrants, rights or options to acquire such capital
stock (with redeemable preferred stock being valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends) and (l) the Unsecured Seller Note; provided, however, that
Indebtedness shall not include trade payables, accrued expenses, accrued
dividends, deferred compensation and accrued income taxes, in each case arising
in the ordinary course of business.
Intercompany Notes - Section 5.17.
Interest Rate Determination Date - With respect to a LIBOR Based Rate
Advance, the date which is two (2) Business Days prior to the commencement of
the LIBOR Interest Period for such Borrowing.
Inventory - All of the "inventory" (as that term is defined in Section
9-109 of the Uniform Commercial Code as in effect in the State of New York) of
the Borrower and its Subsidiaries, whether now existing or hereinafter acquired
or created.
Investments - Investments of any Person shall mean (i) any direct or
indirect purchase or other acquisition of any share of capital stock, evidence
of Indebtedness or other security issued by any other Person, (ii) any loan,
advance (other than advance to employees for travel expenses, drawing accounts
and similar expenditures extended in the ordinary course and consistent with
past practice) or extension of credit (other than accounts receivable created in
the ordinary course) to, or contribution to the capital of, any other Person,
including any guarantee or Indebtedness of any other Person and any joint
venture, (iii) any commitment or option to make an investment if, in the case of
an option, the consideration therefor exceeds $50,000 and (iv) any capital
contribution to any other Person; and any of the foregoing shall be considered
an Investment whether such investment is acquired by purchase, exchange,
issuance of stock or other securities, merger, reorganization or any other
method.
Knowledge - Whenever used in this Agreement, the actual knowledge of
any executive officer of the Borrower or of the president of any of the
Subsidiaries.
L/C Commitment - $10,000,000 plus the undrawn amount of the Tuggle Road
Letter of Credit (to the extent the Tuggle Road Letter of Credit is
outstanding).
L/C Fees - Section 2.6(c)(i).
Lender(s)- The lending institutions listed on Annex I attached hereto
and incorporated herein by reference.
Letter of Credit or Letters of Credit - (a) Standby letter or letters
of credit, and (b) commercial letter or letters of credit, in each case issued
or to be issued by the Fronting Lender for the account of the Borrower pursuant
to Section 2.2 herein.
Liabilities - All liabilities of every kind of the Borrower as would be
shown on a consolidated financial statement of the Borrower prepared in
accordance with GAAP.
LIBOR Based Rate - Section 2.5(b)(i).
LIBOR Based Rate Advance - Any Advance on which interest accrues at the
LIBOR Based Rate.
LIBOR Based Rate Margin - Section 2.5(b)(i).
LIBOR Interest Period - Section 2.5(b)(ii).
Lien - Other than as expressly excluded in the next sentence, any
interest in property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute or contract, and including, but not limited to, the security
interest or lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt or a lease, consignment or bailment for security purposes. The
term "Lien" shall include without limitation, reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property other than
Property which is leased by the Borrower or any of its Subsidiaries or for which
the Borrower or any of its Subsidiaries has an unexercised option to purchase
such Property and other than those which would not materially adversely
interfere with the Borrower's or any of the Borrower's Subsidiary's use of the
Property and would not materially detract from the value of the Property. For
the purposes of this Agreement, the Borrower and each of its Subsidiaries shall
be deemed to be the owner of any Property which it has acquired or holds subject
to a conditional sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes.
Loan Documents - This Agreement, the Revolving Credit Notes, the
Guarantees and all agreements, instruments and documents executed and/or
delivered in connection herewith or therewith, all as may be amended,
supplemented, replaced, restated or superseded from time to time.
Losses - Of any Person, the losses, liabilities, claims (including
those based upon negligence, strict or absolute liability and liability in
tort), damages, expenses, obligations, penalties, actions, judgments, Liens,
penalties, fines, suits, costs or disbursements of any kind or nature whatsoever
(including reasonable fees and expenses of counsel in connection with any
Proceeding commenced or threatened, whether or not such Person shall be
designated a party thereto) at any time (including following the payment of the
Obligations and/or the termination of the Revolving Credit) incurred by, imposed
on or asserted against such Person.
Majority Lenders - The Lenders holding Pro Rata Percentages aggregating
more than 50% of the total Revolving Credit.
Mandatory Loan - Section 2.4(b)(iii)(B).
Material Adverse Effect - (a) With respect to any Person and its
Subsidiaries, any material adverse effect (both before and after giving effect
to the transactions contemplated by this Agreement and the other Loan Documents)
with respect to the business, assets, properties, financial condition,
stockholders' equity, contingent liabilities, prospects, material agreements or
results of operations of such Person and its Subsidiaries, taken as one
enterprise on a consolidated basis, or (b) any fact or circumstance that, singly
or in the aggregate with any other fact or circumstance, has a reasonable
likelihood of resulting in or leading to (i) a material adverse effect described
in clause (a), (ii) the inability of such Person to perform in any material
respect its obligations hereunder or under any other Loan Document or the
inability of the Lenders to enforce in any material respect their rights
purported to be granted hereunder or under any other Loan Document, or (iii) a
material adverse effect on the ability of the Borrower and its Subsidiaries
taken as a whole on a consolidated basis to effect (including hindering or
unduly delaying) the transactions contemplated by this Agreement and the other
Loan Documents on the terms contemplated hereby and thereby.
Maturity Date - The day which is five (5) years from the Closing Date
unless such day is not a Business Day, in which event the Maturity Date shall be
the next Business Day thereafter.
Modified Advances - At any date of determination, the amount of
Advances then outstanding less the undrawn amount of the Tuggle Road Letter of
Credit.
Moody's - Moody's Investors Service, Inc.
Net Cash Proceeds from Asset Sales - With respect to any Asset Sale,
the Cash Proceeds resulting therefrom net of direct reasonable expenses of sale
and also net of the payment of Indebtedness secured by valid and enforceable
Liens on the assets sold; provided, however, that (a) expenses constituting
taxes shall only include taxes to the extent that taxes are payable in cash in
the current year or in the next succeeding year with respect to the current year
as a result of such Asset Sale and (b) net Cash Proceeds from sales of Property
as permitted under Section 6.4(a) (to the extent such sale is made to a
Guarantor or Borrower) hereof shall not be included herein.
Net Cash Proceeds from Equity Offerings - With respect to any Equity
Offering, the Cash Proceeds resulting therefrom net of direct reasonable
expenses of such offering.
Notice of Borrowing - Section 2.4(b)(ii).
Obligations - All existing and future liabilities and obligations of
every kind or nature at any time owing by the Borrower to any one or more of the
Lenders or to either or both of the Agents, whether joint or several, related or
unrelated, primary or secondary, matured or contingent, due or to become due,
and whether principal, interest, fees or Expenses, including without limitation
Obligations in respect of the Revolving Credit whether related to cash Advances
or Letters of Credit (whether drawn or undrawn).
Outstandings - At any time, the sum of the (a) aggregate amount of all
cash Advances outstanding hereunder, (b) face amount of all Letters of Credit
and all outstanding Reimbursement Obligations and (c) outstanding principal
amount of the Unsecured Seller Note.
Permitted Acquisitions - Section 6.2.
Permitted Liens - Section 6.3.
Person - An individual, partnership, corporation, limited liability
company, limited liability partnership, trust, unincorporated association or
organization, joint venture or any other entity.
Prime Rate - That rate so designated by the Administrative Agent from
time to time as its prime rate of interest, which is not necessarily the lowest
or best rate of interest charged by the Administrative Agent.
Pro Rata Percentages - Section 2.1(a)(i).
Pro Rata Shares - Section 2.1(a)(i).
Proceeding - Any claim, action, judgment, suit, hearing, governmental
investigation, arbitration (to the extent binding on the Borrower or any of its
Subsidiaries) or proceeding, including by or before any Governmental Authority.
Property - Any existing or future interest of the Borrower or any of
its Subsidiaries in any existing or future property or asset of any kind or
nature, whether real, personal or mixed, or tangible or intangible, now owned or
hereafter acquired or created (including without limitation the capital stock of
any Subsidiary).
Quarterly Compliance Certificate - Section 5.8.
Rapidforms Mortgage - The mortgage loan indebtedness of Rapidforms,
Inc., to Penn Mutual Life Insurance Company as evidenced by that certain
Mortgage dated February 7, 1989 between such parties.
Real Property - All right, title and interest of the Borrower or any of
its Subsidiaries (including any leasehold estate) in and to any parcel of real
property owned, leased or operated by the Borrower or any of its Subsidiaries
together with, in each case, all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental
to the ownership, lease or operation thereof.
Regular Advances - Advances other than Swing Line Advances.
Regulation D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as
amended, and any successor thereto.
Reimbursement Obligations - Section 2.2(c).
Reserve - For any day, that reserve (expressed as a decimal) which is
in effect (whether or not actually incurred) with respect to a Lender (or any
Affiliate of such Lender if applicable pursuant to Section 2.9(e)) on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor or any other banking authority to which a Lender (or any Affiliate of
such Lender if applicable pursuant to Section 2.9(e)) is subject including any
board or governmental or administrative agency of the United States or any other
jurisdiction to which a Lender (or any Affiliate of such Lender if applicable
pursuant to Section 2.9(e)) is subject), for determining the maximum reserve
requirement (including without limitation any basic, supplemental, marginal or
emergency reserves) for Eurocurrency liabilities as defined in Regulation D.
Reserve Percentage - For a Lender (or any Affiliate of such Lender if
applicable pursuant to Section 2.9(e)) on any day, that percentage (expressed as
a decimal) which is in effect on such day, prescribed by the Board of Governors
of the Federal Reserve System (or any successor or any other banking authority
to which a Lender (or any Affiliate of such Lender if applicable pursuant to
Section 2.9(e)) is subject, including any board or governmental or
administrative agency of the United States or any other jurisdiction to which a
Lender (or any Affiliate of such Lender if applicable pursuant to Section
2.9(e)) is subject), for determining the maximum reserve requirement (including
without limitation any basic, supplemental, marginal or emergency reserves) for
(a) deposits of United States dollars or (b) Eurocurrency liabilities as defined
in Regulation D, in each case used to fund a LIBOR Based Rate Advance subject to
an Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall be adjusted automatically
on and as of the effective day of any change in the Reserve Percentage.
Revolving Credit - Section 2.1.
Revolving Credit Notes - Section 2.1(c)(i).
S&P - Standard & Poor's Corporation.
Securities Act - The Securities Act of 1933, as amended, together with
all rules and regulations promulgated in connection therewith.
Stock Purchase Agreement - That certain Stock Purchase Agreement dated
as of October 3, 1995 between Gibson and the Borrower whereby the Borrower
agreed to purchase 100% of the outstanding capital stock of Cleo.
Subsidiary - With respect to any Person at any time, (a) any
corporation more than fifty (50%) percent of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
(50%) percent of whose voting stock is legally and beneficially owned by such
Person; (b) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person; and (c) any partnership, joint venture
or other entity of which ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at such time owned directly or indirectly, beneficially or of
record, by, or which is otherwise controlled directly, indirectly or through one
or more intermediaries by, such Person or one or more Subsidiaries of such
Person.
Super Majority Lenders - The Lenders holding Pro Rata Percentages
aggregating 66-2/3 or more of the total Revolving Credit.
Swing Line Advances - Advances under the Swing Line Commitment made by
the Swing Line Lender to the Borrower pursuant to Section 2.1(b).
Swing Line Commitment - The amount set forth opposite the Swing Line
Lender's name on Annex I attached hereto directly below the column entitled
"Swing Line Commitment", as the same may be reduced from time to time pursuant
to Section 8.
Swing Line Lender - CoreStates, in its capacity as such, and its
permitted successors and assigns in such capacity.
Swing Line Note - Section 2.1(c)(ii).
Third-Party Consent - Any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
notice to, or exemption or other action by any Person other than the Borrower or
any of its Subsidiaries or any Governmental Authority.
Tuggle Road Letters of Credit - Those certain stand-by Letters of
Credit in the initial face amount of $__________ and $___________, respectively,
issued by the Fronting Lender for the benefit of Toronto-Dominion Bank to
support those certain Letters of Credit issued by the Toronto-Dominion Bank for
the account of Cleo, Inc. supporting certain Industrial Revenue Bonds issued by
the Industrial Development Board of the City of Memphis and County of Shelby,
Tennessee for the purpose of financing Cleo's Manufacturing facilities in Shelby
County, Tennessee and any Letter of Credit hereafter issued by the Fronting
Lender (or, in lieu thereof, by any of the Lenders) to replace such Letters of
Credit issued by Toronto-Dominion Bank.
Transferee - Section 10.10(d).
Unrestricted Subsidiary - A subsidiary of the Borrower created or
acquired after the Closing Date and designated by the Borrower in writing to the
Administrative Agent prior to such creation or acquisition to be "unrestricted";
provided, however, that no Subsidiary may be designated as an Unrestricted
Subsidiary after such time as the total Investments made by the Borrower and the
Guarantors (taking into account any Investment being proposed as of the date of
any determination hereof), after the Closing Date, in Unrestricted Subsidiaries
previously designated as such, equals an aggregate amount of $20,000,000.
Unsecured Seller Note - That certain Non-Transferrable Promissory Note
of the Borrower in favor of Gibson in the principal amount of $24,574,157, a
true and correct copy of which is attached hereto as Exhibit "1.1(b)".
Utilization Fee - Section 2.6(a).
1.2 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
SECTION 2. THE LOAN.
2.1 Revolving Line of Credit - Description. Subject to the terms and
conditions of this Agreement, the Lenders hereby establish for the benefit of
the Borrower a revolving line of credit (collectively, the "Revolving Credit")
which shall include Advances extended by the Lenders to or for the benefit of
the Borrower from time to time hereunder, up to the Facility Limit.
(a) (i) Each Lender agrees severally to make Regular Advances to the
Borrower as a part of the Revolving Credit, subject to the terms of this
Agreement, up to the lesser of the amounts ("Pro Rata Shares") or percentages
("Pro Rata Percentages") of the Revolving Credit opposite its name on Annex I
attached hereto and incorporated herein by reference.
(ii) Regular Advances under the Revolving Credit (A) shall be made at
any time and from time to time on and after the Closing Date and prior to the
Maturity Date, (B) may be made as Alternate Base Rate Advances or, at the
Borrower's option and subject to the terms hereof, as LIBOR Based Rate Advances
or, at the Borrower's option and subject to the terms hereof, as Letters of
Credit; provided that all Advances made by all of the Lenders pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Advances of the same type, (C) may be repaid and reborrowed in
accordance with the provisions hereof, (D) shall not, when aggregated with a
Lender's Pro Rata Percentage of other Advances then outstanding, exceed for such
Lender, at any time outstanding, the Pro Rata Share of such Lender, at such time
and (E) shall not be made if, at the time the requested Advance is to be made,
the aggregate Outstandings, after giving effect to the Advance requested by the
relevant Notice of Borrowing, would exceed the lesser of (1) the Borrowing Base
as shown in the Borrowing Base Certificate that was last required to be
delivered pursuant to Section 5.14 or (2) the Facility Limit in effect at such
time.
(b) (i) The Swing Line Lender may, in its sole and absolute discretion,
make Swing Line Advances to the Borrower as a part of the Revolving Credit,
subject to the terms of this Agreement, up to the Swing Line Commitment.
(ii) Swing Line Advances under the Revolving Credit (A) shall be made
at any time and from time to time on and after the Closing Date and prior to the
Maturity Date, (B) shall be made only in cash and as Alternate Base Rate
Advances and shall not be entitled to be converted into LIBOR Based Rate
Advances so long as they remain Swing Line Advances, (C) may be repaid and
reborrowed in accordance with the provisions hereof, (D) shall not be made if
the aggregate principal amount of Swing Line Advances and the Swing Line
Lender's Pro Rata Percentage of all other Advances then outstanding, after
giving effect to the Swing Line Advance requested by the relevant Notice of
Borrowing, would exceed the Swing Line Lender's Pro Rata Share and (E) shall not
be made if the aggregate principal amount of Swing Line Advances and all other
Advances then outstanding, after giving effect to the Swing Line Advance
requested by the relevant Notice of Borrowing, would exceed the lesser of (1)
the Borrowing Base as shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 5.14 or (2) the Facility Limit in
effect at such time. In no event shall the aggregate principal amount of Swing
Line Advances outstanding at any time exceed the Swing Line Commitment.
(c) (i) At Closing, the Borrower shall execute and deliver its
promissory note to each Lender in the principal amount of such Lender's Pro Rata
Share, each in the form attached hereto as Exhibit 2.1(c)(i) (as amended,
replaced, restated or superseded from time to time, collectively the "Revolving
Credit Notes") to evidence its unconditional obligation to repay each Lender for
all Advances made under the Revolving Credit, with interest as herein and
therein provided. Each Advance under the Revolving Credit shall be deemed
evidenced by the Revolving Credit Notes, which are deemed incorporated herein by
reference and made a part hereof.
(ii) At Closing, the Borrower shall execute and deliver its promissory
note to the Swing Line Lender in the principal amount of the Swing Line
Commitment, in the form attached hereto as Exhibit 2.1(c)(ii) (as amended,
replaced, restated or superseded from time to time, the "Swing Line Note") to
evidence its unconditional obligation to repay the Swing Line Lender for all
Swing Line Advances made under the Revolving Credit, with interest as herein and
therein provided. Each Swing Line Advance under the Revolving Credit shall be
deemed evidenced by the Swing Line Note, which is deemed incorporated herein by
reference and made a part hereof.
(d) The term of the Revolving Credit shall expire on the Maturity Date
unless earlier terminated in accordance with the terms hereof. On such date,
unless having been sooner accelerated by the Administrative Agent pursuant to
the terms hereof, the Revolving Credit shall be terminated and all of the
Obligations shall be due and payable in full, and as of which date, no further
Advances shall be available from the Lenders.
2.2 Letters of Credit.
(a) As part of the Revolving Credit and subject to its terms and
conditions and the customary terms, conditions and procedures of the Fronting
Lender, the Fronting Lender, shall, at the request of the Administrative Agent
and on behalf of and for the benefit of the Lenders, make available to the
Borrower (either for its own account or, at the Borrower's request, as a
co-applicant with any of the Guarantors) Letters of Credit which shall not
exceed, in the aggregate at any one time outstanding, the L/C Commitment. All
Letters of Credit issued under the Revolving Credit shall reduce dollar for
dollar the amount available to be borrowed by the Borrower under the Revolving
Credit. No Letter of Credit shall be issued with an expiry date later than the
earlier of: (i) three hundred ninety-five (395) days from the date of issuance
(except the Tuggle Road Letters of Credit which may have expiry dates of up to
three (3) years from the date of issuance) and (ii) the thirtieth (30th) day
prior to the Maturity Date. The Borrower shall execute and deliver to the
Fronting Lender all letter of credit agreements (including without limitation,
the forms marked as Exhibit "2.2(a)" attached hereto and made a part hereof) and
other documents, instruments and agreements customarily required by the Fronting
Lender for such purposes. All such documents, instruments and agreements shall
be in form and substance satisfactory to the Fronting Lender. The outstanding
letters of credit issued by CoreStates which are listed on Schedule "2.2(a)"
shall be deemed for all purposes to have been issued under the Revolving Credit
as of the date hereof.
(b) Immediately upon the issuance of any Letter of Credit, the Fronting
Lender is deemed to have granted to each Lender, and each Lender is hereby
deemed to have irrevocably acquired, an individual participating interest
(without recourse or warranty), in accordance with each Lender's respective Pro
Rata Percentage, in all of the Fronting Lender's rights and liabilities with
respect to such Letter of Credit. Each Lender shall be directly, irrevocably and
unconditionally obligated to the Fronting Lender, according to its Pro Rata
Percentage, to reimburse the Fronting Lender for any draws made at any time
without regard to the occurrence of a Default or Event of Default (including
without limitation, following the commencement of any bankruptcy,
reorganization, receivership, liquidation or dissolution proceeding with respect
to the Borrower) under any Letter of Credit outstanding under the L/C Commitment
not immediately reimbursed by the Borrower.
(c) In the event of any request for drawing under any Letter of Credit
by the beneficiary thereof, the Fronting Lender shall promptly notify the
Borrower and the Borrower shall immediately reimburse the Fronting Lender on the
day when such drawing is honored, by either a cash payment by the Borrower, or
in the absence of such payment by the Borrower, by the Lenders automatically
making, or having been deemed to have made, (without further request or approval
of the Borrower) a cash Advance under the Revolving Credit on such date which
shall accrue interest at the Alternate Base Rate. All Advances which constitute
a reimbursement for a draw under a Letter of Credit shall be shared by the
Lenders in accordance with their respective Pro Rata Percentages. If, for any
reason, proceeds of Advances are not received by the Fronting Lender on the date
a drawing under a Letter of Credit is honored in an amount equal to the amount
of such drawing, the Borrower shall reimburse the Fronting Lender, on the
Business Day immediately following the date of such drawing, in an amount in
same day funds equal to the excess of the amount of such drawing over the amount
of such proceeds, if any, that are so received, plus accrued interest on such
amount at the Alternate Base Rate. The Borrower's reimbursement obligation for
draws under Letters of Credit along with its obligation to pay L/C Fees and
Fronting Fees shall herein be referred to collectively as the Borrower's
"Reimbursement Obligations". All of the Borrower's Reimbursement Obligations
hereunder with respect to Letters of Credit shall apply unconditionally and
absolutely to, and shall be joint and several with respect to, Letters of Credit
issued hereunder on behalf of the Borrower as a co-applicant with any of the
Guarantors as if such Letters of Credit had been issued for the account of the
Borrower alone and the term "Reimbursement Obligations" as used throughout this
Agreement and the other Loan Documents shall be deemed to include the Borrower's
Reimbursement Obligations and its obligation to pay L/C Fees and Fronting Fees
with respect to all such Letters of Credit.
(d) (i) In the event that the Borrower shall fail to reimburse the
Fronting Lender as provided in Section 2.2(c) in an amount equal to the amount
of the drawing honored by the Fronting Lender under a Letter of Credit, the
Fronting Lender shall promptly notify each Lender of the unreimbursed amount of
such drawing and of such Lender's participation therein based on such Lender's
Pro Rata Percentage. Each Lender shall make available to the Fronting Lender an
amount equal to its respective participation in same day funds, at the office of
the Fronting Lender specified in such notice, not later than 1:00 p.m.
(Philadelphia time) on the Business Day after the date notified by the Fronting
Lender. In the event that any Lender fails to make available to such Fronting
Lender the amount of such Lender's participation based on such Lender's Pro Rata
Percentage in such Letter of Credit, as provided in this Section 2.2(d), the
Fronting Lender shall be entitled to recover such amount on demand from such
Lender together with interest at the overnight Fed Funds Rate for the first
three (3) days and at the Alternate Base Rate for each day thereafter. The
Fronting Lender shall distribute to each other Lender which has paid all amounts
payable by it under this Section 2.2(d) with respect to any Letter of Credit,
such other Lender's share, based on such Lender's Pro Rata Percentage, of all
payments received by the Fronting Lender from the Borrower in reimbursement of
drawings honored by the Fronting Lender under such Letter of Credit, when such
payments are received. Nothing in this Section 2.2(d) shall be deemed to relieve
any Lender from its obligation to pay all amounts payable by it under this
Section 2.2(d) with respect to any Letter of Credit issued by the Fronting
Lender or to prejudice any rights that the Borrower or any other Lender may have
against a Lender as a result of any default by such Lender hereunder and no
Lender shall be responsible for the failure of any other Lender to pay its
respective participation, based on its Pro Rata Percentage, payable under this
Section 2.2(d).
(ii) In connection with the failure of any Lender to make available to
the Fronting Lender the amount of such Lender's participation in any Letter of
Credit, such Lender hereby agrees to protect, indemnify, pay and save the
Fronting Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including, without
limitation, reasonable attorneys' fees, allocated costs of internal counsel and
the costs (including judgments) in connection with any related litigation) which
the Fronting Lender may incur or be subject to as a consequence, direct or
indirect, of the failure of such Lender to make available its participation in
such Letter of Credit.
Notwithstanding anything to the contrary contained in this Section
2.2(d), no Lender failing to provide its participation in any Letter of Credit
shall have any obligation to indemnify the Fronting Lender in respect of any
liability incurred by the Fronting Lender arising solely out of the gross
negligence or willful misconduct of the Fronting Lender.
(e) The obligation of the Borrower to reimburse the Fronting Lender for
drawings made under the Letters of Credit and the obligations of the Lenders to
the Fronting Lender under Section 2.2(d) shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right that
the Borrower or any Affiliate of the Borrower or any other Person may have at
any time against a beneficiary or any transferee of any Letter of Credit (or any
Persons for whom any such beneficiary or transferee may be acting), the Fronting
Lender, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction;
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(iv) payment by the Fronting Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other document that does not
comply with the terms of such Letter of Credit unless the Fronting Lender shall
have acted in the absence of good faith and with willful misconduct or gross
negligence in issuing such payment;
(v) any other circumstance or happening whatsoever that is similar to
any of the foregoing; or
(vi) the fact that a Default or Event of Default shall have occurred
and be continuing.
(f) If by reason of (i) any change after the Closing Date in applicable
law, regulation, rule, decree or regulatory requirement or any change in the
interpretation or application by any judicial or regulatory authority of any
law, regulation, rule, decree or regulatory requirement or (ii) compliance by
the Fronting Lender or any Lender with any direction, reasonable request or
requirement (whether or not having the force of law) of any governmental or
monetary authority including, without limitation, Regulation D:
(A) the Fronting Lender or any Lender shall be subject to any tax or
other levy or charge of any nature or to any variation thereof (except for
changes in the rate of any tax on the net income of the Fronting Lender or any
Lender or its applicable lending office) or to any penalty with respect to the
maintenance or fulfillment of its obligations under this Section 2.2, whether
directly or by such being imposed on or suffered by the Fronting Lender or any
Lender;
(B) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued by the
Fronting Lender or participations therein purchased by any Lender; or
(C) there shall be imposed on the Fronting Lender or any Lender any
other condition regarding this Section 2.2, any Letter of Credit or any
participation therein; and the result of the foregoing is to directly or
indirectly increase the cost to the Fronting Lender or any Lender of issuing,
creating, making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or to reduce the amount receivable in
respect thereof by the Fronting Lender or any Lender, then and in any such case
the Fronting Lender or such Lender shall, within 90 days after the additional
cost is incurred or the amount received is reduced, notify the Borrower and the
Borrower shall pay on demand such amounts as may be necessary to compensate the
Fronting Lender or such Lender on an after-tax basis for such additional cost or
reduced receipt, together with interest on such amount from the date demanded
until payment in full thereof at a rate per annum equal at all times to the
Alternate Base Rate. A certificate signed by an officer of the Lender as to the
amount of such increased cost or reduced receipt showing in reasonable detail
the basis for the calculation thereof, submitted to the Borrower and the
Administrative Agent by the Fronting Lender or any Lender, as the case may be,
shall, except for manifest error, be final, conclusive and binding for all
purposes.
(g) In addition to amounts payable as elsewhere provided in this
Section 2.2, without duplication, the Borrower hereby agrees to protect,
indemnify, pay and save the Fronting Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and reasonable allocated costs of internal
counsel) which the Fronting Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of the Letters of Credit or (ii) the
failure of the Fronting Lender to honor a drawing under any Letter of Credit as
a result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority (all such acts
or omissions herein called "Government Acts").
As between the Borrower and the Fronting Lender, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by the Fronting Lender by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the Fronting
Lender shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effects of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of any such Letter of Credit to comply
fully with conditions required in order to draw upon such Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
are in cipher, unless any of the foregoing are caused by the Fronting Lender's
gross negligence or willful misconduct; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof, unless caused by the Fronting Lender's gross negligence or
willful misconduct; (vii) for the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the control of the
Fronting Lender, including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of any of the Fronting
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Fronting
Lender in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith, shall not create any liability
on the part of the Fronting Lender to the Borrower.
Notwithstanding anything to the contrary contained in this Section
2.2(g), the Borrower shall have no obligation to indemnify the Fronting Lender
in respect of any liability incurred by the Fronting Lender arising solely out
of the gross negligence or willful misconduct of the Fronting Lender.
2.3 Voluntary Reduction of Commitment. The Borrower may, at any time,
without premium or penalty, permanently reduce the Facility Limit then
available. The exercise of the foregoing option shall be evidenced by the
Borrower giving the Administrative Agent written notice of the Borrower's
election to do so (as evidenced for the purposes of this Section by a written
acknowledgment of receipt executed by such officer of the Administrative Agent
as the Administrative Agent may designate to the Borrower in writing) of such
reduction request. Such notice shall be irrevocable and shall specify the date
upon which such reduction shall be effective (which effective date shall be a
Business Day and shall be no less than 5 days after receipt of such notice by
the Administrative Agent) and the amount thereof, which shall be in the minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of such
amount. In the event of such a reduction in the Facility Limit, Advances in an
amount equal to that amount of the Outstandings that is in excess of the
Facility Limit, as so reduced ("Over-Limit Amount") shall be simultaneously paid
on the effective date of such reduction, with interest accrued on the amount so
paid or prepaid to the date of such reduction. On the effective date of such
reduction, the Borrower shall cash collateralize Letters of Credit, on terms
satisfactory to the Administrative Agent, in the amount, if any, by which the
Over-Limit Amount exceeds the amount of non-Letter of Credit Advances and shall
execute such documents, instruments and agreements as the Administrative Agent
shall deem necessary to perfect a security interest in such cash collateral. A
reduction in the Facility Limit shall reduce each Lender's Pro Rata Share in
accordance with its respective Pro Rata Percentage.
2.4 Advances, Conversions, Renewals and Payments:
(a) Except to the extent otherwise set forth in this Agreement, all
payments of principal and of interest on the Revolving Credit, the Commitment
Fee, the Utilization Fee, the L/C Fees, all other charges, Expenses and any
other Obligations of the Borrower hereunder, shall be made to the Administrative
Agent at its main Philadelphia banking office, Broad and Chestnut Streets,
Philadelphia, Pennsylvania (or such other office as may be designated by the
Agent to the Borrower in writing), in immediately available funds in lawful
money of the United States of America. The Administrative Agent shall have the
unconditional right and discretion to charge the Borrower's operating account
with the Administrative Agent (or any Subsidiary's operating account with the
Administrative Agent, if so directed by the Borrower or if an Event of Default
has occurred hereunder) for all of the Borrower's Obligations as they become due
from time to time under this Agreement, including without limitation, interest,
principal, fees and reimbursement of Expenses.
(b) (i) Advances (except Letters of Credit) which may be made by the
Lenders from time to time under the Revolving Credit shall be made available by
crediting such proceeds to the Borrower's operating account with the
Administrative Agent or to such other Persons or accounts as may be specified by
the Borrower to the Administrative Agent in writing.
(ii) All Regular Advances (except Letters of Credit) requested by the
Borrower must be in the minimum amount of (A) $2,000,000 (unless the Swing Line
Lender shall refuse to, or is unable, to make a Swing Line Advance for a lesser
amount in which case such minimum amount shall be $500,000) and integral
multiples of $100,000 in excess of such amount for Alternate Base Rate Advances
(unless otherwise agreed by the Administrative Agent in its sole and absolute
discretion) and (B) $5,000,000 and integral multiples of $100,000 in excess of
such amount for LIBOR Based Rate Advances and must be requested:
(A) For all Alternate Base Rate Advances (including Swing Line
Advances) by eleven o'clock (11:00) A.M., Philadelphia time, on the date such
Advance is to be made; and
(B) For all LIBOR Based Rate Advances or any Letter of Credit, by ten
o'clock (10:00) A.M., Philadelphia time, at least three (3) Business Days before
such Advance is to be made.
All requests for an Advance are to be in writing in the form attached
hereto as Exhibit "2.4(b)" and made a part hereof ("Notice of Borrowing") which
form is to be executed by an Authorized Officer of the Borrower. Such request
may be sent by telecopy or facsimile transmission provided that receipt of such
request shall not be effective unless confirmed via telephone to the
Administrative Agent. Once made, Advance requests are irrevocable. Each request
must indicate the amount of such Advance, the date of such Advance, and whether
or not the requested Advance is a LIBOR Based Rate Advance or an Alternate Base
Rate Advance or a conversion or renewal of an existing Advance, and in the case
of a LIBOR Based Rate Advance, must specify the applicable LIBOR Interest
Period. Upon receiving a request for an Advance in accordance with this
subparagraph (ii) by twelve o'clock (12:00) noon, Philadelphia time on the date
of such request, or as soon as is reasonably practicable thereafter, the
Administrative Agent shall notify all Lenders of the request.
(iii) (A) Each Lender shall advance its applicable Pro Rata Percentage
of a requested Regular Advance (and in the case of a Swing Line Advance, the
Swing Line Lender shall advance the amount of the requested Swing Line Advance)
to the Administrative Agent by remitting federal funds immediately available to
the Administrative Agent pursuant to the Administrative Agent's instructions
prior to three o'clock (3:00) p.m. Philadelphia time on the date of the Advance.
Subject to the satisfaction of the terms and conditions hereof and receipt by
the Administrative Agent of all required funds from the other Lenders, the
Administrative Agent shall make the requested Advance available to the Borrower
by crediting such amount to the Borrower's operating account with the
Administrative Agent as soon as is reasonably practicable thereafter on the day
the requested Advance is to be made.
(B) (1) The Swing Line Lender shall, so long as and to the extent that
amounts are available to be borrowed under the Facility Limit (whether or not
any conditions precedent thereto can be or are met), require each other Lender,
and each other Lender hereby agrees, subject to this Section 2.4(b)(iii)(B), on
such date (which shall be a Business Day) as designated by the Swing Line Lender
in writing to the Borrower and the other Lenders, to make a Regular Advance,
which shall be an Alternate Base Rate Advance, in an amount equal to such
Lender's Pro Rata Percentage of the amount of the Swing Line Advances specified
in such notice (each a "Mandatory Loan"). If Alternate Base Rate Advances are
made by the Lenders other than the Swing Line Lender under the immediately
preceding sentence, each such Lender shall make the amount of its Regular
Advance available to the Administrative Agent, in same day funds, at the
Administrative Agent's office, not later than 12:00 noon (Philadelphia time) on
the Business Day next succeeding the date such notice is given. The conversion
of Swing Line Advances to Regular Advances will not require the Borrower to
comply with the conditions set forth in Section 3 hereof or the notice
requirements of Section 2.4(b) hereof or require any other action on the part of
the Borrower. The proceeds of such Regular Advances shall be immediately
delivered to the Swing Line Lender (and not to the Borrower) and applied to
repay the outstanding Swing Line Advances. On the day such Regular Advances are
made, the Swing Line Lender's Pro Rata Share of the Swing Line Advances shall be
deemed to be paid with the proceeds of a Regular Advance made by the Swing Line
Lender and such portion of the Swing Line Advances deemed to be so paid shall no
longer be outstanding as Swing Line Advances, shall no longer be due under the
Swing Line Note and shall be due under the Revolving Credit Note issued to the
Swing Line Lender. If any portion of any such amount paid to the Swing Line
Lender should be recovered by or on behalf of the Borrower from the Swing Line
Lender in bankruptcy, by assignment for the benefit of creditors or otherwise,
the loss of the amount so recovered shall be ratably shared among all of the
Lenders in the manner contemplated by Section 9.7 hereof. Each Lender's
obligation to make the Regular Advances referred to in this paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) the occurrence of any
Material Adverse Effect with respect to the Borrower; (iv) any breach of this
Agreement or any of the other Loan Documents by the Borrower or any of its
Subsidiaries or any other Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
(2) In the event that any Mandatory Loan cannot for any reason be made
on the date otherwise required above (including, without limitation, as a result
of the commencement of a proceeding under the Bankruptcy Code with respect to
the Borrower), then each Lender hereby agrees that it shall forthwith purchase
(as of the date the Mandatory Loan would otherwise have occurred, but adjusted
for any principal payments received by the Swing Line Lender relating to the
Swing Line Advance from the Borrower on or after such date and prior to such
purchase) from the Swing Line Lender, such participations in the outstanding
Swing Line Advances as shall be necessary to cause such Lenders to share in such
Swing Line Advances ratably based upon their respective Pro Rata Percentages;
provided, however, that (x) all interest payable on the Swing Line Advances
shall be for the account of the Swing Line Lender until the date as of which the
respective participation required to be purchased is paid and, to the extent
attributable to the purchased participation, shall be payable to the participant
from and after such date and (y) at the time any purchase of participations
pursuant to this sentence is actually made, the purchasing Lender shall be
required to pay the Swing Line Lender interest on the principal amount of the
participation purchased for each day from and including the day upon which the
Mandatory Loan would otherwise have occurred to but excluding the date of
payment for such participation, at a rate per annum equal to (I) the overnight
Fed Funds Rate for the first three (3) days and (II) at the Alternate Base Rate
for each day thereafter.
(3) A copy of each notice given by the Swing Line Lender to the Lenders
pursuant to Section 2.4(b)(iii)(B)(1) shall be promptly delivered by the Swing
Line Lender to the Administrative Agent and the Borrower. Upon the making of a
Regular Advance by a Lender pursuant to this Section 2.4(b)(iii)(B), the amount
so funded shall become due under such Lender's Revolving Credit Note and shall
no longer be owed under the Swing Line Note.
(C) Neither the Administrative Agent nor any other Lender shall be
obligated, for any reason whatsoever, to advance the share of any other Lender
(including, any Lender's share of funding obligations with respect to Letters of
Credit). If such corresponding amount is not made available to the
Administrative Agent by such Lender on the date the Advance is made and the
Administrative Agent elects (at its sole and absolute discretion, without any
obligation to do so) to make such Lender's share of the Advance available to the
Borrower, the Administrative Agent shall be entitled to recover such amount on
demand from such Lender, or from the Borrower, together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to the Borrower and ending on (but excluding) the date the
Administrative Agent recovers such amount, at a rate per annum equal to the Fed
Funds Rate, for each such day (or, if such day is not a Business Day, for the
next preceding Business Day). The Administrative Agent shall also be entitled to
recover any and all losses and damages (including without limitation, reasonable
attorneys' fees and costs) from any Lender failing to so advance upon demand of
the Administrative Agent. The Administrative Agent may set off the obligations
of a Lender under this paragraph against any distributions or payments of the
Obligations which the Administrative Agent would otherwise make available to
such Lender. To the extent any Lender fails to provide its respective Pro Rata
Percentage of any requested Advance, such Lender's Pro Rata Percentage of all
payments of the Obligations shall decrease to reflect the actual percentage
which its actual outstanding Advances bears to the total outstanding Advances of
all Lenders.
2.5 Interest. The unpaid principal balance of the Revolving Credit
shall bear interest, subject to the terms hereof, on one of the two bases
selected by the Borrower from among the borrowing options set forth below, it
being understood that subject to the provisions hereof, the Borrower may select
different options to apply simultaneously to different parts of the outstanding
Revolving Credit.
(a) Alternate Base Rate Option Interest on the outstanding Alternate
Base Rate Advances under the Revolving Credit will accrue at the Alternate Base
Rate. Interest on all Alternate Base Rate Advances shall be payable quarterly,
in arrears, on the first day of each calendar quarter beginning on the first day
of the first full calendar quarter after the date hereof.
(b) LIBOR Rate Option
(i) Interest on the outstanding LIBOR Based Rate Advances under the
Revolving Credit shall accrue at the rate ("LIBOR Based Rate") equal to the sum
of (A) the Adjusted LIBOR Rate as determined by the Administrative Agent on the
Interest Rate Determination Date plus (B) a margin (the "LIBOR Based Rate
Margin") equal to one and one quarter (1.25%) percent per annum. Notwithstanding
the foregoing, the LIBOR Based Rate Margin may, after December 31, 1996,
fluctuate from time to time in accordance with the following schedule:
If the Borrower's Ratio of Consolidated
EBITDA to Consolidated Interest Expense
is equal to or greater
than the following (measured on Eligible LIBOR
a rolling four quarter basis) Based Rate Margin
Less than 5.50 to 1 one and one quarter
(1.25%) percent per
annum
("Level 1")
5.50 to 1 one (1.0%) percent
per annum
("Level 2")
7.00 to 1 three quarters of
one (0.75%) percent
per annum
("Level 3")
9.50 to 1 one half of one
(.50%) percent
per annum
("Level 4")
Changes in the LIBOR Based Rate Margin (if any) shall become effective
(A) with respect to the Quarterly Compliance Certificate delivered in respect of
the first three (3) fiscal quarters in any fiscal year in accordance with
Section 5.8, commencing on the first day of the calendar month immediately
following the calendar month in which the Administrative Agent shall have
received from the Borrower such Quarterly Compliance Certificate or (B) with
respect to the Quarterly Compliance Certificate delivered in respect of the last
fiscal quarter in any fiscal year in accordance with Section 5.8, commencing on
the earlier to occur of (I) the first day of the calendar month immediately
following the calendar month in which the Administrative Agent shall have
received from the Borrower such Quarterly Compliance Certificate or (II) the
first day of the calendar month immediately following the calendar month in
which the date 45 days after the end of the fiscal year of the Borrower most
recently ended occurs provided, however, that no such changes shall occur (x)
until the Borrower has delivered its year end Quarterly Compliance Certificate
for the fiscal year ending December 31, 1996 and (y) unless no Default or Event
of Default shall have occurred and be continuing. Upon the occurrence and during
the continuance of a Default or an Event of Default, the LIBOR Based Rate Margin
may, in the discretion of the Administrative Agent or at the direction of the
Majority Lenders, be increased (and shall automatically be so increased if the
Default or Event of Default is a payment default) to one and one quarter (1.25%)
percent per annum (in addition to institution of the Default Rate, if
applicable) and shall be applied retroactively to the date of the occurrence of
such Default or Event of Default (or in the event of a Default in respect of the
obligation to deliver a Quarterly Compliance Certificate for the last fiscal
quarter in each fiscal year, the first day of the calendar month immediately
following the calendar month in which the date 45 days after the end of the
latest fiscal year of the Borrower occurs). Notwithstanding the foregoing,
decreases in the LIBOR Based Rate Margin, from one fiscal quarter of the
Borrower to the next, shall be no greater than one level. By way of example
only, if the LIBOR Based Rate Margin is at Level 1 during a fiscal quarter and
the Borrower's Quarterly Compliance Certificate for the end of such quarter
shows the Borrower's Ratio of Consolidated EBITDA to Consolidated Interest
Expense to be greater than 9.50 to 1, the applicable LIBOR Based Rate Margin for
the next fiscal quarter shall be Level 2. If such covenant calculations remain
the same as of the end of such second quarter, the LIBOR Based Rate Margin shall
decrease to Level 3. If, however, such certificate shows the ratio to be less
than 5.50 to 1, then the LIBOR Based Rate Margin shall return to Level 1 for the
third quarter.
(ii) Those portions of the Revolving Credit subject to this option
shall be selected and outstanding for either a one (1) month, two (2) month,
three (3) month, or six (6) month (or if available from all of the Lenders, nine
(9) month or twelve (12) month) period from the date such LIBOR Based Rate
Advance is made or renewed or an Advance is converted to a LIBOR Based Rate
Advance ("LIBOR Interest Period") and must be repaid in full on the last day of
such applicable period, with all accrued and unpaid interest thereon. Interest
shall also be due and payable, for LIBOR Based Rate Advances having a LIBOR
Interest Period of three (3) months or greater, on each date occurring at
three-month intervals after the first day of such LIBOR Based Rate Advance
Period. No LIBOR Interest Period may end after the Maturity Date. Subject to all
of the terms and conditions applicable to a request for a new Advance which the
Borrower desires to select as a LIBOR Based Rate Advance, the Borrower may
convert any Advance to a LIBOR Based Rate Advance or extend a LIBOR Based Rate
Advance as of the last day of the LIBOR Interest Period to a new LIBOR Based
Rate Advance.
(iii) No more than ten (10) portions (tranches) of principal of LIBOR
Based Rate Advances may be outstanding at any one time.
(iv) The initial LIBOR Interest Period for any Borrowing of LIBOR Based
Rate Advances shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of an Alternate Base Rate Advance) and each
LIBOR Interest Period occurring thereafter (including continuations thereof) in
respect of such Borrowing shall commence on the date on which the next preceding
LIBOR Interest Period expires.
(v) If any LIBOR Interest Period relating to a Borrowing of LIBOR Based
Rate Advances begins on a date for which there is no numerically corresponding
date in the calendar month in which such LIBOR Interest Period ends, such LIBOR
Interest Period shall end on the last Business Day of such calendar month.
(vi) If any LIBOR Interest Period would otherwise expire on a day which
is not a Business Day, such LIBOR Interest Period shall expire on the next
succeeding Business Day; provided that if any LIBOR Interest Period in respect
of a LIBOR Based Rate Advance would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such LIBOR Interest Period shall expire on the next
preceding Business Day.
(c) Calculation of Interest Interest shall be calculated on the basis
of a 360 day year (or a year of 365 or 366 days, as the case may be, in the case
of all Advances based on the Prime Rate) and charged on the actual days elapsed.
(d) Failure to Specify Rate All Advances for which an interest rate
option is not specifically designated by the Borrower, pursuant to the terms
hereof, or not requested in conformity with the terms hereof, shall be Alternate
Base Rate Advances.
(e) Default Rate After the occurrence and during the continuance of an
Event of Default hereunder, the per annum effective rate of interest on all
Advances may, in the discretion of the Administrative Agent or at the direction
of the Majority Lenders, be increased (and shall be automatically so increased
if the Event of Default is a payment default) by two (2%) percentage points and
may be applied retroactively to the date of the occurrence of such Event of
Default. Upon an acceleration of the Obligations by the Administrative Agent
and/or the Lenders hereunder, the Administrative Agent may (and shall, at the
direction of the Majority Lenders), automatically and without prior notice to
the Borrower, convert each LIBOR Based Rate Advance to an Alternate Base Rate
Advance. The Administrative Agent will subsequently give notice to the Borrower
of such conversion.
(f) Continuation of Interest Charges All rates of interest charged on
Advances under the Revolving Credit shall, until such Advances are paid,
continue to accrue at the applicable contract rate provided in this Agreement
and be paid even after the occurrence of any Default or Event of Default, or
after maturity, acceleration, recovery of judgment, bankruptcy, insolvency
proceedings of any kind or the happening of any event or occurrence similar or
dissimilar.
(g) Applicable Interest Limitations In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest hereunder and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. In the event that such court
determines the Lenders have charged or received interest hereunder in excess of
the highest applicable rate, the Lenders shall apply and set off such excess
interest received by the Lenders against other Obligations due or to become due
and such rate shall automatically be reduced to the maximum rate permitted by
such law.
2.6 Fees.
(a) So long as the Revolving Credit is outstanding and has not been
terminated, the Borrower shall unconditionally pay to the Administrative Agent,
for the ratable benefit of the Lenders, a fee ("Utilization Fee") equal to one
quarter of one (.25%) percent per annum of the aggregate Modified Advances for
each day on which the aggregate Modified Advances exceed $97,500,000, which fee
shall be computed and paid on a quarterly basis, in arrears, on the first day of
each calendar quarter, beginning in the first calendar quarter after the Closing
Date, in each case for the actual number of days elapsed over a 360 day year.
(b) So long as the Revolving Credit is outstanding and has not been
terminated, the Borrower shall unconditionally pay to the Administrative Agent,
for the ratable benefit of the Lenders, a fee ("Commitment Fee") equal to one
quarter of one (.25%) percent per annum of the actual daily unused portion of
the Revolving Credit (which shall be calculated as the Facility Limit minus the
average daily outstanding principal balance of Advances during each fiscal
quarter) which fee shall be computed and paid on a quarterly basis, in arrears,
on the first day of each calendar quarter, beginning in the first calendar
quarter after the Closing Date, in each case for the actual number of days
elapsed over a 360 day year.
(c) (i) The Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders, letter of credit fees equal to (A) one quarter
of one (.25%) percent of the face amount of each documentary letter of credit,
which shall be computed and paid upon issuance (as a condition of the issuance
of each such Letter of Credit) and (B), for each day, the applicable LIBOR Based
Rate Margin multiplied by the aggregate undrawn face amount of the outstanding
standby letters of credit (collectively, the "L/C Fees") which shall be computed
and paid a quarterly basis, in arrears, on the first day of each calendar
quarter, beginning in the first calendar quarter after the Closing Date, in each
case for the actual number of days elapsed over a 360 day year.
(ii) In addition to the foregoing, the Borrower shall pay to the
Fronting Lender, for its own account, (A) a fee ("Fronting Fee") equal to one
eighth of one (1/8%) percent per annum of the aggregate face amount of the
outstanding Letters of Credit which shall be computed and paid on a quarterly
basis, in arrears, on the first day of each calendar quarter, beginning in the
first calendar quarter after the Closing Date, in each case for the actual
number of days elapsed over a 360 day year, and (B) customary issuance,
amendment, extension, cancellation and administration fees and charges for each
Letter of Credit, due and payable upon demand of the Fronting Lender.
2.7 Prepayments: Advances (except Letters of Credit) may be prepaid at
any time and from time to time in whole or in part without premium or penalty,
subject to reimbursement of the Lenders' re-deployment costs in the case of
prepayments of LIBOR Based Rate Advances in accordance with Section 2.9 below.
2.8 Use of Proceeds: The proceeds of the Lenders' Advances under the
Revolving Credit shall be used by the Borrower solely: (a) to pay the cash
portion of the purchase price to be paid in connection with the Acquisition, (b)
to provide Letters of Credit to be used by the Borrower solely in the ordinary
course of its business subject to the reasonable approval of the Fronting Lender
as well as replace the existing letters of credit issued under the Existing
Credit Facilities on behalf of the Borrower and its Subsidiaries (except for
certain letters of credit issued by CoreStates as set forth on Schedule "2.2(a)"
which shall be deemed to be issued under the Revolving Credit), (c) to repay in
full existing Indebtedness under the Existing Credit Facilities (in which case
the facilities and commitments related to the Existing Credit Facilities other
than the existing facility in favor of Rapidforms, Ltd. shall be canceled), (d)
to pay fees and expenses related to the Acquisition, (e) to pay the Unsecured
Seller Note and (f) for working capital needs and general corporate purposes,
including the funding of Permitted Acquisitions, permitted dividends and
permitted stock repurchases, not otherwise prohibited under this Agreement.
2.9 Special Provisions Governing LIBOR Based Rate Advances.
Notwithstanding other provisions of this Agreement, the following provisions
shall govern with respect to LIBOR Based Rate Advances as to the matters
covered:
(a) On the Interest Rate Determination Date the Administrative Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto) the interest rate which shall
apply to the LIBOR Based Rate Advances for which an interest rate is then being
determined for the applicable LIBOR Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing or by facsimile)
to the Borrower and to each Lender.
(b) In the event that (x) in the case of clause (i) below, the
Administrative Agent or (y) in the case of clause (ii) or (iii) below, any
Lender, shall have determined (which determination shall, absent manifest error,
be final, conclusive and binding upon all parties hereto):
(i) at any time that a LIBOR Rate is to be determined by the
Administrative Agent that, by reason of any changes arising on or after the
Closing Date affecting the interbank Eurodollar market, adequate and fair means
do not exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Adjusted LIBOR Rate;
(ii) at any time that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to any
Lender or its obligation to make LIBOR Based Rate Advances (which increase in
cost or reduction in receivables shall be calculated in accordance with such
Lender's reasonable averaging and attribution methods) because of (x) any change
since the Closing Date (including changes proposed or published prior to the
Closing Date but not reflected in the pricing of the Advances) in any applicable
law or governmental (or quasi-governmental or other body or entity accorded the
status of a rule or regulation making authority) rule, regulation, guideline or
order, whether or not having the force of law, or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order, such as, for example, but not
limited to: (A) a change in the basis of taxation of payments to any Lender of
the principal of or interest on the Revolving Credit Notes or any other amounts
payable hereunder (except for changes in the rate of tax on, or determined by
reference to, the net income or profits of such Lender pursuant to the laws of
the jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein) or
(B) a change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the computation
of the LIBOR Rate and/or (y) other circumstances since the date of this
Agreement affecting such Lender or the interbank Eurodollar market or the
position of such Lender in such market; or
(iii) at any time that the making or continuance of any LIBOR Based
Rate Advance has become unlawful by compliance by such Lender in good faith with
any applicable law or governmental (or quasi-governmental or other body or
entity accorded the status of a rule or regulation making authority) rule,
regulation, guideline or order (or would conflict with any such governmental
rule, regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), or has become impracticable
as a result of a contingency occurring after the Closing Date which materially
and adversely affects the interbank eurodollar market; then, and in any such
event, the Administrative Agent in the case of clause (i) above or such Lender
in the case of clause (ii) or (iii) above shall on such date give notice (by
telephone confirmed in writing or by facsimile) to the Borrower of the
Advance(s) affected and, in the case of clause (ii) or (iii) to the
Administrative Agent, of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, LIBOR Based Rate Advances shall no longer be
available until such time as the Administrative Agent notifies the Borrower and
the Lenders that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing given by the
Borrower with respect to the borrowing of or conversion into (including
continuance of) LIBOR Based Rate Advances which have not yet been incurred shall
be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its reasonable discretion
shall determine) as shall be required to compensate such Lender on an after-tax
basis for such increased costs or reductions in amounts receivable hereunder (a
written certificate signed by an officer of such Lender as to the additional
amounts owed to such Lender, showing in reasonable detail the basis for the
calculation thereof, submitted to the Borrower by such Lender shall, absent
manifest error, be final, conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 2.9(c) as promptly as possible and, in any event,
within the time period required under Section 2.9(c) or, if earlier, the time
period required by law. All demands for payment hereunder shall be given no more
than ninety (90) days after the occurrence of the change in law or other event
giving rise to such demand; provided however, that failure to deliver notice on
a timely basis shall not constitute a waiver of any Lender's right to receive
payment for any costs relating to the 90-day period preceding the date of demand
and any costs incurred after the giving of such notice.
(c) At any time that any LIBOR Based Rate Advance is affected by the
circumstances described in Section 2.9(b)(ii) or (iii), the Borrower may (and in
the case of a LIBOR Based Rate Advance affected pursuant to Section 2.9(b)(iii)
shall) either (i) if a Notice of Borrowing has been given with respect to the
affected LIBOR Based Rate Advance, cancel said Notice of Borrowing by giving the
Administrative Agent telephonic notice (confirmed promptly in writing or by
facsimile) thereof on the same date that the Borrower was notified by a Lender
pursuant to Section 2.9(b)(ii) or (iii), or (ii) if the affected LIBOR Based
Rate Advance is then outstanding, upon at least three (3) Business Days' notice
to the Administrative Agent, require the affected Lender to convert each such
LIBOR Based Rate Advance into an Alternate Base Rate Advance or prepay such
LIBOR Based Rate Advance on the last day of the current LIBOR Interest Period
therefor unless earlier payment is required by law; provided that if more than
one Lender is affected at any time, then all affected Lenders must be treated
the same pursuant to this Section 2.9(c); and provided, further, that the
Borrower shall compensate any such affected Lenders as set forth in Section
2.9(f).
(d) Anything herein to the contrary notwithstanding, if, on any
Interest Rate Determination Date, no LIBOR Rate is available by reason of any
changes arising on or after the Closing Date affecting the interbank Eurodollar
market or adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of LIBOR Rate, the
Administrative Agent shall give the Borrower and each Lender prompt notice
thereof and the Advances requested to be made as LIBOR Based Rate Advances
shall, subject to the applicable notice requirements, be made as Alternate Base
Rate Advances.
(e) Each Lender agrees that, as promptly as practicable after it has
actual knowledge of the occurrence of any event or the existence of a condition
that would cause it to be an affected Lender under Section 2.9(b)(ii) or (iii),
it will, to the extent not inconsistent with such Lender's internal policies,
use reasonable efforts to make, fund or maintain the affected LIBOR Based Rate
Advances of such Lender through another lending office of such Lender if as a
result thereof the additional moneys which would otherwise be required to be
paid in respect of such Advances pursuant to Section 2.9(b)(ii) would be
materially reduced or the illegality or other adverse circumstances which would
otherwise require prepayment of such Advances pursuant to Section 2.9(b)(iii)
would cease to exist, and if, as determined by such Lender, in its reasonable
discretion, the making, funding or maintaining of such Advances through such
other lending office would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to promptly pay all reasonable out-of-pocket expenses
incurred by any Lender in utilizing another lending office of such Lender
pursuant to this Section 2.9(e).
(f) The Borrower shall compensate each Lender, upon written request by
that Lender, for all reasonable losses, expenses and liabilities (including,
without limitation, such factors as any interest paid by that Lender to lenders
of funds borrowed by it to make or carry its LIBOR Based Rate Advances and any
loss sustained by that Lender in connection with re-deployment of such funds
(based upon the difference between the amount earned in connection with the
re-deployment of such funds and the amount payable by the Borrower if such funds
had been borrowed or remained outstanding, but not for loss of profit)) which
that Lender may sustain with respect to the Borrower's LIBOR Based Rate
Advances: (i) if for any reason attributable to the Borrower, a Borrowing of any
LIBOR Based Rate Advance does not occur on a date specified therefor in a Notice
of Borrowing, or a telephonic request for borrowing or conversion, or a
successive LIBOR Interest Period does not commence after notice therefor is
given or is deemed to have been given pursuant to Section 2.4(b) (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to clause (x) of the last
paragraph of Section 2.9(b)); or (ii) if any prepayment or repayment (in
accordance with Section 2.7, this Section 2.9, by acceleration or otherwise) or
conversion of any of such Lender's LIBOR Based Rate Advances occurs on a date
which is not the last day of the LIBOR Interest Period applicable to that
Advance; or (iii) if any prepayment or repayment of any such Lender's LIBOR
Based Rate Advances is not made on any date specified in a notice of prepayment
or repayment given by the Borrower; or (iv) as a consequence of (x) any other
failure by the Borrower to repay such Lender's LIBOR Based Rate Advances when
required by the terms of this Agreement or (y) any election made pursuant to
Section 2.9(c). Compensation owing under this Section 2.9(f) shall be equal to
the amount of interest which would have accrued on the amount of principal
prepaid or repaid or converted or not borrowed for the period from the date of
such prepayment or repayment or conversion or failure to borrow to the last day
of the then current LIBOR Interest Period for the relevant LIBOR Based Rate
Advance (or, in the case of a failure to borrow, the LIBOR Interest Period for
such LIBOR Based Rate Advance which would have commenced on the date of such
failure to borrow) at the applicable rate of interest for such LIBOR Based Rate
Advance provided for herein minus any amount such Lender, in good faith and in
its sole discretion, determines is realizable upon the re-deployment of such
funds. A certificate signed by an officer of the Lender as to the amount of such
losses, expenses and liabilities, showing in reasonable detail the calculation
thereof and submitted to the Borrower by such Lender shall, absent manifest
error, be final, conclusive and binding for all purposes.
(g) Any Lender may make, carry or transfer LIBOR Based Rate Advances
at, to, or for the account of any of its branch offices or the office of an
Affiliate of that Lender; provided that any increased costs associated therewith
shall be borne by such Lender except as provided in Section 2.9(e) above.
(h) During the continuance of a Default or an Event of Default, the
Borrower may not elect to have an Advance made or maintained as, or converted
into, a LIBOR Based Rate Advance after the expiration of any LIBOR Interest
Period then in effect for that Advance.
(i) Calculation of all amounts payable to the Lenders under this
Section 2.9 in respect of LIBOR Based Rate Advances shall be made as though the
Lender had actually funded its relevant LIBOR Based Rate Advance through the
purchase of a Eurodollar deposit bearing interest at the LIBOR Rate applicable
to such LIBOR Based Rate Advance and having a maturity comparable to the
relevant LIBOR Interest Period and through the transfer of such Eurodollar
deposit from an offshore office of the applicable Lender to a domestic office of
such Lender in the United States of America; provided, however, that the Lenders
may fund each of their LIBOR Based Rate Advances in any manner they deem fit and
the foregoing assumption shall be utilized only for the calculation of amounts
payable under this Section 2.9.
2.10 Capital Requirements, Etc. If the adoption or effectiveness after
the Closing Date of any applicable law or governmental (or quasi-governmental or
other body or entity accorded the status of a rule or regulation making
authority) rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender or such
Lender's direct or indirect parent with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency (including in each case any such change
proposed or published prior to the date hereof but not reflected in the pricing
of the Advances), has or would have the effect of reducing the rate of return on
such Lender's or such Lender's parent's capital or assets as a consequence of
such Lender's obligations hereunder to a level below that which such Lender or
such Lender's parent could have achieved but for such adoption, effectiveness or
change or as a consequence of an increase in the amount of capital required to
be maintained by such Lender (including in each case, without limitation, with
respect to any Lender's commitment hereunder or any Advance), then from time to
time, within fifteen (15) days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate, on an after-tax basis, such Lender or such
Lender's parent, as the case may be, for such reduction. Each Lender, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 2.10, will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts, although any delay in giving any notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 2.10.
2.11 Mandatory Prepayments/Commitment Reductions.
(a) (i) The Borrower shall immediately prepay the outstanding principal
amount of the Advances (exclusive of undrawn Letters of Credit) in accordance
with Section 2.3 on any date on which the Outstandings exceed the Facility Limit
in effect at such time, in the amount of such excess.
(ii) The Borrower shall immediately prepay to the Swing Line Lender the
outstanding principal amount of the Swing Line Advances on any date on which the
aggregate outstanding principal amount of such Swing Line Advances exceed the
Swing Line Commitment in effect at such time, in the amount of such excess.
(b) If, at any time, the Outstandings exceed the Borrowing Base as set
forth in the Borrower's most recent Borrowing Base Certificate required to be
delivered pursuant to Section 5.14 below (such amount is hereinafter referred to
as the "Borrowing Base Excess"), then the Borrower shall immediately prepay the
Advances (exclusive of undrawn Letters of Credit) in an aggregate amount equal
to such Borrowing Base Excess. At the time of such required prepayment, the
Borrower shall cash collateralize Letters of Credit, on terms satisfactory to
the Administrative Agent, in the amount, if any, by which the Borrowing Base
Excess exceeds the amount of non-Letter of Credit Advances. The Borrower shall
execute such documents, instruments and agreements as the Administrative Agent
shall deem necessary to perfect a security interest in such cash collateral.
(c) Immediately upon funds being made available to the Borrower and/or
any of the Borrower's Subsidiaries, as the case may be, constituting Net Cash
Proceeds from Asset Sales, an amount equal to 100% of such Net Cash Proceeds
from Asset Sales in excess of the first $7,500,000 realized by the Borrower
and/or its Subsidiaries, on an aggregate basis, from Asset Sales after the
Closing Date, shall be prepaid and applied to the Advances as provided in
Section 2.11(f).
(d) Immediately upon funds being made available to the Borrower
constituting Net Cash Proceeds from Equity Offerings, an amount equal to 50% of
such Net Cash Proceeds from Equity Offerings shall be prepaid and applied to the
Advances as provided in Section 2.11(f).
(e) During the first calendar quarter of each calendar year during the
term hereof beginning in 1996, the Borrower shall cause the outstanding
principal balance of Advances (exclusive of undrawn Letters of Credit) under the
Revolving Credit to be less than the following for a consecutive thirty (30) day
period in such first calendar quarter: in the case of the first calendar quarter
of 1996, $40,000,000, and in the case of the first calendar quarter in each
subsequent calendar year, $35,000,000 ("Reduced Level"). If, as of March 1 of
each year the Borrower has not completed its compliance with this covenant for
such year, the Borrower shall, on such date, reduce outstanding Advances
(exclusive of undrawn Letters of Credit) to the applicable Reduced Level or (if
at or below such Reduced Level on such date) maintain the outstanding Advances
(exclusive of undrawn Letters of Credit) at or below the applicable Reduced
Level for a sufficient number of days to complete its compliance with this
covenant for such year.
(f) With respect to each prepayment of Advances required by Section
2.11(a), (b), (c), (d) or (e) other than Alternate Base Rate Advances, the
Borrower shall give the Administrative Agent two (2) Business Days notice and
may designate the types of Advances and the specific Borrowing or Borrowings
which are to be prepaid. In the absence of a designation by the Borrower, the
Administrative Agent shall make such designation in its sole discretion. All
prepayments shall include payment of accrued interest on the principal amount so
prepaid, shall be applied to the payment of interest, Expenses, fees and charges
before application to principal and shall include amounts payable, if any, under
Section 2.9(f). On the effective date of any such prepayment, the Borrower shall
cash collateralize Letters of Credit, on terms and conditions satisfactory to
the Administrative Agent, in the amount, if any, by which the amount of such
prepayment exceeds the outstanding cash Advances and shall execute such
documents, instruments and agreements as the Administrative Agent shall deem
necessary to perfect a security interest in such cash collateral.
(g) The amount required to be applied in accordance with Sections
2.11(c) or (d) shall permanently reduce the Facility Limit on a
dollar-for-dollar basis. A reduction in the Facility Limit shall reduce each
Lender's Pro Rata Share in accordance with its respective Pro Rata Percentage.
2.12 Net Payments. (a) Except as otherwise required by law, all
payments made by the Borrower to any Lender or the Administrative Agent under
this Agreement and/or any Loan Document shall be made free and clear of, and
without reduction for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding income and franchise taxes imposed by any
jurisdiction in which such Lender's principal or lending office is located or in
which such Lender is engaged in a trade or business or any political subdivision
or taxing authority thereof or therein (such non-excluded taxes being called
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
the Administrative Agent or any Lender under this Agreement and/or any Loan
Document, the Borrower shall timely remit such taxes to the Governmental
Authority imposing the same and the amounts so payable to such Lender shall be
increased to the extent necessary to yield to such Lender (after payment of all
Taxes) interest or any such other amounts payable at the rates or in the amounts
specified in this Agreement and/or any Loan Document. Whenever any Tax is
payable by the Borrower, as promptly as possible thereafter, the Borrower shall
send to the Administrative Agent, for its own account or the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. Without prejudice to the
foregoing, if any Lender or the Administrative Agent is required to make any
payment on account of Taxes, the Borrower will, upon notification by the Lender
or the Administrative Agent, promptly indemnify such Person against such Taxes.
For purposes of this Section 2.12, the term "Taxes" includes interest, penalties
and expenses payable or incurred in connection therewith. A certificate as to
any additional amounts (showing in reasonable detail the calculation thereof,
or, alternatively, including a copy of the notice from the taxing jurisdiction
notifying the Lender of its liability for Taxes) payable to a Lender under this
Section 2.12 submitted to the Borrower by such Lender shall, absent manifest
error, be final, conclusive and binding for all purposes upon all parties
hereto. The Lender shall submit such certification or otherwise provide written
notice to the Borrower within a reasonable period of time after becoming aware
of any Taxes for which it is entitled to payments of additional amounts under
this Section 2.12.
(b) Prior to the date of initial funding by each Lender that is not
incorporated under the laws of the United States of America or a state thereof,
such Lender will deliver to the Borrower and the Administrative Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each case that such
Lender is entitled to receive payments under this Agreement and/or any Loan
Document payable to it, without deduction or withholding of any United States
federal income taxes. Each Lender that delivers to the Borrower and the
Administrative Agent a Form 1001 or 4224 pursuant to the preceding sentence, and
each assignee, undertakes to deliver to the Borrower and the Administrative
Agent two copies of the said Form 1001 or 4224, or successor applicable forms,
or other manner of certification, as the case may be, on or before the date that
any such form previously delivered expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower and the Administrative Agent, and such
extensions or renewals thereof as may reasonably be requested by the Borrower,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments under this Agreement and/or any other Loan Document without
deduction or withholding of any United States federal income taxes, unless in
any such cases an event (including without limitation any change in treaty, law
or regulation) has occurred subsequent to the Closing Date and prior to the date
on which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it. Each such Lender which is not able
to provide the applicable form shall advise the Borrower that it is not capable
of receiving payments without any deduction or withholding of United States
federal income tax. Notwithstanding any other provision of this Section 2.12, no
Lender shall be required to deliver any form pursuant to this Section 2.12 that
such Lender is not legally able to deliver.
(c) The Borrower shall not be required to pay any increased amount on
account of Taxes pursuant to this Section 2.12 to any Lender to the extent that
such Taxes would not have been payable if such Lender had furnished a form
required by Section 2.12(b), unless such failure results from any event
subsequent to the date hereof (including without limitation any change in
treaty, law or regulation) specified in the second sentence of Section 2.12(b).
SECTION 3. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES.
3.1 Conditions Precedent to Closing. Closing under this Agreement is
subject to the following conditions precedent (all documents, instruments and
agreements to be in form and substance satisfactory to the Administrative Agent
and the Administrative Agent's counsel):
(a) Resolutions, Opinions, and Other Documents. The Borrower shall have
delivered to the Administrative Agent the following:
(i) this Agreement, the Revolving Credit Notes, and the Swing Line Note
all properly executed;
(ii) each of the other Loan Documents to be executed by the Borrower or
by any other Person pursuant to the terms hereof;
(iii) Guarantees properly executed by each of the Guarantors;
(iv) certified copies of (A) resolutions of the Borrower's board of
directors authorizing the execution of this Agreement, the Revolving Credit
Notes, the Swing Line Note to be issued hereunder and each of the other Loan
Documents, and (B) the Borrower's Articles or Certificate of Incorporation and
Bylaws;
(v) certified copies of (A) resolutions of each Guarantor's board of
directors authorizing the execution of the Guarantees and (B) each Guarantor's
Articles or Certificate of Incorporation and By-laws;
(vi) an incumbency certificate for the Borrower identifying the parties
executing this Agreement, the Revolving Credit Notes, the Swing Line Note and
the other Loan Documents with specimen signatures;
(vii) an incumbency certificate for each Guarantor identifying the
parties executing the Guarantees, with specimen signatures;
(viii) a written opinion of the Borrower's and Guarantors' counsel
addressed to the Administrative Agent for the benefit of all Lenders;
(ix) Financial Statements, etc. Prior to the Closing Date, (A) the
Agents shall have received from the Borrower and be reasonably satisfied with
(1) the Borrower's audited consolidated financial statements, including a
balance sheet and statements of operations, stockholders' equity and cash flow
of the Borrower and its consolidated Subsidiaries at and for the years ended
December 31, 1992, 1993 and 1994, together with unqualified opinions on the
audited consolidated statements for each of such years from Arthur Andersen &
Company and unaudited consolidating financial statements including statements of
operations and a balance sheet for the Borrower and the Guarantors (other than
Cleo) at and for the years ended December 31, 1992, 1993 and 1994, (2) company
prepared financial statements for Cleo at and for the years ended December 31,
1992, 1993 and 1994, along with Cleo's audited balance sheet as of December 31,
1994, (3) unaudited consolidated interim period financial statements for the
Borrower and Cleo at and for the nine (9) months ended September 30, 1995 and
(4) the pro forma consolidated and consolidating opening balance sheets of the
Borrower and Cleo (after giving effect to the Acquisition and any expected
Borrowings under this Agreement) prepared on a projected basis as of the Closing
Date, together with a certificate executed by the Chief Financial Officer of the
Borrower to the effect that such financial statements fairly and completely
present the pro forma financial position and results of operations of the
Borrower and its Subsidiaries and have been prepared on a consistent basis
(collectively, the "Financial Statements"), and (B) the Borrower and Cleo shall
have delivered to the Lenders, and the Lenders shall be reasonably satisfied
with, projected pro forma financial statements for the period commencing
November 1, 1995 and ending December 31, 2000 (the first sixteen (16) months'
balance sheets to be prepared on a month to month basis) prepared in accordance
with the Borrower's normal accounting procedures, consistently applied (which
for 1995, will incorporate actual results through August and which shall be
extrapolated through year end and which for 1996, 1997, 1998, 1999 and 2000,
shall represent management's reasonable estimate of the Borrower's and its
consolidated Subsidiaries' projected performance during such years) including
(1) forecasted balance sheets, statements of operations and cash flows of the
Borrower and its consolidated Subsidiaries for such periods, (2) the amount of
forecasted Consolidated Capital Expenditures for such periods, and (3) the
Borrower's forecasted compliance with Sections 7.1 - 7.6, inclusive.
(x) certification by the chief financial officer of the Borrower that
there has not occurred any material adverse change in the business, assets,
operations, properties, financial condition, contingent liabilities, prospects
or material agreements of the Borrower and its Subsidiaries taken as a whole,
and of Cleo, since December 31, 1994 as reflected on the applicable Financial
Statements of such entities delivered to the Agents, except, with respect to
Cleo, as set forth in Cleo's forecast for the fiscal year ending December 31,
1995 prepared in September, 1995 and delivered to Agents;
(xi) payment of all fees due on the Closing Date and Expenses
associated with the Revolving Credit;
(xii) repayment in full of all outstanding obligations with respect to,
and cancellation of, the Existing Credit Facilities;
(xiii) proof of consummation of the Acquisition (excepting only the
funding to be provided hereunder) on terms and conditions satisfactory to the
Administrative Agent, including delivery of certified copies of each of the
Acquisition Documents which shall not have been amended since October 3, 1995;
(xiv) Uniform Commercial Code, judgment, federal and state tax lien
searches against the Borrower, Cleo, and each of the other Guarantors at the
Borrower's sole cost and expense, showing that the Property of the Borrower,
Cleo and each other Guarantor is not subject to any Liens except for Permitted
Liens, together with Corporate Tax Lien Search Certificates showing no Liens on
the Borrower's, Cleo's or any of the Guarantors' Property except for Permitted
Liens, and certificates of good standing showing the Borrower, Cleo and each of
the Guarantors to be in good standing in each jurisdiction in which it is
qualified to do business (in the case of Cleo, Tennessee, Arkansas and Texas
only);
(xv) evidence satisfactory to the Agents of minimum Consolidated EBITDA
for the Borrower and its Subsidiaries (excluding Cleo) for the twelve (12) month
period ending September 30, 1995 of $33,000,000;
(xvi) initial Notice of Borrowing and a Borrowing Base Certificate
prepared as of the end of the month immediately preceding the Closing Date; and
(xvii) copies of all other documents, instruments, agreements, opinions
and certificates as the Administrative Agent may reasonably request.
(b) Absence of Certain Events. As of the Closing Date, (i) no Default
or Event of Default hereunder shall have occurred and be continuing and (ii)
there shall not have occurred or become known any event or condition having a
Material Adverse Effect with respect to the Borrower or with respect to Cleo
since December 31, 1994, as reflected on the applicable Financial Statements of
such entities delivered to the Agents, except, with respect to Cleo, as set
forth in Cleo's forecast for the fiscal year ending December 31, 1995 prepared
in September 1995 and delivered to the Agents.
(c) Warranties and Representations at Closing. The warranties and
representations contained in Section 4 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. The Borrower shall
not have taken any action or permitted any condition to exist which would have
been prohibited by any Section hereof. All warranties and representations
contained in this Agreement, unless expressly stated to the contrary, are deemed
to have been made to the Administrative Agent and Lenders immediately following
completion of Closing hereunder. Subject expressly to Section 8.1(f) below, all
warranties and representations made by the Borrower with respect to Cleo as of
the Closing Date are given to the best of the Borrower's Knowledge.
(d) Compliance with this Agreement. The Borrower shall have performed
and complied with all agreements, covenants and conditions contained herein
which are required to be performed or complied with by the Borrower before or at
the Closing Date, including, without limitation, the provisions of Sections 5, 6
and 7 hereof.
(e) Officers' Certificate. The Administrative Agent shall receive a
certificate dated the Closing Date and signed by the chief financial officer of
the Borrower certifying that all of the conditions precedent to the Borrowings
to occur on the Closing Date have been fulfilled.
(f) Indebtedness; Liens, etc. (i) The Borrower and each of the
Guarantors shall have received all necessary consents or waivers or shall have
amended, supplemented or otherwise modified, repaid, redeemed or defeased its
outstanding Indebtedness in a manner and on terms satisfactory to the
Administrative Agent such that there exists no default or potential default
(including, without limitation, as a result of the consummation of the
transactions contemplated by the Acquisition or of any Borrowing hereunder) with
respect to such Indebtedness or under any note, evidence of indebtedness,
mortgage, deed of trust, security document or other agreement relating to such
Indebtedness and such indentures, notes, evidences of indebtedness, mortgages,
deeds of trust or other agreements relating to such Indebtedness shall not
contain any restriction on the ability of the Borrower or any of the Guarantors
to enter into this Agreement, the Guarantees or the other Loan Documents to
which it is entering or the granting of any Lien in favor of the Lenders, nor do
such agreements, documents or instruments contain any provision giving rise to
the creation of any Lien in favor of any Person as a result of the consummation
of the transactions contemplated by the Acquisition or of any Borrowing
hereunder.
(ii) The Administrative Agent and the Lenders shall be satisfied, in
their reasonable discretion, with all Indebtedness of the Borrower and each of
the Guarantors, outstanding on the Closing Date.
(g) Consents, etc. All material consents of any Governmental Authority
and Third-Party Consents (including, without limitation, all material approvals
and consents required in connection with any Environmental Law or other
environmental statutes, rules or regulations), if any, in connection with the
transactions contemplated by the Acquisition, this Agreement and the other Loan
Documents (including any consents and approvals that are necessary for the
Borrower to borrow and for each of the Guarantors to perform its obligations
hereunder and to perform in a full and timely manner all of its obligations
under the other Loan Documents) and otherwise referred to herein or therein to
be completed on or before the Closing Date, shall have been obtained and
delivered to the Administrative Agent, and shall remain in effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes, in the judgment of
the Administrative Agent or the Majority Lenders, materially adverse conditions
upon the consummation of the transactions contemplated
by this Agreement and in connection with the Acquisition. There shall
not exist any judgment, order, injunction or other restraint issued or filed
with respect to the making of the Advances hereunder or the consummation of the
Acquisition.
(h) Environmental Review. At or prior to the Closing Date, (i) there
shall have been delivered to the Administrative Agent the Phase I environmental
report pertaining to certain of Cleo's Memphis, Tennessee properties
commissioned by the Borrower and (ii) there shall have been delivered to the
Administrative Agent all environmental reports, investigations, studies, audits,
assessments or reviews in the possession of the Borrower or any Subsidiary, as
set forth in Schedule "3.1(h)" attached hereto and made a part hereof, in
relation to the current business or operations of the Borrower or any Subsidiary
or any Real Property, Property or facilities now owned, operated, leased or
controlled by the Borrower or any of the Subsidiaries which contain information
pertaining to any event(s) or condition(s) which have, or to the best of the
Borrower's present Knowledge, are reasonably likely to cause, a Material Adverse
Effect; and the Administrative Agent and the Lenders shall be satisfied, in
their reasonable discretion, that no Material Adverse Effect is reasonably
likely to occur based upon the information contained in such investigations,
studies, audits, assessments and reviews listed on Schedule 3.1(h).
(i) Employee Health and Safety Exposure. The Agents and the Lenders
shall be reasonably satisfied as to the amount and nature of any employee health
and safety exposures to which the Borrower or any of the Guarantors may be
subject.
(j) Sufficiency of Working Capital. The Agents and the Lenders shall be
reasonably satisfied with the sufficiency of amounts available under the
Revolving Credit to meet the ongoing working capital requirements of the
Borrower and the Guarantors after giving effect to the Acquisition and the
consummation of the other transactions contemplated hereby and thereby.
(k) Accounts and Inventory. The Agents and the Lenders shall have
received a field examination, reasonably satisfactory in form and substance to
the Agents and the Lenders, of the Accounts and Inventory of The Paper Magic
Group, Inc., a Pennsylvania corporation, Rapidforms, Inc., Berwick Industries,
Inc. and Cleo.
(l) Compliance with Laws. The Borrower and each of its Subsidiaries
shall be in compliance with all applicable statutes, regulations and ordinances
of the United States of America and each other country and jurisdiction, and of
each state, city, town, municipality, country, and each agency thereof
(including, without any limitation, ERISA laws, Environmental Laws and margin
regulations), a violation of which would cause a Material Adverse Effect.
(m) Capitalization and Structure. The capitalization and structure of
the Borrower and its Subsidiaries on a consolidated basis (after giving effect
to the Acquisition and the other transactions contemplated hereby and thereby)
shall be substantially as presented to the Agents prior to Closing.
(n) Unsecured Seller Note. The Unsecured Seller Note shall be
satisfactory in all respects to the Lenders, including but not limited to the
terms relating to the interest rate, fees, maturity, covenants, events of
default and remedies.
3.2 Closing. Subject to the conditions of this Section 3, the Revolving
Credit shall be made available on such date (the "Closing Date") and at such
time as may be mutually agreeable to the parties contemporaneously with the
execution hereof ("Closing") at the offices of the Borrower's counsel, Morgan,
Lewis & Bockius, L.L.P., in Philadelphia, Pennsylvania.
3.3 Conditions Precedent to all Advances. The obligation of Lenders to
make Advances hereunder is subject, at the time of making each such Advance, to
the satisfaction of the following conditions precedent (all documents,
instruments and agreements to be in form and substance satisfactory to the
Administrative Agent and the Administrative Agent's counsel):
(a) Agreements Effective. This Agreement, the Revolving Credit Notes,
the Swing Line Note and each of the other Loan Documents shall be effective;
(b) Notice of Borrowing. With respect to any Advance, the
Administrative Agent shall have received, in accordance with the provisions of
Section 2.4 hereof, prior to the making of any such Advance, an originally
executed Notice of Borrowing signed by an Authorized Officer, in writing,
delivered to the Administrative Agent (the furnishing by the Borrower of each
such Notice of Borrowing shall be deemed to constitute a representation and
warranty of the Borrower to the effect that the other conditions set forth in
this Section 3 are satisfied in all material respects as of the date of delivery
and will be satisfied on the date such Advances are made).
(c) No Default; Representations and Warranties. At the time of the
making of each Advance and also after giving effect thereto, (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Loan Documents in effect at such time (as
amended or modified from time to time, including by the delivery of amendments
or supplements (in form, scope and substance satisfactory to the Administrative
Agent and the Majority Lenders) to the schedules and exhibits to this Agreement
and/or the other Loan Documents) 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 such date, unless such representation and warranty
expressly indicates that it is being made as of any other specific date, in
which case, on and as of such other date.
(d) Material Adverse Change, etc. (i) No event or condition shall have
occurred or become known or would result from any Borrowing on the date of any
such Borrowing and the use of the proceeds therefrom that has or would, singly
or in the aggregate, result in a Material Adverse Effect.
(ii) There shall not exist any judgment, order, injunction or other
restraint issued or filed prohibiting, limiting or otherwise adversely affecting
the making of any Advances hereunder.
(e) Borrowing Base Certificate The Administrative Agent shall have
received the most current Borrowing Base Certificate in compliance with Section
5.14 hereof.
(f) Fees The Borrower shall have paid to the Administrative Agent, the
Lenders and the Fronting Lender, all fees payable to the Administrative Agent,
the Lenders and/or the Fronting Lender to the extent due hereunder and all costs
and Expenses (including legal fees and expenses) payable to the Administrative
Agent, the Lenders and/or the Fronting Lender hereunder.
(g) Litigation. There shall be no Proceeding pending or, to the best of
Borrower's Knowledge, threatened with respect to the Borrower or any of its
Subsidiaries or any Property of any such Person that, in the reasonable judgment
of the Administrative Agent, would, singly or in the aggregate, have a Material
Adverse Effect. No injunction or other restraining order to be issued shall be
pending or noticed with respect to any Proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, this Agreement, the other Loan Documents or the Acquisition or the
transactions contemplated hereby or thereby.
(h) Margin Rules. Neither the making of any Advance nor the use of the
proceeds therefrom will violate the provisions of Regulation G, T, U or X or any
other regulation of the Board of Governors of the Federal Reserve System or the
provisions of Section 7 of the Exchange Act.
The acceptance of the proceeds of each Borrowing of Advances shall
constitute a representation and warranty by the Borrower to each of the Lenders
that all of the applicable conditions specified in Section 3 and in any other
provision of this Agreement or any of the other Loan Documents have been
satisfied or waived.
3.4 Waiver of Rights. By completing the Closing hereunder or by making
Advances hereunder, the Administrative Agent does not thereby waive a breach of
any warranty or representation made by the Borrower hereunder or in any
agreement, document, or instrument delivered to the Administrative Agent or
otherwise referred to herein, and all of the Administrative Agent's claims and
rights resulting from any breach or misrepresentation by the Borrower are
specifically reserved by the Administrative Agent.
3.5 Delivery of Documents. All of the certificates and other
agreements, documents, instruments and papers referred to in this Section 3,
unless otherwise specified, shall be delivered to the Administrative Agent at
its office (or such other location as may be specified by the Administrative
Agent) for the account of each of the Lenders and in sufficient counterparts for
each of the Lenders.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to make the Advances under the Revolving Credit
to the Borrower, the Borrower warrants and represents to the Administrative
Agent and Lenders that:
4.1 Corporate Organization and Validity.
(a) The Borrower and its domestic Subsidiaries are corporations duly
organized and validly existing under the laws of their respective states (or
countries or other jurisdictions, as applicable) of incorporation, are duly
qualified, are validly existing and in good standing and have lawful power and
authority to engage in the business each conducts in each state and each foreign
country where the nature and extent of their businesses require qualification,
except when the failure to so qualify would not have a Material Adverse Effect.
(b) The making and performance of this Agreement and the other Loan
Documents does not violate any law, government rule or regulation, court or
administrative order or other such order having the effect of law, or the
charter, minutes or bylaw provisions of the Borrower or any of the Guarantors or
violate or result in a default (immediately or with the passage of time) under
any contract, agreement or instrument to which any such Person is a party, or by
which any such Person or its Property is bound. Neither the Borrower nor any of
the Guarantors is in violation of any term of any agreement or instrument to
which any such Person is a party or by which it or its Property may be bound or
of its charter, minutes or its bylaws which violation has had a Material Adverse
Effect.
(c) The Borrower and each of the Guarantors has all requisite corporate
power and authority to enter into and perform under this Agreement and each of
the Loan Documents (as applicable) and to incur the obligations herein provided
for, and has taken all proper and necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents (as applicable).
(d) This Agreement, the Revolving Credit Notes, the Swing Line Note,
the Guarantees and all of the other Loan Documents, when delivered, will be
valid and binding upon the Borrower and the Guarantors (as applicable) and
enforceable in accordance with their respective terms.
4.2 Places of Business. As of the Closing Date, the only places of
business of the Borrower and the Guarantors and the places where each keeps and
intends to keep its Property and records concerning its Property, are at the
addresses listed in Schedule "4.2" attached hereto and made part hereof.
4.3 Pending Litigation. There are no judgments or judicial or
administrative orders against or binding upon the Borrower or any of its
Subsidiaries, proceedings or investigations (civil or criminal) pending, or to
the knowledge of the Borrower threatened, against or affecting the Borrower or
any of its Subsidiaries in any court or before any governmental authority or
arbitration board or tribunal which would cause a Material Adverse Effect,
except as shown in Schedule"4.3" attached hereto and made part hereof. Neither
the Borrower nor any of its Subsidiaries is in default with respect to any order
of any court, Governmental Authority, regulatory agency or arbitration board or
tribunal which would cause a Material Adverse Effect.
4.4 Title to Properties. The Borrower and each of its domestic
Subsidiaries has good and marketable title in fee simple (or its equivalent
under applicable law) to all the Property it respectively purports to own, free
from Liens and free from the claims of any other Person, except for those Liens
set forth on Schedule "4.4" attached hereto and made part hereof and for
Permitted Liens.
4.5 Governmental Consent: Neither the nature of the Borrower or any of
its Subsidiaries' respective businesses or Property, nor any relationship
between such entities and any other Person, nor any circumstance affecting any
such entities in connection with the issuance or delivery of this Agreement, the
Revolving Credit Notes, the Swing Line Note, the Guarantees or the other Loan
Documents is such as to require a consent, approval or authorization of, or
filing, registration or qualification with, any Governmental Authority on the
part of any such party in conjunction with the execution and delivery of this
Agreement or the issuance or delivery of the Revolving Credit Notes, the Swing
Line Note, the Guarantees, or the other Loan Documents, other than such of the
foregoing as have been obtained or made.
4.6 Taxes. All tax returns required to be filed (except for those tax
returns which, if not filed, would not have a Material Adverse Effect) by the
Borrower and each of its Subsidiaries in any jurisdiction, have in fact been
filed or extensions have been obtained, and all taxes, assessments, fees and
other governmental charges upon any such Person, or upon any of such Person's
respective Property, income or franchises, which are due and payable, have been
paid, except for those taxes being contested in good faith with due diligence by
appropriate proceedings for which appropriate reserves have been maintained
pursuant to GAAP. Neither the Borrower nor any of its Subsidiaries, is aware of
any proposed additional tax assessment or tax to be assessed against or
applicable to such Person (except for those tax assessments which would not
cause a Material Adverse Effect).
4.7 Financial Statements. Subject to Section 4.8 with respect to pro
forma statements for Cleo, the Financial Statements (complete copies of which
have been delivered to the Administrative Agent and were then, distributed to
Lenders), were prepared in accordance with GAAP (excluding footnotes for
unaudited statements) are complete and present fairly the financial position of
the Borrower and its Subsidiaries as of such dates and the results of their
operations for such periods provided, however, that (a) interim financial
statements are subject to normal and recurring year end adjustments in the
ordinary course, (b) interim financial statements of Cleo during 1995 are
subject to year end adjustments, and (c) the representations in this Section 4.7
do not apply to financial statements with respect to Cleo for any period prior
to December 31, 1994. The fiscal year for the Borrower and each of its
Subsidiaries (including Cleo) ends on December 31.
4.8 Full Disclosure. Neither the Financial Statements nor any written
statement furnished by, or on behalf of, the Borrower to the Administrative
Agent and/or Lenders in connection with the Revolving Credit contained in any
Financial Statements or documents, instruments, agreements or certificates
relating to the Borrower and its Subsidiaries (including all information
contained in the Confidential Memorandum) contains any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact known to the Borrower which
the Borrower has not disclosed to the Administrative Agent in writing, which
would cause a Material Adverse Effect. The projections and pro forma financial
information contained in any materials provided by the Borrower to the Agents or
any Lender are based upon good faith estimates and assumptions believed by the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. Subject expressly to Section 8.1(f) below,
all such Financial Statements and other statements described in this Section 4.8
made by the Borrower with respect to Cleo as of the Closing Date, are given to
the best of the Borrower's Knowledge.
4.9 Subsidiaries. Other than the parties listed on Schedule "4.9"
attached hereto, the Borrower has, as of the Closing Date, no actively operating
Subsidiaries. The jurisdiction of incorporation of each of such Subsidiaries is
also set forth on Schedule "4.9".
4.10 Guarantees, Indebtedness, etc.
(a) As of the Closing Date, neither the Borrower nor any of the
Guarantors owns or holds equity (excepting the stock of its Subsidiaries) or
long term debt investments in, has any outstanding advances to, or serves as
guarantor, surety or accommodation maker for the obligations of, or has any
outstanding borrowings from, any Person, which, in the case of any such equity,
investment, advance, guarantee or borrowing, involves the expenditure of money
or incurrence of an obligation, as the case may be, of at least $1,000,000
except as described in Schedule "4.10", attached hereto and made part hereof.
(b) Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement, or subject to any charter or other corporate restriction,
which would cause a Material Adverse Effect.
(c) Except as otherwise specifically provided in this Agreement,
neither the Borrower nor any of its Subsidiaries has agreed or consented to
cause or permit any of its Property, whether now owned or hereafter acquired, to
be subject in the future (upon the happening of a contingency or otherwise), to
a Lien not permitted by this Agreement.
4.11 Government Regulations, etc.
(a) The use of the proceeds of, and the Borrower's issuance of the
Revolving Credit Notes and the Swing Line Note, will not directly or indirectly
violate or result in a violation of the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations U, T, G and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Borrower
does not own or intend to carry or purchase any "margin security" within the
meaning of said Regulations, except in conformity with said Regulations.
(b) The Borrower and each of the Guarantors has obtained all licenses,
permits, franchises or other governmental authorizations necessary for the
ownership of its Property (including, in the case of the Borrower, the
acquisition and ownership of the capital stock of Cleo) and for the conduct of
its business, except for those which, if not obtained, would not cause a
Material Adverse Effect.
(c) As of the date hereof, no employee benefit plan, as defined in
Section 3(2) of ERISA, (other than a multi-employer plan described in Section
3(37) of ERISA) ("Employee Benefit Plan") maintained by the Borrower or any of
its Subsidiaries, or under which any such Person could have any liability under
ERISA or the Internal Revenue Code (i) has failed to meet the minimum funding
standards established in Section 302 of ERISA for which such Person continues to
be liable, (ii) except as set forth on Exhibit 4.11(c), has failed to comply, in
any material respect, with any applicable requirement of ERISA and of the
Internal Revenue Code, including all applicable rulings and regulations
thereunder for which it continues to be responsible, or (iii) has, to its
knowledge, engaged in or been involved in a Prohibited Transaction (as defined
in ERISA or the Internal Revenue Code) under ERISA or the Internal Revenue Code,
except to the extent that a failure to comply with the foregoing would not
present a reasonable likelihood of having a Material Adverse Effect. Except set
forth on Schedule 4.11(c) attached hereto and made a part hereof, no Employee
Benefit Plan maintained by the Borrower or any of its Subsidiaries has been
terminated within the one (1) year period prior to the date hereof. Neither the
Borrower nor any of its Subsidiaries has assumed, or received notice of a claim
asserted against such Person, withdrawal liability (as defined in the
Multi-employer Pension Plan Amendments Act of 1980, as amended) with respect to
any multi-employer pension plan in which it participates. Other than as shown on
Schedule 4.11(c), neither the Borrower nor any of its Subsidiaries is a member
of any Controlled Group (as defined in Sections 414(b),(c),(m) and (o) of the
Internal Revenue Code and Section 4001(a)(14) of ERISA). The Borrower and each
of its Subsidiaries has timely made all contributions when due with respect to
any multi-employer pension plan in which it participates and no event has
occurred triggering a claim against such Person for withdrawal liability with
respect to any multi-employer pension plan in which such Person participates.
(d) Neither the Borrower nor any of the Guarantors is in violation of
any applicable statute, regulation or ordinance of the United States of America
or any other country or jurisdiction, or of any state, city, town, municipality,
county or of any other jurisdiction, or of any agency thereof, (including
without limitation, Environmental Laws and regulations), a violation of which
would cause a Material Adverse Effect.
(e) The Borrower and all of the Guarantors are current with all reports
and documents required to be filed with any state or federal securities
commission or similar agency, if any, and are in full compliance in all material
respects with all applicable rules and regulations of such commissions.
(f) Neither the Borrower nor any of the Guarantors are, or will be
after giving effect to the transactions contemplated hereby, subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or to any federal or state statute or regulation limiting its ability
to incur indebtedness for money borrowed or guarantee such indebtedness as
contemplated by this Agreement or any other Loan Document.
(g) Neither the Borrower, nor any of its Subsidiaries is, or will be
after giving effect to the transactions contemplated hereby, an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
4.12 Business Interruptions. Within five (5) years prior to the date
hereof, neither the business, Property or operations of the Borrower or any of
the Guarantors have been materially and adversely affected in any way by any
casualty, strike, lockout, combination of workers, order of the United States of
America, or any state or local government, or any political subdivision or
agency thereof, directed against such Persons. To the best of the Borrower's
Knowledge, as of the Closing Date, there are no pending or threatened labor
disputes, strikes, lockouts or similar occurrences or grievances affecting the
business being operated by the Borrower or any of the Guarantors.
4.13 Names.
(a) Within five (5) years prior to the Closing Date, neither the
Borrower nor any of the Guarantors has conducted business under or used any
other name (whether corporate or assumed) except for the names shown on Schedule
"4.13(a)", attached hereto and made part hereof. As of the Closing Date, the
Borrower and its domestic Subsidiaries are, respectively, the sole owners of
each of their names listed on such Schedule "4.13(a)" and any and all business
done and all invoices issued in such trade names are the applicable party's
sales, business and invoices. As of the Closing Date, each trade name of the
Borrower and the Guarantors represents a division or trading style of such
entities and not a separate corporate subsidiary, affiliated, or independent
entity.
(b) As of the Closing Date, all federally registered trademarks,
patents or copyrights of the Borrower and the Guarantors are listed on Schedule
"4.13(b)" attached hereto and made part hereof. Schedule "4.13(b)" shall also
list all agreements for the license to use third party-owned trademarks, patents
and copyrights. The appropriate entity identified on such Schedule "4.13(b)" is
the sole owner of such Property except to the extent any other Person has or
claims rights in such Property as also described on such Schedule "4.13(b)." To
the best of the Borrower's Knowledge, neither the Borrower nor any of the
Guarantors are in violation in any material respect of any intellectual property
rights of any other Person with respect to such Property.
4.14 Other Associations. As of the Closing Date, neither the Borrower
nor any of the Guarantors is engaged in any joint venture or partnership with
any other Person except as described on Schedule "4.14" hereto and made part
hereof.
4.15 Environmental Matters. Except as disclosed on Schedule "4.15"
attached hereto and made part hereof, or as would not have, singly or in the
aggregate, a Material Adverse Effect:
(a) The Borrower and each of its Subsidiaries has obtained all permits,
licenses and other authorizations (collectively "Environmental Authorizations")
that are required with respect to the use, ownership and operation of their
business, Real Property and other Property under any Environmental Law and each
such Environmental Authorization is in full force and effect.
(b) The Borrower and each of its Subsidiaries is in compliance with all
terms and conditions of the Environmental Authorizations specified in Section
4.15(a) above, and is also in compliance with, and not subject to liability
under, any Environmental Law applicable to it and its respective businesses,
operations, Real Property and other Property.
(c) There is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding, written notice
or demand letter or request for information pending or, to the knowledge of the
Borrower, are any such actions or any investigations threatened against the
Borrower or any of its Subsidiaries under any Environmental Law.
(d) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or current plans which could
reasonably be expected to materially interfere with or prevent compliance by the
Borrower or any of its Subsidiaries with any Environmental Law, or which could
reasonably be expected to give rise to any liability under any Environmental
Law, including, without limitation, liability under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), or similar applicable state, local or foreign laws for response or
corrective action, or which could reasonably be expected to form the basis of
any suit, proceeding, hearing, notice of violation, or notice of potential
liability or responsibility, based on or primarily related to the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport, shipping or handling, or the arrangement for treatment or disposal or
the emission, discharge, release or threatened release into the environment, of
any Hazardous Materials.
(e) Neither the Borrower nor any of its Subsidiaries has received
written notice that it has been identified as a potentially responsible party or
any request for information under CERCLA or any comparable state law, nor has
any such Person received any written notification that any Hazardous Materials
that it or any of its respective predecessors in interest has used, generated,
stored, treated, handled, transported or disposed of, or arranged for transport
or treatment of, or arranged for disposal or treatment of, has been found at any
site at which any Governmental Authority or private party is conducting or plans
to conduct an investigation or other action pursuant to any Environmental Law.
(f) There have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping into the environment) of Hazardous
Materials by the Borrower or any of its Subsidiaries or to the Borrower's
knowledge after due inquiry, any of their respective predecessors in interest,
at, on, upon, under, into or from any of the Real Properties. To the knowledge
of the Borrower, there have been no such releases at, on, upon, under, from or
into any real property in the vicinity of any of the Real Properties that,
through soil, air, surface water or groundwater migration or contamination, has
become located on, in or under such Real Properties.
(g) There is no friable asbestos or friable asbestos-containing
material in, on, or at any of the Real Properties or any facility or equipment
owned or operated by the Borrower or any of its Subsidiaries.
(h) No Real Property of the Borrower or any of its Subsidiaries is (i)
listed or proposed for listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or on any comparable
list published by any Governmental Authority.
(i) No regulated underground storage tanks or related piping are
located at, under or on the Real Property, or, to the best of the Borrower's
Knowledge, located in the vicinity of such Real Property.
(j) Except as listed on Schedule 3.1(h) attached hereto, no
environmental reports, investigations, studies, audits, assessments or reviews
in the possession of the Borrower or any Subsidiary with respect to the current
business or operations of the Borrower or any Subsidiary or any Real Property or
other Property or facility now owned, operated, leased or controlled by the
Borrower or any Subsidiary contain information pertaining to any event(s) or
condition(s) which have or, to the best of the Borrower's present Knowledge, are
reasonably likely to cause a Material Adverse Effect. No environmental reports,
investigations, studies, audits, assessments or reviews in the possession of the
Borrower or any Subsidiary with respect to the current or prior business or
Property of the Borrower or any Subsidiary or any Real Property or other
Property or facility now, or to the best of Borrower's Knowledge, previously
owned, leased, operated or controlled by the Borrower or any Subsidiary, contain
information pertaining to events or conditions which would be, or otherwise are,
reasonably likely to have or cause a Material Adverse Effect.
(k) No Lien has been recorded under any Environmental Law with respect
to any facility, inventory, Real Property or other Property presently owned,
operated, leased or controlled by the Borrower or any of its Subsidiaries.
4.16 Regulation O. No director, executive officer or principal
shareholder of the Borrower is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director" (when
used with reference to a Lender), "executive officer" and "principal
shareholder" have the respective meanings assigned thereto in Regulation O
issued by the Board of Governors of the Federal Reserve System.
4.17 Capital Stock. The authorized and outstanding capital stock of the
Borrower and each of the Guarantors is, as of the Closing Date, as set forth on
Schedule "4.17" attached hereto and made part hereof. All of the capital stock
of each such Person has been duly and validly authorized and, to the extent
outstanding, is issued and is fully paid and non-assessable and has been sold
and delivered to the holders thereof in compliance with, or under valid
exemption from, all federal and state laws and the rules and regulations of all
regulatory bodies thereof governing the sale and delivery of securities. As of
the Closing Date hereof, except for the rights and obligations set forth in
Schedule "4.17", there are no subscriptions, warrants, options, calls,
commitments, rights or agreements by which the Borrower or any of the Guarantors
or any of their respective shareholders are bound relating to the issuance,
transfer, voting or redemption of shares of its capital stock or any pre-emptive
rights held by any Person with respect to the shares of capital stock of such
parties. As of the Closing Date hereof, neither the Borrower nor any of the
Guarantors has issued any securities convertible into or exchangeable for shares
of its capital stock or any options, warrants or other rights to acquire such
shares or securities convertible into or exchangeable for such shares except as
shown on Schedule "4.17".
4.18 Solvency. After giving effect to the Acquisition, the creation of
the Revolving Credit and the transactions described herein and therein, the
Borrower and its Subsidiaries, on a consolidated basis, are solvent, are able to
pay their respective debts as they become due and have capital sufficient to
carry on their respective business and all businesses in which any such Persons
are about to engage, and now own Property having a value both at fair valuation
and at present fair salable value greater than the amount required to pay such
entity's debts. After giving effect to the Acquisition, the creation of the
Revolving Credit and the transactions described herein and therein, the Borrower
and its Subsidiaries, on a consolidated basis, will not be rendered insolvent by
the execution and delivery of this Agreement or any of the other agreements,
documents or instruments executed in connection with this Agreement (including,
without limitation, the Guarantees) or by the transactions contemplated
hereunder or thereunder.
4.19 Interrelatedness of the Borrower and the Guarantors. The business
operations of the Borrower and the Guarantors are related and have a common
business purpose. To permit their uninterrupted and continuous operations, such
companies now require and will from time to time hereafter require funds for
general business purposes. The proceeds of Advances under the Revolving Credit
will directly or indirectly benefit the Borrower and each of the Guarantors
severally and jointly, regardless of which entity requests or receives part or
all of the proceeds of such Advances.
4.20 Purchase of Cleo. The purchase of Cleo by the Borrower has
(subject only to the funding to be provided hereunder) been completed in
accordance with all applicable law, and the Stock Purchase Agreement and the
other Acquisition Documents constitute valid and binding agreements, enforceable
in accordance with their respective terms. Certified true and complete conformed
copies of such agreements (along with all exhibits and schedules thereto) have
been delivered to the Agents contemporaneously herewith.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower covenants that until all of the Borrower's Obligations to
Lenders and the Administrative Agent hereunder are paid and satisfied in full
and the Revolving Credit has been terminated (it being understood that the
Borrower shall cause each of its Subsidiaries (or, as the case may be, the
Guarantors) to observe and comply in a timely manner with each provision of the
covenants in this Section 5 to the extent applicable to such Subsidiary (or, as
the case may be, such Guarantor)):
5.1 Payment of Taxes and Claims. The Borrower shall, and shall cause
each of its Subsidiaries to, pay, before they become delinquent,
(a) all taxes, assessments and governmental charges or levies imposed
upon it or upon any such party's Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, which, if unpaid, would result
in the imposition of a Lien upon its Property; provided, however, that the
Borrower and its Subsidiaries shall not be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall at the time be contested in good faith and by appropriate
proceedings by such party, and if such party shall have set aside on its books
adequate reserves in respect thereof, if so required in accordance with GAAP;
which deferment of payment is permissible so long as no Lien has been entered
and such party's title to, and its right to use, its Property are not materially
adversely affected thereby.
5.2 Maintenance of Properties and Corporate Existence.
(a) Property - The Borrower shall, and shall cause each of the
Guarantors to, maintain its Property in good condition (normal wear and tear and
fire and other insured casualty excepted) and make all necessary renewals,
replacements, additions, betterments and improvements thereto and will pay and
discharge when due the cost of repairs and maintenance to its Property, and will
pay all rentals when due for all real estate leased by such parties.
(b) Property Insurance - The Borrower shall, and shall cause each of
the Guarantors to, maintain and deliver to the Administrative Agent, upon the
Administrative Agent's request, evidence of business interruption insurance and
insurance on all insurable tangible Property against fire, flood, casualty and
such other hazards as may be reasonably acceptable to the Administrative Agent
in such amounts, with such deductibles and with such insurers as are customary
for companies in the same or similar business located in the same or similar
area.
(c) General and Products Liability Insurance - The Borrower shall, and
shall cause each of the Guarantors to, maintain general liability and products
liability insurance in such amounts as is customary for companies in the same or
similar businesses located in the same or similar area and shall deliver to the
Administrative Agent upon the Administrative Agent's request, evidence of such
insurance.
(d) Financial Records - The Borrower shall, and shall cause each of the
Guarantors to, keep in all material respects current and accurate books of
records and accounts in which full and correct entries will be made of all of
its business transactions, and will reflect in its financial statements adequate
accruals and appropriations to reserves, all in accordance with GAAP. The
Borrower and each of the Guarantors shall not change their respective fiscal
year end dates without the prior written consent of the Administrative Agent.
(e) Corporate Existence and Rights - Except for mergers, consolidations
and liquidations permitted under this Agreement, the Borrower shall, and shall
cause each of the Guarantors to, do (or cause to be done) all things necessary
to preserve and keep in full force and effect its existence, good standing,
rights and franchises.
(f) Compliance with Law - The Borrower shall, and shall cause each of
the Guarantors to, comply with all laws, ordinances, governmental rules and
regulations to which it is subject, and will obtain all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its Property or to the conduct of its businesses, a violation of which or
failure to obtain would have a Material Adverse Effect.
5.3 Litigation. The Borrower shall, and shall cause each of its
Subsidiaries to, give immediate notice to the Administrative Agent of any
litigation or governmental investigation affecting the Borrower or any of its
Subsidiaries except for litigation with potential liability to any such party of
less than $2,000,000 or litigation which is fully covered by insurance
(exclusive of a deductible not to exceed $2,000,000).
5.4 Issue Taxes. The Borrower shall, and shall cause each of the
Guarantors to, pay all taxes (other than taxes based upon or measured by any
Lender's income or revenues or any personal property tax), if any, in connection
with the issuance of the Revolving Credit Notes and the Guarantees (as
applicable). The obligations of each such party hereunder shall survive the
payment of such party's Obligations hereunder and the termination of this
Agreement.
5.5 Lender Accounts. The Borrower shall maintain its major
depository and disbursement accounts with the Administrative
Agent.
5.6 Employee Benefit Plans. The Borrower shall, and shall cause each of
its Subsidiaries to, (a) fund all of its Employee Benefit Plans in a manner that
will satisfy the minimum funding standards of Section 302 of ERISA (unless
failure to do the same would not have a Material Adverse Effect) and will
promptly satisfy any accumulated funding deficiency that arises under Section
302 of ERISA, (b) furnish the Administrative Agent, promptly after the filing of
the same, with copies of all reports (with all attachments thereto) required, by
statute, regulation, administrative consent or order or similar written
understanding, to be filed with the United States Department of Labor, the
Pension Benefit Guaranty Corporation ("PBGC") or the Internal Revenue Service
("IRS") with respect to all Employee Benefit Plan(s) to the extent such reports
contain information pertaining to events or conditions which would be, or
otherwise are, reasonably likely to have a Material Adverse Effect, or reports
which any such party, or any member of a Controlled Group of which the Borrower
or any of its Subsidiaries has knowledge (with respect to any assertions of
termination liability under Title IV of ERISA or, withdrawal liability, as
defined in ERISA), may receive from the United States Department of Labor, the
IRS or the PBGC, with respect to any such Employee Benefit Plan(s), and (c)
promptly advise the Administrative Agent of the occurrence of any Reportable
Event (as defined in Section 4043 of ERISA) which requires the giving of notice
to the PBGC or any Prohibited Transaction, of which the Borrower or any of its
Subsidiaries has knowledge, with respect to any such Employee Benefit Plan(s)
and the action which such party proposes to take with respect thereto. The
Borrower and each of its Subsidiaries will make all contributions when due with
respect to any multi-employer pension plan in which it participates and will
promptly advise the Administrative Agent (i) upon its receipt of notice of the
assertion against such party of a claim for withdrawal liability, (ii) upon the
Borrower's knowledge of the occurrence of any event which would trigger the
assertion of a claim for withdrawal liability against the Borrower or any of its
Subsidiaries, or (iii) upon the Borrower's knowledge of the occurrence of any
event which, to the best of the Borrower's Knowledge, would, after the date
hereof, place the Borrower or any of its Subsidiaries in a Controlled Group
(other than as shown on Schedule "4.11(c)" hereto) as a result of which any
member (including such party) thereof may be subject to a claim for withdrawal
liability, whether liquidated or contingent.
5.7 Financial and Business Information. The Borrower shall deliver to
the Administrative Agent and to each of the Lenders the following:
(a) Financial Statements and Covenant Reports Such data, reports,
statements and information, financial or otherwise, as the Administrative Agent
may reasonably request (except for information for which an attorney/client
privilege has been reasonably claimed or asserted by the Borrower) with
sufficient copies for all Lenders, including, without limitation:
(i) within forty-five (45) days after the end of each of the first
three quarterly accounting periods in each fiscal year of the Borrower, the
consolidated statement of operations of the Borrower and its Subsidiaries for
such quarter and for the expired portion of the fiscal year ending with the end
of such quarter, setting forth in comparative form the corresponding figures for
the corresponding periods of the previous fiscal year, and the balance sheet of
the Borrower and its Subsidiaries as at the end of such quarter, setting forth
in comparative form the corresponding figures as at the end of the corresponding
period of the previous fiscal year, all on a consolidated and consolidating
basis, in reasonable detail and certified by the chief financial officer of the
Borrower to have been prepared in accordance with GAAP (without footnotes);
(ii) within one hundred twenty (120) days after the end of each fiscal
year of the Borrower, the consolidated statement of operations of the Borrower
for such year, the balance sheet of the Borrower as at the end of such fiscal
year and a statement of cash flows for such fiscal year, all on a consolidated
and consolidating basis (statement of cash flows to be consolidated only),
setting forth in each case in comparative form the corresponding figures as at
the end of the previous fiscal year, all in reasonable detail, audited and
unqualifiedly certified (as to the consolidated statements) by independent
public accountants of recognized standing, selected by the Borrower and
satisfactory to the Administrative Agent, to have been prepared in accordance
with GAAP, and such independent public accountants shall also unqualifiedly
certify that in making the examinations necessary to their certification
mentioned above they have reviewed the terms of this Agreement and the accounts
and conditions of the Borrower during the accounting period covered by the
certificate and that such review did not disclose the existence of any condition
or event which constitutes an Event of Default (or if such conditions or events
existed, describing them); and
(iii) by March 1 of each year an internally prepared budget of
projected expenses and revenues for such fiscal year.
(b) Notice of Event of Default Promptly upon becoming aware of the
existence of any condition or event which constitutes a Default or an Event of
Default under this Agreement, a written notice specifying the nature and period
of existence thereof and what action the Borrower is taking (and proposes to
take) with respect thereto;
(c) Notice of Claimed Default Immediately upon receipt by the Borrower
or any of its Subsidiaries of a notice of default, oral or written, given to
such party by any creditor for borrowed money or holding long term Indebtedness
of such party, a copy of such notice (or a written explanation, if given orally)
along with an explanation of what action the Borrower is taking (and proposes to
take) with respect thereto;
(d) Securities and Other Reports If any Subsidiary of the Borrower
becomes a publicly traded company, promptly upon its becoming available, one
copy of each financial statement, report, notice or proxy statement sent by such
party to stockholders generally, and a copy of each regular or periodic report,
and any registration statement, or prospectus or any other document in respect
thereof filed by such party with any securities exchange or with all federal or
state securities and exchange commissions or any successor agency. In addition
to the foregoing, the Borrower shall, promptly upon its becoming available,
deliver to the Administrative Agent one copy of each regular or periodic report
and any registration statement or prospectus and any other document filed by the
Borrower with any securities exchange or with all federal or state securities
and exchange commissions or any successor agency.
5.8 Officers' Certificates. Along with the set of financial statements
delivered to the Administrative Agent at the end of each calendar quarter and
fiscal year pursuant to Section 5.7(a) hereof, the Borrower shall deliver to the
Administrative Agent a certificate (in the form of Exhibit 5.8 attached hereto
and made a part hereof) ("Quarterly Compliance Certificate") from the chief
financial officer of the Borrower (and as to certificates accompanying the
annual statements of the Borrower, also certified by the Borrower's independent
certified public accountant) in form and substance satisfactory to the
Administrative Agent setting forth, to the best of such officer's knowledge
after due investigation:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Borrower is in
compliance with the requirements of Sections 5, 6 and 7, as of the end of the
period covered by the financial statements then being furnished (and any
exhibits appended thereto) under Section 5.8; and
(b) Event of Default - that the signer has reviewed the relevant terms
of this Agreement and has made (or caused to be made under his supervision) a
review of the transactions and conditions of the Borrower from the beginning of
the accounting period covered by the income statements being delivered therewith
to the date of the certificate, and that such review has not disclosed the
existence during such period of any condition or event which constitutes a
Default or an Event of Default or if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken or proposes to take with respect thereto.
5.9 Inspection. So long as the Borrower is indebted to Lenders, and
subject in all events to the provisions of Section 10.24 hereof, the Borrower
and each of the Guarantors will, on not less than twenty-four (24) hours prior
notice, permit any of the Administrative Agent's officers or other
representatives (at its own expense, prior to the occurrence of an Event of
Default) to visit and inspect during business hours any of the locations of the
Borrower and each of the Guarantors, to examine and audit all of such parties'
books of account, records, reports and other papers (to the extent not subject
to an attorney-client privilege), to make copies and extracts therefrom and to
discuss such parties' affairs, finances and accounts with its officers,
employees and independent certified public accountants. Representatives of each
Lender may accompany the Administrative Agent during each such inspection and
visit. Representatives of any Lender may visit with executive officers of the
Borrower as they may mutually agree.
5.10 Tax Returns and Reports. Subject to Section 10.24 hereof, at the
Administrative Agent's request from time to time, the Borrower and each of the
Guarantors shall immediately furnish the Administrative Agent with copies of the
annual federal and state income tax returns of each such party for such years
such parties have not been audited and may be subject to audit. The Lenders and
the Administrative Agent shall not disclose any such returns or other written
financial information to any third party (except as permitted in Section 5.11
hereof) without the prior written consent of the Borrower, or unless required by
law or so compelled by order of a court of competent jurisdiction. The Borrower
further agrees that if requested by the Administrative Agent, it shall
immediately furnish the Administrative Agent with copies of all reports filed
with any Governmental Authority or agency, board or commission and shall supply
such information with respect to each of the Guarantors which becomes a publicly
traded company.
5.11 Information to Participants and Assignees. Subject to Section
10.24 hereof, the Administrative Agent, the Syndication Agent and each Lender
may divulge to any actual or prospective participant, assignee or co-lender it
may obtain with respect to the Revolving Credit, or any portion thereof, all
information, and furnish to such Person copies of reports, financial statements,
certificates, and documents obtained under any provision of this Agreement or
any of the other Loan Documents. The Agents and the Lenders shall not divulge
the contents of any written financial information to any other Person other than
as set forth above without the prior written consent of the Borrower, or unless
required by law or so compelled by an order of a court of competent
jurisdiction.
5.12 Material Adverse Developments. The Borrower agrees that
immediately upon becoming aware of any development or other information outside
the ordinary course of business (excluding matters of a general economic,
financial or political nature) which materially and adversely affects its, or
any of its Subsidiaries' Property, businesses, prospects, or financial
condition, in all cases taken as a whole on a consolidated basis, or such
parties' ability to perform under this Agreement or any of the other Loan
Documents (as applicable), it shall give to the Administrative Agent telephonic
or telegraphic notice specifying the nature of such development or information
and such anticipated effect. In addition, such verbal communication shall be
confirmed by written notice thereof to the Administrative Agent on the same day
such verbal communication is made.
5.13 Additional Parties. In the event that any Person, other than an
Unrestricted Subsidiary, becomes a Subsidiary of the Borrower after the Closing
Date (each such Subsidiary referred to herein as an "Additional Party" and
collectively as the "Additional Parties"), then, promptly after such Person
becomes a Subsidiary of the Borrower (but in any event prior to any
capitalization (other than de minimis capitalization) of, or contribution of
assets to, such Subsidiary), the Borrower shall cause such Subsidiary to execute
and deliver all such agreements, guarantees, suretyship agreements, documents
and certificates (including any amendments to the Loan Documents) and do such
other acts and things as the Administrative Agent may reasonably request in
order to have such Subsidiary guarantee and act as surety for the Obligations
and effect fully the purposes of this Agreement and the other Loan Documents and
to provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, in such event, such Additional Party shall execute and deliver to the
Administrative Agent a Guarantee (upon the execution of which, such Additional
Party shall become a Guarantor for all of the Obligations and for all purposes
hereunder and under the other Loan Documents).
5.14 Borrowing Base Certificate. At any time at the option of the
Borrower and in any event within twenty (20) days after the last Business Day of
each fiscal month of the Borrower, the Borrower shall deliver to the
Administrative Agent and to each of the Lenders for distribution by the
Administrative Agent to each Lender a certificate ("Borrowing Base
Certificate"), in the form of Exhibit "5.14" attached hereto and made a part
hereof, detailing the Eligible Accounts Receivable and Eligible Inventory of the
Borrower and the Guarantors as of the last day of such month, certified as
complete and correct on behalf of the Borrower by the Borrower's chief executive
officer, chief financial officer or treasurer. In addition, each Borrowing Base
Certificate shall have attached to it such additional schedules and/or other
information as the Administrative Agent may reasonably request. If the Borrower
fails to deliver any such Borrowing Base Certificate within thirty (30) days
after the end of any such month, then the Borrowing Base shall be deemed to be
$0 until such time as the Borrower shall deliver such required Borrowing Base
Certificate.
5.15 Performance of Obligations. The Borrower shall, and shall cause
each of the Guarantors to, perform in all material respects all of its
obligations under the terms of each mortgage, indenture, security agreement,
other debt instrument and any material contract by which it is bound or to which
it is a party, except where such nonperformance would not, singly or in the
aggregate, have a Material Adverse Effect.
5.16 Further Assurances. At any time and from time to time upon the
reasonable request of the Administrative Agent, the Borrower shall, and shall
cause each of the Guarantors to, execute and deliver such further documents,
instruments and agreements, and do such other acts and things as the
Administrative Agent may reasonably request, in order to effect fully the
purposes of this Agreement and the other Loan Documents and to provide for
payment of the Obligations in accordance with the terms of this Agreement and
the other Loan Documents.
5.17 Evidence of Intercompany Indebtedness. All Indebtedness owing at
any time and from time to time from the Borrower to any of its Subsidiaries or
any of the Borrower's Subsidiaries to the Borrower, or to any other such
Subsidiary shall be evidenced by a master promissory note or notes
("Intercompany Notes"), in form and substance satisfactory to the Administrative
Agent. All Intercompany Notes, in the case of any such existing Indebtedness,
shall have been executed, or shall contemporaneously herewith be executed by the
applicable obligor(s). True and correct copies of all Intercompany Notes
(including all amendments, replacements and additions executed from time to
time) shall be delivered to the Administrative Agent promptly upon execution
thereof accompanied by a certificate executed by an Authorized Officer of the
Borrower to the effect that such copies are true and correct copies of the
original instruments and that all such intercompany Indebtedness is then
evidenced by such Intercompany Notes.
SECTION 6. NEGATIVE COVENANTS.
The Borrower covenants that until all of the Borrower's Obligations
hereunder to the Lenders are paid and satisfied in full and the Revolving Credit
has been terminated that (it being understood that the Borrower shall cause each
of its Subsidiaries (or, as the case may be, the Guarantors) to observe and
comply in a timely manner with each provision of the covenants in this Section 6
to the extent applicable to such Subsidiary (or, as the case may be, such
Guarantor)):
6.1 Mergers. The Borrower shall not, nor shall it cause or permit any
of the Guarantors to, merge or consolidate or otherwise combine with or into any
other Person other than the merger of one Guarantor into another Guarantor (or
into another Person which thereby becomes a Guarantor to the extent such merger
is consummated contemporaneously with and as part of a transaction permitted
under Section 6.2 below) or into the Borrower, or commence a dissolution or
liquidation other than a liquidation or dissolution of a Guarantor pursuant to
which all Property thereof is directly and promptly transferred into the
Borrower or another Guarantor.
6.2 Acquisitions; Creation of Subsidiaries.
(a) The Borrower shall not, nor shall it cause or permit any of the
Guarantors to acquire all or a material portion of the stock, securities or
other Property of any nature of any Person in any transaction or in any series
of related transactions or enter into any sale and leaseback transaction,
provided, however, that the Borrower and the Guarantors may consummate any such
transaction (a "Permitted Acquisition") only if: (a) no Default or Event of
Default hereunder has occurred and is outstanding or would otherwise be caused
by, or would exist after giving effect to, the consummation of such acquisition;
(b) the aggregate consideration for all such acquisitions in a given year shall
not exceed an amount (the "Acquisition Amount") equal to fifteen (15%) percent,
(increasing to twenty (20%) percent commencing in 1998), of the prior year-end
Consolidated Net Worth, with a carryover only into the following year,
commencing with a carryover from 1997 to 1998, of fifty (50%) percent of the
previous year's unused Acquisition Amount, exclusive of any carryover amount
from a previous year, (for purposes of calculating the amount to be carried into
any other year, the amount of acquisitions in any year shall first be counted
against the Acquisition Amount (exclusive of any carryover amount from the
previous year)); (c) the aggregate consideration in all acquisitions following
the Closing Date until termination of the Revolving Credit shall not exceed
forty (40%) percent of the Consolidated Net Worth as of the end of the year
immediately preceding the year of determination, (d) the acquiring Person must
acquire, in the case of a stock acquisition, at least 80% of the issued and
outstanding capital stock of the Person being acquired (provided, however, that
if the acquiring Person acquires less than 100% of the issued and outstanding
capital stock of the acquired Person, the owners of the unacquired shares must
be bound by a shareholders' agreement reasonably satisfactory to the
Administrative Agent which shall include, at a minimum, "drag along" rights in
respect of such minority shares); (e) the Borrower and the Guarantors shall not
assume any new material contingent liabilities, (f) the business of the acquired
entity shall be generally similar to the lines of business of the Borrower and
the Guarantors; (g) any Person acquired by the Borrower (and becoming a
Subsidiary of the Borrower), except Unrestricted Subsidiaries, shall
unconditionally guaranty and become surety for all of the Borrower's Obligations
on terms and conditions satisfactory to the Administrative Agent; (h) the
Administrative Agent shall have received a satisfactory certificate prepared and
signed by the Chief Financial Officer of the Borrower showing (after taking into
effect the proposed acquisition) pro forma covenant compliance with the
financial covenants set forth in Section 7 herein immediately following the
applicable acquisition and projected compliance with such covenants for no fewer
than the next four (4) succeeding fiscal quarters of the Borrower, setting forth
in reasonable detail the calculations used in presenting such projections; and
(i) the Administrative Agent shall have received a satisfactory officer's
certificate from an Authorized Officer of the Borrower to the effect that the
conditions set forth in clauses (a)-(h) have been satisfied as of the date of
the acquisition.
(b) Notwithstanding anything to the contrary in this Agreement,
including any references to "Subsidiaries," neither the Borrower nor any
Guarantor shall create or acquire any interest in any Person that would be a
Subsidiary after the Closing Date other than (a) the creation of Delaware
holding companies for strategic reasons, as determined by the Borrower, on not
less than fifteen (15) days prior written notice to the Administrative Agent,
(b) maintenance of its interests in its respective Subsidiaries as of the
Closing Date, (c) in anticipation of or pursuant to or to effect any Permitted
Acquisition and (d) Unrestricted Subsidiaries of the Borrower or any Guarantor.
6.3 Liens and Encumbrances. (a) The Borrower shall not, nor shall it
cause or permit any of the Guarantors to: (i) execute a negative pledge
agreement with any Person covering any of its Property, or (ii) create or cause
or authorize or agree or consent to cause or permit, assume or suffer to exist
or remain in effect (upon the happening of a contingency or otherwise), its
Property, whether now owned or hereafter acquired, to be subject to a Lien or be
subject to any claim except for the following ("Permitted Liens"):
(1) Liens securing taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords, and other like Persons, or Liens evidencing consignment or bailment
arrangements with the Borrower or any of the Guarantors as consignee or bailee,
provided the payment thereof is not at the time required by Section 5.1;
(2) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance, social
security and other like laws and in connection with leases or trade contracts;
(3) Purchase money security interests (attaching solely to the fixed
asset purchased and securing only the obligation incurred to finance such
purchase) from the Borrower or any of the Guarantors to Persons providing
financing for permitted Consolidated Capital Expenditures provided that each
such financing obligation incurred by the Borrower shall not exceed the lesser
of (A) cost or (B) appraised fair market value;
(4) Existing Liens described on Schedule "4.4" hereto; and
(5) Purchase money security interests (attaching solely to the fixed
asset purchased and securing only the obligation incurred to finance such
purchase) deemed to be assumed by the Borrower or any of the Guarantors in
connection with Permitted Acquisitions.
(b) If the Borrower or any Subsidiary shall create or assume any Lien
upon any of its Property or income or profits therefrom, other than Liens
permitted under this Section 6.3, and without having such provisions be deemed
for any purpose to represent a consent by any Lender or Lenders to such Lien, it
shall make or cause to be made effective provisions whereby the Obligations will
be secured by such Lien equally and ratably with any and all other indebtedness
secured thereby.
6.4 Transactions With Affiliates or Subsidiaries. The Borrower shall
not, nor shall it cause or permit any of the Guarantors to, enter into any
transaction of any kind or nature with any Affiliate, including, without
limitation, the purchase, sale, or exchange of Property, or the loaning or
giving of funds to any Affiliate or any Subsidiary, excepting (a) sales of
Property and co-licensing or co-marketing arrangements or agreements pursuant to
the reasonable requirements of the Borrower's or the Guarantors' business and
upon terms substantially the same and no less favorable to such party as it
would obtain in a comparable arm's length transaction with any Person not an
Affiliate, and so long as such transaction is not otherwise prohibited
hereunder, (b) loans and transfers of Property (other than shares of capital
stock of any Subsidiary and intellectual property) by the Borrower to the
Guarantors and loans and transfers of Property by the Guarantors to the Borrower
or to other Guarantors, (c) loans by the Borrower or Guarantor to any of the
Subsidiaries (other than Guarantors) after the date hereof in an aggregate
amount as to all such loans under this clause (c) not to exceed $20,000,000
outstanding in the aggregate after the Closing Date, and (d) the de minimis
transfer by the Borrower or any of the Guarantors of their Property to any of
the Subsidiaries.
6.5 Guarantees. Excepting (a) the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection, (b) the
Guarantees, (c) guarantees by the Borrower or by any Guarantor of operating
leases of any Subsidiary entered into in the ordinary course of business, (d)
indemnification obligations to directors and officers under applicable law or
set forth in the certificate of incorporation and/or by-laws of the Borrower or
any Subsidiary, and (e) additional guarantees by the Borrower and/or any of the
Guarantors for the Indebtedness of any Person which, together with Indebtedness
permitted under Section 6.12(b)(iv) below shall not exceed $5,000,000 at any one
time outstanding, the Borrower shall not, nor shall it cause or permit any of
the Guarantors to, become or be liable, directly or indirectly, primary or
secondary, matured or contingent, in any manner, whether as guarantor, surety,
accommodation maker, or otherwise, and for the existing or future indebtedness
or obligation(s) of any kind or nature of any Person.
6.6 Dividends and Redemptions. The Borrower shall not, nor shall it
cause or permit any of its Subsidiaries to, directly or indirectly: (a) declare,
pay, authorize or make any form of dividend (except for share or stock splits)
or return any capital, in cash or property, to its shareholders, their
successors or assigns, except (i) as expressly permitted by Section 6.1 hereof,
(ii) dividends payable to the Borrower or any Guarantor by any Subsidiary on a
pro rata basis to all holders, and (iii) dividends declared and paid by the
Borrower at its option not prohibited by provisos (A), (B) and (C) below, (b)
redeem, retire, purchase or otherwise acquire or retire, for any consideration,
any of the capital stock of the Borrower or any of the Subsidiaries now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any such stock), except (i) the Borrower or any of the
Guarantors may redeem, retire, purchase or otherwise acquire or retire its
capital stock from its employees as part of reasonable employee incentive plans,
(ii) Rapidforms, Inc., Russell & Miller, Inc. and Newshire Forms, Inc. may
redeem the outstanding capital stock of their current minority shareholders, and
(iii) redemptions, etc. not prohibited by the provisos (A), (B) and (C) below,
or (c) set aside any funds for any of the purposes set forth in clauses (a) and
(b) hereof; provided, however, that (A) dividends or redemptions, etc. otherwise
permitted as set forth above shall not be made so long as any Default or Event
of Default is then outstanding or would be outstanding after taking into effect
such dividend, redemption or setting aside of funds, (B) the total dividends
paid and redemptions, etc. made in any fiscal year shall not in any event
exceed, in the aggregate, 35% of the Borrower's Consolidated Net Income (only if
positive) for the prior fiscal year, (C) no dividend may be declared or paid or
redemption made if the Borrower's ratio of Consolidated Total Debt to
Consolidated Net Worth is greater than .45 to 1 as of the end of the fiscal
quarter immediately preceding the date of payment of any such dividend.
6.7 Loans and Investments. The Borrower shall not, nor shall it cause
or permit any of the Guarantors to, make or have outstanding Investments in, any
Person, other than (a) Investments in commercial paper maturing in one (1) year
or less from the date of issuance rated either A-1 by S&P, P-1 by Moody's or
other similar nationally recognized credit rating agency of similar standing;
(b) Investments in direct obligations of the United States of America, or any
agency or instrumentality thereof, maturing in five (5) years or less from the
date of acquisition thereof; (c) Investments in certificates of deposit maturing
within one (1) year from the date of origin issued by, or money market funds
held by, a Lender; (d) Investments in repurchase agreements secured by direct
obligations of the United States of America, or any agency thereof, maturing in
twelve (12) months or less and having a market value at the time such repurchase
agreement is entered into at least equal to the amount of the repurchase
obligations or thereunder, entered into with a Lender, (e) loans permitted under
Section 6.4 above, (f) Investments which are Permitted Acquisitions, (g)
Investments by the Borrower or any of the Guarantors as permitted under Sections
6.4(a) and (b), (h) Investments in any Guarantor and Investments in any other
Subsidiary of the Borrower as such Investments existed as of the Closing Date,
(i) permitted Investments in connection with Asset Sales permitted pursuant to
Section 6.13(b)(i)(C), (j) other Investments not to exceed $5,000,000 in the
aggregate outstanding at any one time, and (k) loans to employees made by the
Borrower or any Guarantor for the purpose of enabling such employees to exercise
stock options up to an aggregate loan balance of $1,000,000 at any time
outstanding.
6.8 Use of Lenders' Name. The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, use any Lender's name (or the name of any
Lender's Affiliates) or the Agents' names in connection with any of its business
operations. Nothing herein contained is intended to permit or authorize the
Borrower or any of its Subsidiaries to make any contract or extend any
commitment on behalf of any Lender or either of the Agents.
6.9 Amendment or Waivers of Certain Documents. (a) The Borrower shall
not, nor shall it cause or permit any of the Guarantors to, amend, modify,
supplement or otherwise change the terms of their respective certificates of
incorporation or bylaws or any agreement entered into by the Borrower or any of
the Guarantors with respect to their respective capital stock or other equity
interests (other than any amendment, modification, supplement or change which
individually, or together with all amendments, modifications, waivers or changes
made, would not be adverse to the Borrower, any of the Guarantors, the
Administrative Agent or the Lenders) without the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld.
(b) The Borrower shall not, nor shall it cause or permit any of the
Guarantors to, amend, modify, supplement or otherwise change, or waive
compliance with or consent to a departure from, any of the terms or provisions
of any Existing Debt of the Borrower, the Acquisition Documents or any other
material agreement of the Borrower or the Guarantors (other than any amendments,
modifications, supplements, changes, waivers and consents which individually, or
together with all other amendments, modifications, supplements, changes, waivers
and consents made, would not be adverse to the Borrower, any of the Guarantors,
the Administrative Agent or the Lenders) without the prior written consent of
the Administrative Agent, which consent shall not be unreasonably withheld.
(c) Neither the Borrower nor any Subsidiary shall enter into, suffer to
exist or become or remain subject to any agreement or instrument to which any
such Person is a party or by which any such Person or its Property may be
subject or bound, except for the Loan Documents, that would prohibit or restrict
in any manner, directly or indirectly, or require the consent of any Person to,
any amendment to, or waiver or consent to departure from the terms of, any of
the Loan Documents.
6.10 Sale and Lease-Backs. The Borrower shall not, nor shall it cause
or permit any of the Guarantors to, directly or indirectly, become or thereafter
remain liable as lessee or as guarantor or surety with respect to the lessee's
obligations under any lease, whether an operating lease or a capital lease, of
any property (whether real or personal or mixed), whether now owned or hereafter
acquired, (i) which the Borrower or any of the Guarantors has sold or
transferred or is to sell or transfer to any other Person or (ii) which the
Borrower or any such Subsidiary intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
the Borrower or any such Subsidiary to any Person in connection with such lease,
if in the case of clause (i) or (ii) above, such sale and such lease are part of
the same transaction or a series of related transactions or such sale and such
lease occur within one (1) year of each other or are with the same other Person.
6.11 Business Conducted. The Borrower shall not, nor shall it cause or
permit any of the Guarantors to, engage, directly or indirectly, in any line of
business substantially different from the business conducted by it immediately
prior to the Closing Date, or engage in business or lines of business which are
not reasonably and substantially related thereto.
6.12 Indebtedness. The Borrower shall not, nor shall it cause or permit
any of the Guarantors to (a) make any prepayments of any nature whatsoever (or
deposit money or other Property for the purpose thereof) on any existing or
future long-term Indebtedness to any Person, except (so long as no Default or
Event of Default is then outstanding and such payment would not cause a Default
or an Event of Default hereunder) payment on the Unsecured Seller Note and the
Rapidforms Mortgage or (b) hereafter incur or be or become liable for
Indebtedness except for (i) Indebtedness to the Lenders pursuant to this
Agreement, (ii) purchase money financing supported by Liens permitted pursuant
to Sections 6.3(a)(3) or 6.3(a)(5) above, (iii) the Unsecured Seller Note, and
(iv) additional Indebtedness in an aggregate principal amount, together with all
obligations described in Section 6.5(d) herein, not exceeding $5,000,000.
6.13 Restrictions on Fundamental Changes; Asset Sales. The Borrower
shall not, nor shall it cause or permit any of its Subsidiaries to, (a)
materially alter the corporate, partnership, capital or legal structure of the
Borrower or any Subsidiary of the Borrower other than alterations of the
structure of (i) Guarantors as permitted in Section 6.9 above and (ii) any other
Subsidiaries in the ordinary course if no Default or Event of Default has
occurred or is continuing or (b) make or effect any Asset Sale excepting (i)
Asset Sales made (A) at a time when no Default of Event or Default is
outstanding hereunder or would be outstanding after taking into effect such
Asset Sale, (B) the consideration received shall be an amount at least
substantially equal to the fair market value of the Property which is the
subject of the Asset Sale, as certified to the Administrative Agent by the
Borrower's chief financial officer; (C) at least 75% of the consideration
received therefrom shall be cash (any non-cash consideration must be in the form
of either (1) senior commercial paper with a rating of at least "A-1" by S & P
or "P- 1" by Moody's, (2) a senior debt instrument fully secured by marketable
securities of a company listed on a nationally recognized exchange) or (3) a
debt instrument secured by a first lien on the assets sold; (D) such Asset Sales
are not to an Affiliate of the seller; (E) the proceeds of such Asset Sale are
applied as required by Section 2.11; and (F) the assets sold in all transactions
permitted hereby after the Closing Date shall have an aggregate fair market
value of not more than $37,500,000; (ii) transactions permitted under Section
6.4 above, (iii) the Borrower and any of its Subsidiaries may from time to time
abandon any personal Property of the Borrower or such Subsidiary which is no
longer useful in the business of the Borrower or such Subsidiary and can not be
sold and (iv) at a time when no Default or Event of Default is outstanding
hereunder or would be outstanding after taking into effect such Asset Sale,
sales of minority interests of capital stock or partnership interests of any
Subsidiary (other than a Guarantor) to any employees thereof.
6.14 Agreements Regarding Dividends. Neither the Borrower nor any of
the Guarantors shall create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind (whether arising
by operation of law, by agreement, by its articles or certificate of
incorporation, bylaws or other constituent documents of such Person, or
otherwise) on the ability of any Subsidiary of the Borrower to (i) pay dividends
or make any other distribution on any of such Subsidiary's capital stock,
partnership interests or other interests, as the case may be, owned by the
Borrower or any other Subsidiary of Borrower, (ii) make loans or advances to, or
guarantee any Indebtedness or any other obligation of, the Borrower or any other
Subsidiary of Borrower or (iii) transfer any of its Property to the Borrower or
any other Subsidiary of Borrower, except restrictions pursuant to (A) the Loan
Documents and (B) applicable law.
6.15 Miscellaneous Covenants.
(a) The Borrower shall not, nor shall it cause or permit any of the
Guarantors to, become or be a party to any contract or agreement which
materially impairs such party's ability to perform under this Agreement, or
under any other instrument, agreement or document to which the Borrower or such
Subsidiary is a party or by which it is or may be bound.
(b) The Borrower shall not, nor shall it cause or permit any of the
Guarantors to, carry or purchase any "margin security" within the meaning of
Regulations U, G, T or X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II except in accordance with such Regulations.
SECTION 7. FINANCIAL COVENANTS.
The Borrower shall comply with the following financial covenants (each
to be measured as of the end of each of the Borrower's fiscal quarters during
the applicable respective measurement periods, except that the first measurement
date under Sections 7.1, 7.3, and 7.4 below shall be March 31, 1996 and the
first measurement date under Section 7.6 shall be December 31, 1996):
7.1 Fixed Charge Coverage Ratio. The Borrower shall have and maintain a
Fixed Charge Coverage Ratio of not less than the following during the following
periods (measured on a rolling four quarter basis):
Period Minimum Ratio
From the Closing Date
through September 30, 1996 1.00 to 1
October 1, 1996 through
September 30, 1997 1.10 to 1
October 1, 1997 through
September 30, 1998 1.20 to 1
October 1, 1998 and at all
times thereafter 1.40 to 1
7.2 Minimum Consolidated Net Worth. The Borrower shall have and
maintain a minimum Consolidated Net Worth of not less than $135,000,000 for the
period from the Closing Date through December 31, 1995. For each subsequent
fiscal quarter thereafter, the Borrower shall maintain, at all times during such
fiscal quarter, minimum Consolidated Net Worth in an amount equal to at least
the preceding fiscal quarter's minimum Consolidated Net Worth requirement plus
an amount equal to fifty (50%) percent of the Borrower's year to date
Consolidated Net Income for such preceding fiscal quarter (with no adjustment
for losses).
7.3 Ratio of Consolidated Total Debt to Consolidated Capitalization.
The Borrower shall have and maintain a ratio of Consolidated Total Debt to
Consolidated Capitalization of not more than the following during the following
periods:
Period Maximum Ratio
From the Closing Date
through September 30, 1996 .55 to 1
October 1, 1996 through
December 31, 1996 .53 to 1
January 1, 1997 and at all
times thereafter .50 to 1
7.4 Ratio of Consolidated EBITDA to Consolidated Interest Expense. The
Borrower shall have and maintain a ratio of Consolidated EBITDA to Consolidated
Interest Expense of not less than the following during the following periods
(measured on a rolling four quarter basis):
Period Minimum Ratio
From the Closing Date
through September 30, 1996 3.00 to 1
October 1, 1996 through
September 30, 1997 3.50 to 1
October 1, 1997 and at all
times thereafter 4.00 to 1
7.5 Minimum Consolidated EBITDA. The Borrower shall have and maintain
minimum Consolidated EBITDA of not less than the following amounts during the
following periods (measured on a rolling four quarter basis):
Period Minimum EBITDA
From the Closing Date through
June 30, 1996 $33,000,000
July 1, 1996 through
December 31, 1996 $36,000,000
January 1, 1997 and at all
times thereafter $39,000,000
7.6 Capital Expenditures. The Borrower shall not make Consolidated
Capital Expenditures during the fiscal year ending December 31, 1996 in an
aggregate amount in excess of $30,000,000 and, in each fiscal year thereafter,
in an aggregate amount in excess of $15,000,000, with a carryover only into the
following year of fifty (50%) percent of the unspent amount. For the purposes of
calculating the carryover amount available in any year, capital expenditures for
such year shall first be credited against the non-carryover amount permitted in
such year and after such amount has been spent, against the carryover amount.
Notwithstanding the foregoing, the carryover amount from the fiscal year ending
December 31, 1996 into the fiscal year ending December 31, 1997 shall be the
lesser of (i) fifty (50%) percent of the unspent amount during fiscal year
ending December 31, 1996 or (ii) $7,500,000.
SECTION 8. DEFAULT
8.1 Events of Default. Each of the following events shall constitute an
event of default ("Event of Default"):
(a) Payments - if the Borrower fails to make any pay- ment of principal
or interest under the Revolving Credit on its due date; or
(b) Other Charges - if the Borrower fails to pay any other charges,
fees, Expenses or other monetary obligations owing to any Lender or the
Administrative Agent or the Fronting Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable and such
breach is not cured within five (5) days of the Borrower's receipt of notice
from the Administrative Agent of such breach; or
(c) Particular Covenant Defaults - if the Borrower fails to perform or
observe any covenant or undertaking contained in this Agreement, (other than
with respect to the covenants contained in Sections 5.7(b), 6.1 through 6.15 and
Sections 7.1 through 7.6 inclusive, as to which no notice and cure period shall
be applicable), and such breach is not cured within fifteen (15) days of the
Borrower's receipt of notice thereof from the Administrative Agent, or if such
breach could not be cured by the Borrower due to circumstances beyond the
Borrower's control within such fifteen (15) day period, for such longer period
as may be necessary for the Borrower to cure such default (in no event to exceed
a total of thirty (30) days from any such notice) so long as the Borrower is
diligently taking all necessary steps to cure any such default(s); or
(d) Financial Information - if any statement, report, financial
statement, or certificate made and delivered by the Borrower or any of its
officers, employees or agents, to the Administrative Agent or any Lender, is not
true and correct, in all material respects, when made (provided, however, that
an Event of Default shall not be deemed to have occurred hereunder (i) because
interim financial statements are subject to normal and recurring year end
adjustments in the ordinary course, (ii) because interim financial statements of
Cleo during 1995 are subject to year-end adjustments, and (iii) to the extent
financial statements with respect to Cleo for any period prior to December 31,
1994 are not accurate); or
(e) Uninsured Loss - if there shall occur any uninsured damage to or
loss, theft, or destruction of any portion of any Property of the Borrower or
any of the Guarantors in excess of $20,000,000; or
(f) Warranties or Representations - if any warranty, representation or
other statement by or on behalf of the Borrower or any of the Guarantors
contained in or pursuant to this Agreement, or in any of the Loan Documents or
in any other existing or future agreement between the Borrower and/or any of the
Borrower's Subsidiaries, on the one hand, and the Administrative Agent and/or
any one or more of the Lenders, on the other hand, is false, erroneous, or
misleading in any material respect when made (any such misrepresentation with
respect to Cleo, notwithstanding Sections 3 or 4.8 hereof, constituting an Event
of Default hereunder regardless of whether the Borrower or any of the Guarantors
had knowledge of such misrepresentation); or
(g) Agreements with Others - if the Borrower or any of the Guarantors
shall (i) default beyond any grace period under any agreement with any creditor
of the Borrower or any such Subsidiary or holder of long term Indebtedness from
the Borrower or such Subsidiary, if the effect of such default is to cause or
enable the holder of such party's obligations to declare any such obligation of
such party to become due (whether or not actually accelerated) prior to its
maturity date or prior to its regularly scheduled date of payment or (ii) fail
to pay any Indebtedness at final maturity; or
(h) Other Agreements with Lenders - if the Borrower or any of the
Guarantors breaches or violates the terms of, or if a default (subject to any
cure periods contained therein) or an Event of Default occurs under any other
existing or future agreement (related or unrelated) between the Borrower and/or
any of the Borrower's Subsidiaries, on the one hand, and the Administrative
Agent and/or any/all Lenders, on the other hand; or
(i) Judgments - if any final, non-appealable judgment for the payment
of $5,000,000 or more or final, non-appealable judgments aggregating $5,000,000
or more (not acknowledged, in writing, by the Borrower's or its applicable
Subsidiary's insurance company as unconditionally covered by insurance or not
stayed within five (5) days of entry) shall be rendered by a court of competent
jurisdiction against the Borrower or any of the Guarantors; or
(j) Assignment for Benefit of Creditors, etc. - if the Borrower or any
of the Guarantors makes or proposes an assignment for the benefit of creditors
generally, offers a composition or extension to creditors; or
(k) Bankruptcy, Dissolution, etc. - any action for the dissolution or
liquidation of the Borrower or any of the Guarantors, or if there shall be
commenced any case or proceeding for reorganization or liquidation of the
Borrower's or any of Subsidiary's debts under the Bankruptcy Code or any other
state or federal law, now or hereafter enacted for the relief of debtors,
whether instituted by or against such party, provided that as to any such action
or proceeding commenced against any Borrower or any of the Guarantors, such
Borrower or Subsidiary shall have forty-five (45) days to have such action or
proceeding dismissed, it being understood that during such forty-five (45) day
period, the Lenders and the Administrative Agent shall not be obligated to make
Advances to or for the benefit of the Borrower; or
(l) Receiver - if there shall be appointed a receiver, liquidator,
custodian, trustee or similar official or fiduciary for the Borrower or any of
the Guarantors or for any of any of the Borrower's or any of the Guarantors'
Property; or
(m) Execution Process, etc. - if there shall be issued any execution or
distraint process against the Borrower or any of the Guarantors, or any Property
of the Borrower or any Property of any Subsidiary of the Borrower, which
execution is not released, stayed or dismissed within fifteen (15) days of its
entry, it being understood that nothing herein shall in any way impair the
Administrative Agent's and the Lenders' rights to immediately effect an offset
against any asset of the Borrower or the Guarantors; or
(n) Termination of Business - if the Borrower or any of the Guarantors
(except Cleo) cease any material portion of its respective business operations
as presently conducted unless, in the case of a Guarantor, such Guarantor
immediately merges into or consolidates with the Borrower; or
(o) Pension Benefits, etc. - if the Borrower or any of the Guarantors
fail to comply with ERISA so that grounds exist to permit the appointment of a
trustee under ERISA to administer the Borrower's or such Subsidiary's employee
plans or to allow the Pension Benefit Guaranty Corporation to institute
proceedings to appoint a trustee to administer such plan(s), or to permit the
entry of a Lien to secure any deficiency or claim; or
(p) Transfer of Stock - if the Borrower shall not be the owner
(directly or indirectly) of at least 100% of all of the issued and outstanding
voting stock of each of the Guarantors (or 80% in the case of Guarantors formed
in connection with Permitted Acquisitions) (except Rapidforms, Inc., as to which
it must own at least 85% of the issued and outstanding voting stock); or
(q) Investigations - if evidence shall be received by the
Administrative Agent or any Lender that the Borrower or any of the Guarantors is
or has been engaged in any type of activity which, in the Administrative Agent's
reasonable judgment, could result in the forfeiture of Property of any of the
Guarantors or the Borrower to any Governmental Authority; or
(r) Guarantees - if any Guarantee ceases to be effective or any
Guarantor disclaims liability under such Guarantee or attempts to revoke or
otherwise terminate its respective Guarantee for any reason and to any extent,
except to the extent of a merger, consolidation or liquidation permitted
hereunder; or
(s) Change of Control - if there shall occur any Change of Control.
8.2 Rights and Remedies on Default.
(a) Upon the occurrence of a Default or an Event of Default, the
Administrative Agent may, in its discretion, or shall, upon the direction of the
Majority Lenders, withhold or cease making Advances under the Revolving Credit.
(b) In addition to all other rights, options and remedies granted or
available to the Administrative Agent under this Agreement or the other Loan
Documents (each of which is also then exercisable by the Administrative Agent),
the Administrative Agent may, in its discretion, or shall, upon the direction of
Majority Lenders, upon the occurrence and during the continuance of an Event of
Default, terminate the Revolving Credit, accelerate the Obligations and exercise
any rights and remedies available hereunder or under any of the other Loan
Documents, at law or in equity to enforce the Lenders' and the Administrative
Agent's rights and collect the Obligations, all without demand, notice,
presentment or protest or further action of any kind (it also being understood
that the occurrence of any of the events or conditions set forth in
subparagraphs (j), (k) or (l) of Section 8.1 above shall automatically cause an
acceleration of the Obligations). Nevertheless, if at any time within sixty (60)
days after acceleration of the Obligations, (i) the Borrower shall pay all
accrued and unpaid interest and all payments on account of the principal
Obligations, which shall have become due otherwise than by acceleration (with
interest, to the extent permitted by law, on overdue interest, at the Alternate
Base Rate) and all other fees or Expenses then owed hereunder and (ii) all
Defaults and Events of Default (other than non-payment of principal of and
accrued interest on the Advances and the Revolving Credit Notes due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
Section 9.15, then the Super Majority Lenders, by written notice to the
Borrower, may (in their absolute and sole discretion) rescind and annul the
acceleration and its consequences; but such action shall not affect any
subsequent Default or Event of Default or impair any right consequent thereto.
The provisions of the immediately preceding sentence are intended merely to bind
the Lenders to a decision that may be made at the election of the Lenders and
are not intended in any manner or under any circumstances whatsoever to benefit
the Borrower or any of the Guarantors and do not grant in any manner or under
any circumstances whatsoever the Borrower or any of the Guarantors the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
(c) Upon the occurrence and during the continuance of an Event of
Default and in addition to all other rights and remedies available to the
Administrative Agent, the Borrower shall, upon demand of the Administrative
Agent, be obligated to deliver and pledge to the Administrative Agent, on behalf
of all Lenders, cash collateral in the amount of all outstanding Letters of
Credit.
8.3 Nature of Remedies. All rights and remedies granted the
Administrative Agent and/or the Lenders hereunder and under any of the other
Loan Documents, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and the Administrative
Agent and/or the Lenders may proceed with any number of remedies at the same
time until all Obligations are satisfied in full. The exercise of any one right
or remedy shall not be deemed a waiver or release of any other right or remedy,
and the Administrative Agent, upon the occurrence of an Event of Default, may
proceed against the Borrower, at any time, under any agreement, document or
instrument, with any available remedy and in any order.
8.4 Set-Off. If any bank account of the Borrower with the
Administrative Agent, any Lender or any participant is attached or otherwise
liened or levied upon by any third party, the Administrative Agent and/or such
Lender (and/or any participant) need not await the running of any applicable
grace period hereunder, but the Administrative Agent and/or such Lender (and/or
such participant) as agent for the Lenders and the Administrative Agent shall
have and be deemed to have the immediate right of set-off and may apply the
funds or amount thus set-off against any of the Obligations. Any such funds
shall be held for the ratable benefit of all Lenders and shall be remitted to
the Administrative Agent for distribution to all Lenders in accordance with each
Lender's Pro Rata Percentage (subject to such sharing agreements as the
Administrative Agent may reasonably determine to effectuate the terms of this
Agreement).
SECTION 9. THE ADMINISTRATIVE AGENT.
9.1 Appointment and Authorization. Each Lender, and each subsequent
holder of any of the Revolving Credit Notes by its acceptance thereof, hereby
irrevocably appoints and authorizes the Administrative Agent to take such action
on its behalf and to exercise such powers under this Agreement as are delegated
to the Administrative Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent will handle all
transactions relating to the Revolving Credit and all other Obligations,
including without limitation, all transactions with respect to Letters of
Credit, this Agreement, and all of the other Loan Documents, in accordance with
its usual banking practices. The Borrower is hereby authorized by the Lenders to
deal solely with the Administrative Agent in all transactions which affect the
Lenders under this Agreement and the Loan Documents. The rights, privileges and
remedies accorded to the Administrative Agent hereunder shall be exercised by
the Administrative Agent on behalf of all of the Lenders.
9.2 General Immunity. In performing its duties as the Administrative
Agent hereunder, the Administrative Agent will take the same care as it takes in
connection with loans in which it alone is interested, using reasonable and
prudent banking practices. However, neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them hereunder or in connection herewith
except as such actions or omissions are caused from its or their own gross
negligence or willful misconduct unless such action was taken or omitted to be
taken by the Administrative Agent at the direction of the Majority Lenders.
9.3 Consultation with Counsel. The Administrative Agent may consult
with legal counsel and other experts selected by it and shall not be liable for
any action taken or suffered in good faith by it in accordance with the advice
of such counsel.
9.4 Documents. The Administrative Agent shall not be under a duty to
examine into or pass upon the effectiveness, genuineness or validity of this
Agreement or any of the Revolving Credit Notes or any of the other Loan
Documents, and the Administrative Agent shall be entitled to assume that the
same are valid, effective and genuine and what they purport to be. In addition,
the Administrative Agent shall not be liable for failing to make any inquiry
concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument, document or agreement. The
Administrative Agent shall furnish to the Lenders copies of all notices and
other documents (including financial statements) received from the Borrower
hereunder.
9.5 Rights as a Lender. With respect to its Pro Rata Share of the
Revolving Credit, the Administrative Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its capacity as
a Lender. Subject to the provisions of this Agreement, the Administrative Agent
and any Lender may accept deposits from, lend money to and generally engage in
any kind of banking or trust business with the Borrower and its Affiliates and
Subsidiaries as if it were not the Administrative Agent.
9.6 Responsibility of the Administrative Agent. It is expressly
understood and agreed that the obligations of the Administrative Agent hereunder
are only those expressly set forth in this Agreement and that the Administrative
Agent shall be entitled to assume that no Event of Default, and no event that,
with notice, or lapse of time or both would, if unremedied, constitute an Event
of Default, has occurred and is continuing, unless the Administrative Agent has
actual knowledge of such fact. Except to the extent the Administrative Agent is
required by the Lenders pursuant to the express terms hereof to take a specific
action, the Administrative Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions that it may be able to take under or in respect of, this Agreement
and the Loan Documents. The Administrative Agent shall incur no liability under
or in respect of this Agreement and the other Loan Documents by acting upon any
notice, consent, certificate, warranty or other paper or instrument believed by
it to be genuine or authentic or to be signed by the proper party or parties, or
with respect to anything that it may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to it to be necessary or desirable
under the circumstances. It is agreed among the Administrative Agent and the
Lenders that the Administrative Agent shall have no responsibility to carry out
audits or otherwise examine the books and records or properties of the Borrower
or any of the Borrower's Subsidiaries, except as the Administrative Agent in its
sole discretion deems appropriate or unless directed to do so by the Majority
Lenders. The relationship between the Administrative Agent and each Lender is
and shall be that of agent and principal only and nothing herein shall be
construed to constitute the Administrative Agent a joint venturer with any
Lender, a trustee or fiduciary for any of the Lenders or for the holder of a
participation herein nor impose on the Administrative Agent duties and
obligations other than those set forth herein. Nothing contained in this Section
9.6 is intended to relieve the Administrative Agent from liability for its gross
negligence or its willful misconduct unless any act, omission or conduct of the
Administrative Agent is or has been directed by the Majority Lenders.
9.7 Collections and Disbursements.
(a) The Administrative Agent will have the right to collect and receive
all payments of the Obligations, and to collect and receive all reimbursements
for draws made under the Letters of Credit, together with all fees, charges or
other amounts due under this Agreement and the Loan Documents, and the
Administrative Agent will remit to each Lender, according to its Pro Rata
Percentage, all such payments actually received by the Administrative Agent
(subject to any required clearance procedures) on the same Business Day of
receipt thereof (provided such payments shall have been received by the
Administrative Agent prior to 1:00 p.m., Philadelphia time, on such Business
Day) otherwise on the next Business Day.
(b) If any such payment received by the Administrative Agent is
rescinded or otherwise required to be returned for any reason at any time,
whether before or after termination of this Agreement and the Loan Documents,
each Lender will, upon written notice from the Administrative Agent promptly pay
over to the Administrative Agent its Pro Rata Percentage of the amount so
rescinded or returned, together with interest and other fees thereon if also
required to be rescinded or returned.
(c) On the same Business Day on which notice is given to the Lenders by
the Administrative Agent (or on the next following Business Day if such notice
is not given by the Administrative Agent prior to 1:00 p.m., Philadelphia time)
with respect to any payment which has been made on account of any Letter of
Credit, which notice shall state the date and amount of such payment, each
Lender (other than the payor Lender) shall remit to the payor Lender its Pro
Rata Percentage of the payment in respect of such Letter of Credit. The
obligations of the Lenders hereunder are unconditional, not subject to setoff
and irrevocable and may not be terminated at any time.
(d) All payments by the Administrative Agent and the Lenders to each
other hereunder shall be in lawful money of the United States of America and in
immediately available funds. The Administrative Agent will at all times maintain
proper books of account and records reflecting the interest of each Lender in
the Revolving Credit and the Letters of Credit, in a manner customary to the
Administrative Agent's keeping of such records, which books and records shall be
available for inspection by each Lender at reasonable times during normal
business hours, at such Lender's sole expense. The Administrative Agent may
treat the payees of any Revolving Credit Note as the holder thereof until
written notice of the transfer thereof shall have been received by the
Administrative Agent.
(e) Each Lender and each subsequent holder by acceptance of a Revolving
Credit Note agree among themselves that (i) with respect to all amounts received
by them which are applicable to the payment of principal of or interest on the
Revolving Credit Notes and amounts payable in respect of any fees or commissions
hereunder, equitable adjustment will be made so that, in effect, all such
amounts will be shared among the Lenders pro rata based on their respective Pro
Rata Share of the Obligations with respect to which such payment was received,
whether received by voluntary payment, by the exercise of the right of setoff or
banker's lien, by counterclaim or cross action or by the enforcement of any or
all of the Revolving Credit Notes, (ii) if any of them shall exercise any right
of counterclaim, setoff, banker's lien or similar right with respect to amounts
owed by the Borrower or any Guarantor hereunder or under the Revolving Credit
Notes that Lender or holder, as the case may be, shall apportion the amount
recovered as a result of the exercise of such right pro rata in accordance with
each Lender's Pro Rata Percentage, and (iii) if any of them shall thereby
through the exercise of any right of counterclaim, setoff, banker's lien or
otherwise or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or rejection of a proportion of the
aggregate amount of principal and interest due with respect to the Revolving
Credit Notes held by the Lender or holder, or any other amount payable hereunder
which is greater than the proportion received by any other holder of the
Revolving Credit Notes in respect of the aggregate amount of principal and
interest due with respect to the Revolving Credit Notes held by it or any other
amount payable hereunder that Lender or that holder of the Revolving Credit
Notes receiving such proportionately greater payments shall (y) notify each
other Lender and the Administrative Agent of such receipt and (z) purchase for
cash, without recourse or warranty, participations (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in the Revolving
Credit Notes held by the other holders so that all such recoveries of principal
and interest with respect to the Revolving Credit Notes shall be proportionate
to their respective Pro Rata Percentages; provided, however, that if all or part
of such proportionately greater payment received by such purchasing holder is
thereafter recovered from such holder, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to that
holder to the extent of such recovery, but without interest. The Borrower
expressly consents to the foregoing arrangement.
9.8 Indemnification. The Lenders severally and not jointly hereby each
indemnify the Administrative Agent ratably according to the respective amounts
of their Pro Rata Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of this Agreement, any other Loan Document or the Revolving
Credit or any action taken or omitted by the Administrative Agent under or
related to this Agreement, any other Loan Document or the Revolving Credit,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct unless such action was taken or omitted to be
taken by the Administrative Agent at the direction of the Majority Lenders. The
Administrative Agent shall have the right to deduct, from any amounts to be paid
by the Administrative Agent to any Lender hereunder, any amounts owing to the
Administrative Agent by such Lender by virtue of this paragraph.
9.9 Expenses.
(a) All out-of-pocket costs and out-of-pocket expenses incurred by the
Administrative Agent for which the Borrower is responsible hereunder and not
reimbursed on demand by the Borrower, in connection with the analysis,
negotiation, preparation, consummation, amendment, administration, refinancing,
termination, work-out, forbearance and enforcement of the Loan Documents, the
Revolving Credit or the Obligations (including, without limitation, reasonable
counsel and expert fees and expenditures to enforce, protect, preserve, analyze,
negotiate and defend the Administrative Agent's and each Lender's rights and
interest under the Loan Documents) shall be shared and paid on demand by the
Lenders pro rata based on their respective Pro Rata Percentages.
(b) The Administrative Agent may deduct from payments or distributions
to be made to the Lenders such funds as may be necessary to pay or reimburse the
Administrative Agent for such costs or expenses.
9.10 No Reliance. Each Lender has entered into this Agreement and the
Loan Documents solely upon its own independent investigation and is not relying
upon any information supplied by or any representations made by the
Administrative Agent. Each Lender shall continue to make its own analysis and
evaluation of the Borrower and the Guarantors. The Administrative Agent makes no
representation or warranty and assumes no responsibility with respect to the
financial condition, prospects or results of operations of the Borrower or any
of the Guarantors, any obligor or any account debtor of the Borrower; the
accuracy, sufficiency or currency of any information concerning the financial
condition, prospects or results of operations of the Borrower or any Subsidiary;
the sufficiency, authenticity, legal effect, validity or enforceability of the
Loan Documents; or with regard to any other matters, whether similar or
dissimilar. The Administrative Agent assumes no responsibility or liability with
respect to the collectibility of the Obligations or the performance by the
Borrower or any Subsidiary of any obligation under the Loan Documents.
9.11 Reporting. During the term of this Agreement, the Administrative
Agent will promptly furnish each Lender with copies of all financial statements
and reports with respect to the Borrower or any Guarantor actually received by
the Administrative Agent pursuant to Section 5 of this Agreement. The
Administrative Agent will promptly notify the Lenders when it receives actual
knowledge of any Event of Default under the Loan Documents.
9.12 Removal of the Administrative Agent. The Administrative Agent may
resign at any time upon giving thirty (30) days prior written notice thereof to
the Lenders and the Borrower and the Administrative Agent may be removed as the
Administrative Agent at any time hereunder upon the written consent of the Super
Majority Lenders (exclusive of the Administrative Agent) upon the following: (i)
willful misconduct or gross negligence in the performance of the Administrative
Agent's duties or responsibilities under this Agreement; or (ii) if a receiver,
trustee or conservator is appointed for the Administrative Agent or any state or
federal regulatory authority assumes management or control of the Administrative
Agent or if, under applicable law, the administrative or discretionary duties
and responsibilities of the Administrative Agent hereunder become controlled by
or subject to the approval of any state or federal regulatory authority. Upon
any resignation or permitted removal of the Administrative Agent, the Lenders
(exclusive of the Administrative Agent) shall have the right to appoint a
successor to the Administrative Agent by majority vote of the Lenders (exclusive
of the Administrative Agent and based upon the percentages of the total Pro Rata
Shares of such other Lenders). Upon the acceptance of its appointment as a
successor to the Administrative Agent hereunder, by such successor to the
Administrative Agent, such successor to the Administrative Agent shall thereupon
succeed to and become vested with all rights, powers, obligations and duties of
the retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder.
9.13 Action on Instructions of Lenders. With respect to any provision
of this Agreement or any of the other Loan Documents, or any issue arising
hereunder or thereunder, concerning which the Administrative Agent is authorized
to act or withhold action by direction of the Lenders (or, if applicable, the
Majority Lenders), the Administrative Agent shall in all cases be fully
protected in so acting, or in so refraining from acting, hereunder or thereunder
in accordance with written instructions signed by the Lenders (or, if
applicable, the Majority Lenders). Such instructions and any action taken or
failure to act pursuant thereto shall be binding on all Lenders and on all
holders of the Revolving Credit Notes.
9.14 Several Obligations. The obligations of each Lender hereunder and
under each of the other Loan Documents are several, and neither the
Administrative Agent nor any other Lender shall be responsible for the
obligations and commitments of any other Lender.
9.15 Amendments.
(a) Except as expressly provided herein, the Administrative Agent shall
have the sole and exclusive right to service, administer and monitor the
Revolving Credit and the Loan Documents, including without limitation, the right
to exercise all rights, privileges and options under the Loan Documents,
including the credit judgment with respect to the making of Advances and the
determination as to the basis on which and the extent to which Advances may be
made and the determination as to whether draws should be honored for Letters of
Credit.
(b) Notwithstanding anything to the contrary contained in subparagraph
(a) above, prior to an acceleration of the Obligations, the Administrative Agent
shall not, without the prior written consent of all Lenders: (i) extend the
Maturity Date or any payment date under the Revolving Credit Notes, (ii)
decrease any interest rate on the Revolving Credit (unless otherwise expressly
provided for herein) or any fee chargeable to the Borrower by the Lenders and/or
the Administrative Agent and/or the Fronting Lender hereunder or elsewhere,
(iii) increase the Facility Limit or the Pro Rata Share or Pro Rata Percentage
of any of the Lenders except by permitted assignments (or unless otherwise
expressly provided for herein), (iv) release any obligor from the Obligations
(including releasing any Guarantor from its obligations under its respective
Guarantee), except in connection with termination of the Revolving Credit and
full payment and satisfaction of all Obligations (v) change the definition of
Majority Lenders, (vi) consent to the assignment or delegation by the Borrower
or any Guarantor of its obligations under any Loan Document, (vii) change the
definition of Outstandings; or (viii) modify this Subsection 9.15(b) or any of
Sections 2.9(f), 2.10, 2.12, 8.4, 10.5, 10.10 or 10.15.
(c) Notwithstanding anything to the contrary contained in subparagraph
(a) above, prior to an acceleration of the Obligations, the Administrative Agent
shall not, without the prior written consent of the Majority Lenders: (i) enter
into any written amendment to any of the Loan Documents; (ii) waive the
Borrower's compliance with the terms and conditions of the Loan Documents or any
Event of Default hereunder or thereunder; or (iii) consent to the Borrower
taking any action which, if taken, would constitute an Event of Default under
this Agreement or under any of the Loan Documents.
(d) After an acceleration of the Obligations, the Administrative Agent
shall have the sole and exclusive right, after consultation (to the extent
reasonably practicable under the circumstances) with all Lenders, to exercise or
refrain from exercising any and all rights, remedies, privileges and options
under the Loan Documents or available at law or in equity, to protect the rights
of the Lenders and collect the Obligations, including without limitation,
instituting and pursuing all legal actions brought against the Borrower or to
collect the Obligations, or defending any and all actions brought by the
Borrower; incurring Expenses or otherwise making expenditures to protect the
Revolving Credit or the Lenders' rights or remedies; modifying the Revolving
Credit or the Loan Documents; and releasing or settling any amounts owing under
the Obligations. Notwithstanding this subsection (d), after an acceleration of
the Obligations, the Administrative Agent may not, without the prior written
consent of the Super Majority Lenders, enter into a written agreement with the
Borrower which provides that the Obligations are not immediately due and payable
or which provides that the Administrative Agent will forebear from exercising
its remedies hereunder, and may not without the prior written consent of all of
the Lenders (i) compromise or satisfy the Obligations for less than payment in
full; (ii) reduce any rate of interest charged to any outstanding Advance; or
(iii) release the Borrower or any of the Guarantors from its obligations
hereunder or under the Guarantees (as applicable).
SECTION 10. MISCELLANEOUS.
10.1 GOVERNING LAW. THIS AGREEMENT, AND ALL OF THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THEREOF.
10.2 Integrated Agreement. This Agreement, the Revolving Credit Notes
and the other Loan Documents shall be construed as integrated and complementary
of each other, and as augmenting and not restricting Lenders' and/or the
Administrative Agent's rights and remedies. If, after applying the foregoing, an
inconsistency still exists, the provisions of this Agreement shall constitute an
amendment to such inconsistent document and shall control.
10.3 Omission or Delay Not Waiver. No omission or delay by the
Administrative Agent or any Lender in exercising any right or power under this
Agreement or any of the other Loan Documents will impair such right or power or
be construed to be a waiver of any Default, or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
power will not preclude other or further exercise thereof or the exercise of any
other right, and as to the Borrower, no waiver will be valid unless in writing
and signed by the Administrative Agent and then only to the extent specified.
10.4 Time. Unless otherwise expressly set forth herein, whenever the
Borrower shall be required to make any payment or perform any act on a day which
is not a Business Day, such payment may be made, or such act may be performed,
on the next succeeding Business Day. Time is of the essence in the Borrower's,
the Administrative Agent's and each Lender's performance under all provisions of
this Agreement and all Loan Documents.
10.5 Expenses of the Administrative Agent, the Syndication Agent and
Lenders. At Closing and from time to time thereafter, the Borrower will pay
promptly upon demand of the Administrative Agent all reasonable costs, fees and
expenses (a) of each of the Agents in connection with (i) the analysis,
negotiation, preparation, execution, administration and delivery of this
Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein and any amendment, amendment and restatement,
supplement, waiver or consent relating hereto or thereto, whether or not any
such amendment, amendment and restatement, supplement, waiver or consent is
executed or becomes effective (including, without limitation, search costs, the
reasonable fees, expenses and disbursements of counsel for each of the Agents,
and reasonable charges of any expert consultant to the Agents) and (ii) the
syndication of the commitments and (b) each of the Agents and each of the
Lenders in connection with the enforcement of any Obligations of, or the
collection of any payments owing from, the Borrower or any of the Borrower's
Subsidiaries under this Agreement and/or the other Loan Documents to which they
are a party, or protection or defense of the rights of the Lenders and/or the
Agents under the Loan Documents, following the occurrence of any Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement and the other Loan Documents in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings, or
otherwise (including the reasonable fees and disbursements of counsel for each
of the Agents and each of Lenders and reasonable allocated costs of internal
counsel) (collectively, the "Expenses");
10.6 Brokerage. Except as otherwise provided herein, this transaction
was brought about and entered into by the Agents, the Lenders and the Borrower
acting as principals and without any brokers, agents or finders being the
effective procuring cause hereof. The Borrower represents that it has not
committed the Administrative Agent, the Syndication Agent or any Lender to the
payment of any brokerage fee, commission or charge in connection with this
transaction. If any such claim is made on the Administrative Agent, the
Syndication Agent or any Lender by any broker, finder or agent or other Person
(unless such broker, finder, agent or other similar Person is engaged by either
Agent), the Borrower hereby agrees to indemnify, defend and save such party
harmless against such claim and further will defend, with counsel satisfactory
to the Administrative Agent, any action or actions to recover on such claim, at
the Borrower's sole cost and expense, including such party's counsel fees and
costs. The Borrower further agrees that until any such claim or demand is
adjudicated in such party's favor, the amount demanded shall be deemed a
liability of the Borrower under this Agreement.
10.7 Notices.
(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, as follows, unless
such address is changed by written notice hereunder:
If to the Administrative Agent to:
CoreStates Bank, N.A., the
Administrative Agent
The Widener Building
1339 Chestnut Street
F.C. 1-8-4-2
Philadelphia, PA 19101-7618
Attention Charles Dietrich, Senior Vice President
Telecopy No: 215-973-5831
With copies to: Blank, Rome, Comisky & McC
1200 Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Harvey I. Forman, Esquire
Telecopy No: 215-569-5555
If to the Borrower or any Guarantor to:
CSS Industries, Inc.
1845 Walnut Street, Suite 800
Philadelphia, PA 19102
Attention: James G. Baxter
Telecopy No.: 215-569-9979
With copies to: Stephen V. Dubin, Esquire
CSS Industries, Inc.
1845 Walnut Street, Suite 800
Philadelphia, PA 19102
Telecopy No: 215-569-9979
Morgan, Lewis & Bockius, L.L.P.
2000 One Logan Square
Philadelphia, PA 19103
Attention: David King, Esquire
Telecopy No. (215) 963-5299
If to Lenders: to the addresses set forth on the
signature pages to this Agreement
(b) Any notice sent by the Administrative Agent, any Lender or the
Borrower by any of the above methods shall be deemed to be given when so
received. Any notice sent by overnight carrier shall be presumed to have been
received the day after it was sent, if by hand delivery, the day sent, and if by
facsimile, no such presumption shall be raised.
(c) The Administrative Agent shall be fully entitled to rely upon any
facsimile transmission or other writing purported to be sent by any Authorized
Officer (whether requesting an Advance or otherwise) as being genuine and
authorized.
10.8 Headings. The headings of any paragraph or Section of this
Agreement are for convenience only and shall not be used to interpret any
provision of this Agreement.
10.9 Survival. All warranties, representations, and covenants made by
the Borrower herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement or any of the other Loan Documents, shall be considered to have
been relied upon by the Administrative Agent and the Lenders, and shall survive
the delivery to the Lenders of the Revolving Credit Notes, regardless of any
investigation made by the Lenders or on their behalf. All statements in any such
certificate or other instrument prepared and/or delivered for the benefit of the
Administrative Agent and any/all Lenders shall constitute warranties and
representations by the Borrower hereunder. Except as otherwise expressly
provided herein, all covenants made by the Borrower hereunder or under any other
agreement or instrument shall be deemed continuing until all Obligations are
satisfied in full and the Revolving Credit is terminated.
10.10 Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties. Neither the Borrower nor any
Guarantor may transfer, assign or delegate any of its duties or obligations
hereunder.
(b) (i) Notwithstanding any other provision of this Agreement, each
Lender may assign all or any part of, or any interest in, such Lender's rights
and benefits hereunder, under the Revolving Credit Notes and under the other
Loan Documents, as well as all Obligations related to such assigned rights and
interest, provided that each such assignment:
(A) must (unless the assignment is to an Affiliate of the assigning
Lender) be approved by the Borrower (such approval not to be unreasonably
withheld or delayed); provided, however, that if a Default or Event of Default
has occurred hereunder, the approval of the Borrower shall not be required,
(B) shall, if not an assignment of the entire commitment of the
applicable Lender, be in a minimum amount of $10,000,000,
(C) must be evidenced by an Assignment Agreement in the form of Exhibit
"10.10" attached hereto and made a part hereof, a true and correct copy of which
shall be delivered to the Administrative Agent,
(D) shall be accompanied by the unconditional payment by the assigning
Lender to the Administrative Agent of an assignment fee equal to $3,500 except
if the assignment is made to an Affiliate of the assigning Lender or to another
Lender, and
(E) shall be effective upon the Administrative Agent's receipt of
written notice from the assignor and assignee Lenders of such assignment and
compliance with subparagraphs (A), (B), (C) and (D) above.
(ii) Each Lender may at any time enter into participation agreements
with one or more participating lenders whereby such Lender may allocate certain
percentages of its Pro Rata Share of the Revolving Credit to such
participant(s), provided that no participant shall have any voting or consent
rights on any issue with respect to this Agreement, the other Loan Documents or
the Revolving Credit. No participant (unless and only to the extent such
participant is itself a Lender) shall be entitled to require the Lender from
whom its participation interest was obtained, to take or refrain from taking any
action under this Agreement or any other Loan Document, except that such Lender
may agree with such participant that such Lender will not, without such
participant's consent, agree to any modification, amendment or waiver of this
Agreement described in Section 9.15(b)(i)-(viii). Notwithstanding the foregoing,
any such participant shall be considered to be a "Lender" for purposes of
Sections 2.2(f), 2.9, 2.10, 2.12, 8.4, 10.5 and 10.15 with respect to its
participation; provided, however, that no participant shall be entitled to
receive any greater amount pursuant to Sections 2.2(f), 2.9, 2.10 or 2.12 than
the transferor Lender would have been entitled to receive in respect of the
participation effected by such transferor Lender had no participation occurred.
The Borrower acknowledges that, for the convenience of all parties, this
Agreement is being entered into with the Lenders only and that its obligations
under this Agreement are, to the extent expressly provided for in this Section
10.10(b)(ii), undertaken for the benefit of, and as an inducement to, any such
participating lenders as well as the Lenders. Any grant of participation by any
Lender shall not discharge, reduce or otherwise affect said Lender's obligation,
in accordance with its Pro Rata Percentage, under this Agreement to fund
Advances, which obligations shall remain primary and absolute. Such grants of
participations shall not affect or diminish the rights of the granting Lender to
reimbursement or other payments which may become due to said Lender under this
Agreement and such reimbursements and other payments will be calculated as if
said Lender had not granted any such participation. Except as provided for
herein, no participant shall have, by virtue of any participation, any rights or
benefits under this Agreement or claims of any kind against the Administrative
Agent or any Lender or the Borrower other than the Lender from whom the
participation has been obtained.
(c) Nothing in this Section 10.10 shall prevent or prohibit any Lender
from pledging its Advances hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
(d) Subject to the provisions of Section 10.24 hereof, the Borrower on
its own behalf and on behalf of each of its Subsidiaries authorizes each Lender
to disclose to any participant or assignee (each, a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the Borrower or any of its Subsidiaries which has been delivered to
such Lender by the Borrower or any such Subsidiary in connection with such
Lender's credit evaluation of the Borrower and its Subsidiaries. In addition,
subject to Section 10.24 hereof, each of the Agents may furnish any information
concerning the Borrower or any of its Subsidiaries in such Agent's possession to
any Affiliate of such Agent. The Borrower shall and shall cause each of its
Subsidiaries to assist any Lender in effectuating any assignment or
participation pursuant to this Section 10.10 (including during syndication) in
whatever manner such Lender reasonably deems necessary, including the
participation in meetings with prospective Transferee.
10.1 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and, all of which, taken
together, shall constitute one fully executed document.
10.12 Modification. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by the
Borrower, the Administrative Agent and the Lenders required by Section 9.15
hereof.
10.13 Signatories. Each individual signatory hereto represents and
warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a
party.
10.14 Third Parties. No rights are intended to be created hereunder or
under any of the other Loan Documents for the benefit of any third party donee,
creditor or incidental beneficiary of the Borrower. Nothing contained in this
Agreement shall be construed as a delegation to the Administrative Agent or any
Lender of the Borrower's duty of performance, including, without limitation, the
Borrower's duties under any account or contract with any other Person.
10.15 Indemnification. (a) The Borrower agrees to indemnify each of the
Lenders, the Syndication Agent and the Administrative Agent and their respective
officers, directors, employees, representatives, agents, attorneys-in-fact and
Affiliates and each other Person, if any, controlling any of them or any of
their Affiliates within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act (each, an "Indemnitee" and collectively, the
"Indemnities") from, and hold each of them harmless against, any and all Losses
resulting from, arising out of, in any way related to or by reason of, (i) the
execution, delivery, performance, administration or enforcement of any Loan
Document, (ii) the Lenders' or the Administrative Agent's agreement to make the
Advances, (iii) the use or intended use of the proceeds of any Advances
hereunder (iv) the consummation of any other transactions contemplated in any
Loan Document, (v) the performance by the Administrative Agent or the
Syndication Agent of their duties hereunder or (vi) any inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of any
material fact, made in any report, exhibit, schedule or publication in
connection with the transactions contemplated hereby furnished to the
Administrative Agent, the Syndication Agent or the Lenders (including the
Confidential Memorandum) by or on behalf of the Borrower, or by reason of the
omission or the alleged omission therefrom of a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, whether or not such Indemnitee is a party and whether or
not such Proceeding is initiated or brought by or on behalf of the Borrower;
provided, however, that the Borrower shall not be liable under the foregoing
indemnification provision to an Indemnitee to the extent that any such Loss is
judicially determined by a court of competent jurisdiction in a final
non-appealable judgment to have resulted solely by reason of the gross
negligence or bad faith of such Indemnitee. To the extent that the undertaking
to indemnify and hold harmless set forth in this Section 10.15 is unenforceable
because it is violative of any law or public policy or otherwise, the Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by any of the Indemnities.
(b) The Borrower agrees on its own behalf and on behalf of the
Guarantors that no Indemnitee shall have any liability (whether direct or
indirect, in contract or tort or otherwise) for any Losses to the Borrower or
any of the Guarantors or any such entities' security holders or creditors
resulting from, arising out of, in any way related to or by reason of (i) the
execution, delivery, performance, administration or enforcement of any Loan
Document, (ii) the Lenders' or the Administrative Agent's agreement to make the
Advances, (iii) the use or intended use of the proceeds of any Advances
hereunder or (iv) the consummation of any other transactions contemplated in any
Loan Document, except to the extent that any Losses judicially determined by a
court of competent jurisdiction in a final non-appealable judgment to have
resulted solely by reason of the gross negligence or bad faith of such
Indemnitee.
(c) Each Indemnitee shall give prompt notice to the Borrower of any
action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify the Borrower shall not relieve it from any
liability which it may otherwise have hereunder. The Borrower may participate at
its own expense in the defense of such action.
(d) In the event that any Indemnitee is requested or required to appear
as a witness in any Proceeding brought by or on behalf of or against the
Borrower or any Affiliate of the Borrower in which such Indemnitee is not named
as a defendant, the Borrower agrees to reimburse each Indemnitee for all
reasonable expenses incurred by each Indemnitee in connection with such
Indemnitee's appearing and preparing to appear as such a witness, including,
without limitation, the reasonable fees and disbursements of each Indemnitee's
legal counsel, and to compensate such Indemnitee in an amount to be mutually
agreed upon.
(e) The Borrower agrees on its own behalf and on behalf of each of the
Guarantors that, without the prior written consent of the Administrative Agent
and the Majority Lenders, no such entity will settle, compromise or consent to
the entry of any judgment in any pending or threatened Proceeding in respect of
which indemnification could be sought under the indemnification provisions of
this Section 10.15 (whether or not any Indemnitee is an actual or potential
party to such Proceeding), unless such settlement, compromise or consent
includes an unconditional written release in form, scope and substance
satisfactory to the Administrative Agent and the Majority Lenders, of each
Indemnitee from all liability arising out of such Proceeding and does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnitee.
10.16 Discharge of Taxes, The Borrower's Obligations, Etc. The
Administrative Agent, in its sole discretion, shall have the right at any time,
and from time to time, without prior notice to the Borrower, if the Borrower
fails to do so, to: (a) pay for the performance of any of the Borrower's
obligations hereunder, and (b) discharge taxes or Liens, at any time levied or
placed on any of the Borrower's Property in violation of this Agreement unless
the Borrower or such Subsidiary or any of the Borrower's Subsidiaries is in good
faith with due diligence by appropriate proceedings contesting such taxes or
Liens and maintaining proper reserves therefor in accordance with GAAP. Such
expenses and advances shall be added to the Revolving Credit and shall bear
interest at the Alternative Base Rate until reimbursed to the Administrative
Agent. Such payments and advances made by the Administrative Agent shall not be
construed as a waiver by the Administrative Agent or the Lenders of an Event of
Default under this Agreement.
10.17 Withholding and Other Tax Liabilities. The Administrative Agent,
in its sole discretion and without any duty to exercise such rights or monitor
such obligation of the Borrower, shall have the right to withhold or direct the
Lenders to withhold any Advances from time to time unless the Borrower shall, at
the Administrative Agent's request, have given to the Administrative Agent
evidence, reasonably satisfactory to the Administrative Agent, that the Borrower
has properly deposited or paid, as required by law, all withholding taxes and
all federal, state, city, county or other taxes due up to and including the date
of the requested Advance. Copies of deposit slips showing payment shall likewise
constitute satisfactory evidence for such purpose. In the event that any Lien,
assessment or tax liability against the Borrower or any of the Borrower's
Subsidiaries shall arise in favor of any taxing authority, whether or not notice
thereof shall be filed or recorded as may be required by law, the Administrative
Agent shall have the right (but shall not be obligated, nor shall the
Administrative Agent or any Lender hereby assume the duty) to pay any such Lien,
assessment or tax liability by virtue of which such charge shall have arisen;
provided, however, that the Administrative Agent shall not pay any such tax,
assessment or Lien if the amount, applicability or validity thereof is being
contested in good faith and by appropriate proceedings by the Borrower or such
Subsidiary. In order to pay any such Lien, assessment or tax liability, the
Administrative Agent shall not be obliged to wait until said Lien, assessment or
tax liability is filed before taking such action as hereinabove set forth. Any
sum or sums which the Administrative Agent (shared ratably by the Lenders) shall
have paid for the discharge of any such Lien shall be added to the Revolving
Credit and shall be paid by the Borrower to the Administrative Agent with
interest thereon, upon demand, and the Administrative Agent shall be subrogated
to all rights of such taxing authority against the Borrower or such Subsidiary.
10.18 Consent to Jurisdiction; Venue.
(a) Any Proceeding with respect to this Agreement or any other Loan
Document may be brought in the courts of the State of New York or of the United
States District Court for the Southern District of New York, and, by execution
and delivery of this Agreement, the Borrower, on its own behalf and on behalf of
each of the Guarantors, hereby irrevocably accepts for itself and in respect of
its Property, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement or any other Loan Documents.
The Borrower, on its own behalf and on behalf of each of the Guarantors further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such Proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Borrower or such Subsidiary at its
address for notices pursuant to Section 10.7, such service to become effective
five (5) days after such mailing. The Borrower on its own behalf and on behalf
of the Guarantors designates and appoints CT Corporation System, 1633 Broadway,
New York, New York 10019 and such other Persons as may hereafter be selected by
the Borrower irrevocably agreeing in writing to serve, as the agent of the
Borrower or such Subsidiary to receive, on such Persons behalf, service of all
process in any proceedings in any such court, such service being hereby
acknowledged by the Borrower, on its own behalf and on behalf of the Guarantors,
to be effective and binding service in every respect. A copy of such process so
served shall be mailed by registered mail to the Borrower or such Subsidiary so
served at its address provided in Section 10.7 except that unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of process. If any agent appointed by the Borrower refuses
to receive and forward such service, the Borrower hereby agrees, on its own
behalf and on behalf of each of the Guarantors, that service upon it by mail
shall constitute sufficient notice. Nothing herein shall affect the right of the
Administrative Agent, the Syndication Agent or any Lender to serve process in
any other manner permitted by law or to commence proceeding or otherwise proceed
against the Borrower or any of the Guarantors in any other jurisdiction.
(b) The Borrower on its own behalf and on behalf of the Guarantors
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid proceedings arising out of or in
connection with this Agreement or any other Loan Document brought in the courts
referred to in clause (a) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such proceeding brought in any
such court has been brought in an inconvenient forum.
10.19 Waivers.
(a) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation,
contract, claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Each party hereto acknowledges that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Agreement, and that each will
continue to rely on the waiver in their related future dealings. Each party
hereto further warrants and represents that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE ADVANCES. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
(b) (i) The Borrower, on behalf of itself and each of the Guarantors,
waives, to the maximum extent not prohibited by law, any right it may have to
claim or recover any special, exemplary, punitive or consequential damages from
any of the Agents or Lenders in any Proceeding in connection with, arising out
of, or in any way related to the transactions contemplated herein or in any
other Loan Document.
(ii) Each of the Agents and the Lenders, waives, to the maximum extent
not prohibited by law, any right it may have to claim or recover any special,
exemplary, punitive or consequential damages from the Borrower or any of the
Guarantors in any Proceeding in connection with, arising out of, or in any way
related to the transactions contemplated herein or in any other Loan Document to
the extent the foregoing is not in derogation of either of the Agents or any of
the Lender's rights to claim or recover any amounts under Sections 2.2(g), 2.9,
2.10, 2.12, 10.5, 10.6, 10.15 or for any other Obligations expressly provided
for in this Agreement or any of the other Loan Documents.
(c) The Borrower, on its own behalf and on behalf of the Guarantors,
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Obligations and any requirement that any Lender
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right to take any action against any other obligor or any other
Person or any collateral or other direct or indirect security for any of the
Obligations.
10.20 Severability. Each provision of this Agreement shall be severable
from every other provision of this Agreement. If any provision is determined to
be invalid or unenforceable, such determination shall not affect or limit the
validity or enforceability of all other provisions.
10.21 Independence of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall be independent
of each other and no exception to any representation, warranty or covenant shall
be deemed to be an exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such exception be
deemed to permit any action or omission that would be in contravention of
applicable law.
10.22 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, no Lender shall be responsible
for the obligation or commitment of any other Lender hereunder, and neither of
the Agents shall be responsible for any obligations of any Lender. Nothing
contained in this Agreement and no action taken by the Lenders pursuant hereto
shall be deemed to constitute the Lenders to be a partnership, an association, a
joint venture or any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement, and it shall not be necessary for any other Lender to be joined as an
additional party in any Proceeding for such purpose.
10.23 Prior Understandings. This Agreement and the other Loan Documents
supersede all prior and contemporaneous understandings and agreements, whether
written or oral, among the parties hereto relating to the transactions provided
for herein and therein, except that the following shall continue to remain in
effect: (a) the letter (the "Commitment Letter") agreement dated October 13,
1995 among Merrill Lynch, CoreStates and the Borrower (other than (A) the Term
Sheet (as defined in the Commitment Letter) and (B) the commitments of Merrill
Lynch and CoreStates thereunder) and (b) the Fee Letter (as defined in the
Commitment Letter).
10.24 Confidentiality. The Agents and each Lender agree to keep
confidential all material non-public information provided to it by or on behalf
of the Borrower and/or the Guarantors pursuant to this Agreement or the other
Loan Documents that is designated by the provider of such information in writing
as confidential; provided that nothing herein shall prevent either Agent or any
Lender from disclosing any such information (a) to either Agent or any other
Lender, (b) to any assignee, proposed assignee, participant or proposed
participant which agrees to comply with the provisions of this subsection, (c)
to its Affiliates, employees, directors, agents, attorneys, accountants and
other professional advisors, (d) upon the request or demand of any Governmental
Authority having jurisdiction over such Person, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any requirement of applicable law, (f) which has been publicly
disclosed other than in breach of this Agreement, or (g) in connection with the
exercise of any remedy or other enforcement of the rights of the Agents and/or
the Lenders hereunder.
IN WITNESS WHEREOF, the undersigned parties have
executed this Agreement the day and year first above written.
CSS INDUSTRIES, INC., a
Delaware corporation
By:
-----------------------------------
Title:
Attest:
-------------------------------
CORESTATES BANK, N.A., as the
Administrative Agent
By:
-----------------------------------
Title:
MERRILL LYNCH & CO., as the
Syndication Agent
By:
-----------------------------------
Title:
Sigature pages for the other lenders has been omitted
EXHIBIT AND SCHEDULE LIST
Annex I -- Lenders, Pro Rata Shares, Pro
Rata Percentages
Exhibit 1.1(a) -- Form of Guarantee
Exhibit 1 1(b) -- Unsecured Seller Note
Exhibit 2.1(c)(i) -- Form of Revolving Credit Note
Exhibit 2.1(c)(ii)-- Form of Swing Line Note
Exhibit 2 2(a) -- Form of Letter of Credit
Agreements
Exhibit 2 4(b) -- Form of Notice of Borrowing
Exhibit 5 8 -- Form of Quarterly Compliance
Certificate
Exhibit 5.14 -- Form of Borrowing Base
Certificate
Exhibit 10.10 -- Form of Assignment Agreement
Schedule 1.1(a) -- Real Property and Equipment
to be Sold
Schedule 1.1(b) -- Existing Credit Facilities
Schedule 1.1(c) -- Consolidated EBITDA Adjustments
relating to the Acquisition of
Cleo, Inc.
Schedule 2.2(a) -- Outstanding Letters of Credit
Issued by CoreStates
Schedule 3.1(h) -- Material Environmental
Investigations, Studies,
Audits, Etc.
Schedule .2 -- Places of Business
Schedule .3 -- Judgments, Proceedings,
Litigation and Orders
Schedule .4 -- Existing Liens and Claims
Schedule .9 -- Subsidiaries and Affiliates and
Jurisdictions of Incorporation
Schedule 4.10 -- Existing Guarantees, Investments
and Borrowings
Schedule 4.11(c) -- ERISA Matters
Schedule 4.13(a) -- Schedule of Names
Schedule 4.13(b) -- Trademarks, Patents and
Copyrights
Schedule 4.14 -- Other Associations
Schedule 4.15 -- Environmental Matters
Schedule 4.17 -- Capital Stock
The Exhibits and Schedules to the Loan Agreement have been
omitted, but the Company agrees to furnish supplementally a copy
of any omitted Exhibits and Schedules to the Commission upon
request.