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AMENDED AND RESTATED
CREDIT AGREEMENT
among
SHOREWOOD PACKAGING CORPORATION
and
SHOREWOOD CORPORATION OF CANADA LIMITED
as Borrowers
and
THE LENDERS PARTY HERETO
and
NATIONSBANK, N.A.
as Administrative Agent, Syndication Agent and Lender
and
THE BANK OF NOVA SCOTIA
as Canadian Administrative Agent, Documentation Agent and Lender
and
THE CHASE MANHATTAN BANK
THE BANK OF NEW YORK
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BANQUE PARIBAS
as Co-Agents
DATED AS OF
May 2, 1997
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TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS AND ACCOUNTING TERMS................................. 1
1.1 Definitions....................................................... 1
1.2 Accounting Terms.................................................. 22
1.3 Computation of Time Periods and Other Definitional Provisions..... 22
SECTION 2 THE REVOLVING LOANS.............................................. 22
2.1 The U.S. Revolving Loans.......................................... 22
2.2 U.S. Letter of Credit Subfacility................................. 23
2.3 Swing Line Loan Subfacility....................................... 29
2.4 The Canadian Revolving Loans...................................... 31
2.5 Bankers' Acceptances.............................................. 31
2.6 Minimum Amounts................................................... 33
2.7 Funding of Advances to Borrowers.................................. 34
2.8 Term. ....................................................... 36
2.9 Revolving Notes................................................... 36
2.10 Reduction of Revolving Loan Commitments.......................... 36
2.11 Canadian Letter of Credit Subfacility............................ 37
SECTION 3 THE TERM LOANS................................................... 43
3.1 U.S. Term Loan Commitment......................................... 43
3.2 [Intentionally Left Blank]........................................ 43
3.3 Funding of Term Loan.............................................. 43
3.4 Scheduled Repayments.............................................. 43
3.5 The Term Notes.................................................... 43
SECTION 4 ADDITIONAL PROVISIONS REGARDING LOANS AND LETTERS OF CREDIT...... 44
4.1 Continuations and Conversions..................................... 44
4.2 Interest ....................................................... 45
4.3 Place and Manner of Payments...................................... 46
4.4 Prepayments....................................................... 46
4.5 Fees ....................................................... 48
4.6 Pro Rata Treatment................................................ 50
4.7 Allocation of Payments After Event of Default..................... 51
4.8 Sharing of Payments............................................... 52
4.9 Capital Adequacy.................................................. 52
4.10 Inability To Determine Interest Rate or Create Bankers'
Acceptances...................................................... 53
4.11 Illegality....................................................... 54
4.12 Requirements of Law.............................................. 54
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4.13 Taxes ....................................................... 55
4.14 Compensation..................................................... 58
SECTION 5 CONDITIONS PRECEDENT............................................. 59
5.1 Closing Conditions................................................ 59
5.2 Conditions to All Extensions of Credit............................ 61
SECTION 6 REPRESENTATIONS AND WARRANTIES................................... 62
6.1 Organization and Good Standing.................................... 62
6.2 Due Authorization................................................. 62
6.3 No Conflicts...................................................... 62
6.4 Consents ....................................................... 63
6.5 Enforceable Obligations........................................... 63
6.6 Financial Condition............................................... 63
6.7 No Default ....................................................... 63
6.8 Liens ....................................................... 63
6.9 Indebtedness...................................................... 63
6.10 Litigation....................................................... 64
6.11 Material Agreements.............................................. 64
6.12 Taxes ....................................................... 64
6.13 Compliance with Law.............................................. 64
6.14 ERISA ....................................................... 64
6.15 Subsidiaries..................................................... 66
6.16 Ownership of Stock............................................... 66
6.17 Use of Proceeds; Margin Stock.................................... 66
6.18 Government Regulation............................................ 66
6.19 Hazardous Substances............................................. 67
6.20 Patents, Franchises, etc......................................... 67
6.22 Location of Assets............................................... 67
SECTION 7 AFFIRMATIVE COVENANTS............................................ 68
7.1 Information Covenants............................................. 68
7.2 Preservation of Existence and Franchises.......................... 70
7.3 Books and Records................................................. 70
7.4 Compliance with Law............................................... 70
7.5 Payment of Taxes and Other Indebtedness........................... 71
7.6 Insurance ....................................................... 71
7.7 Maintenance of Property........................................... 71
7.8 Performance of Obligations........................................ 71
7.9 ERISA ....................................................... 72
7.10 Use of Proceeds.................................................. 72
7.11 Additional Subsidiaries.......................................... 73
7.12 Audits/Inspections............................................... 73
7.13 Financial Covenants.............................................. 73
SECTION 8 NEGATIVE COVENANTS............................................... 74
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8.1 Indebtedness...................................................... 74
8.2 Liens ....................................................... 75
8.3 Nature of Business................................................ 75
8.4 Consolidation or Merger........................................... 76
8.5 Sale or Lease of Assets........................................... 76
8.6 Acquisitions...................................................... 76
8.7 Transactions with Affiliates...................................... 76
8.8 Ownership of Subsidiaries......................................... 77
8.9 Fiscal Year....................................................... 77
8.10 Investments...................................................... 77
8.11 Restricted Payments.............................................. 77
SECTION 9 EVENTS OF DEFAULT................................................ 77
9.1 Events of Default................................................. 77
9.2 Acceleration; Remedies............................................ 79
SECTION 10 AGENCY PROVISIONS............................................... 80
10.1 Appointment...................................................... 80
10.2 Delegation of Duties............................................. 81
10.3 Exculpatory Provisions........................................... 81
10.4 Reliance on Communications....................................... 82
10.5 Notice of Default................................................ 82
10.6 Non-Reliance on Agents and Other Lenders......................... 82
10.7 Indemnification.................................................. 83
10.8 Agent in its Individual Capacity................................. 83
10.9 Successor Agent.................................................. 84
SECTION 11 MISCELLANEOUS................................................... 84
11.1 Notices ....................................................... 84
11.2 Right of Set-Off................................................. 84
11.3 Benefit of Agreement............................................. 85
11.4 No Waiver; Remedies Cumulative................................... 87
11.5 Payment of Expenses; Indemnification............................. 87
11.6 Amendments, Waivers and Consents................................. 88
11.7 Defaulting Lender................................................ 89
11.8 Counterparts..................................................... 89
11.9 Headings ....................................................... 90
11.10 Survival of Indemnification and Representations and Warranties.. 90
11.11 Currency ....................................................... 90
11.12 Governing Law; Venue............................................ 90
11.13 Waiver of Jury Trial............................................ 91
11.14 Severability.................................................... 91
11.15 Loan Entirety................................................... 91
11.16 Binding Effect; Amendment and Restatement of Existing Credit
Agreement; Further Assurances................................... 91
11.17 Confidentiality................................................. 92
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11.18 Definition of Knowledge......................................... 92
EXHIBITS
2.1 Advance Request
2.3 Swing Line Loan Note
2.9 Revolving Credit Notes
3.5 Term Notes
4.1 Notice of Continuation/Conversion
7.1(c) Officer's Certificates
7.1(i) Information Certificate
11.3(b) Assignment Agreement
SCHEDULES
1.1(a) Lenders and Commitments
1.1(b) Existing Letters of Credit
6.9 Indebtedness
6.10 Litigation
6.15 Subsidiaries/Affiliates
6.19 Hazardous Substances
6.22 Location of Assets
7.6 Type and Amount of Insurance
8.2 Liens
11.1 Notices
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered
into as of May 2, 1997 among SHOREWOOD PACKAGING CORPORATION, a Delaware
corporation (the "U.S. Borrower"), SHOREWOOD CORPORATION OF CANADA LIMITED, an
Ontario corporation (the "Canadian Borrower") (collectively, the U.S. Borrower
and the Canadian Borrower referred to herein as the "Borrowers"), the LENDERS
set forth on Schedule 1.1(a) attached hereto (the "Lenders"), NATIONSBANK, N.A.,
a national banking association, in its capacity as Administrative Agent for the
Lenders and THE BANK OF NOVA SCOTIA in its capacity as Canadian Administrative
Agent for the Canadian Lenders.
RECITALS
A. The Borrowers, NationsBank, N.A. f/k/a NationsBank of North
Carolina, N.A., in its capacity as a Lender and as Administrative
Agent, The Bank of Nova Scotia, in its capacity as a Lender and
Canadian Administrative Agent, and the Lenders party thereto entered
into that certain Amended and Restated Credit Agreement dated as of
February 25, 1994 (as amended and modified, the "Existing Credit
Agreement").
B. The Borrowers, the Lenders, the Administrative Agent and the
Canadian Administrative Agent wish to amend and restate the terms
and conditions of the Existing Credit Agreement as set forth below.
Therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrowers, the Lenders, the
Administrative Agent and the Canadian Administrative Agent agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings specified
herein unless the context otherwise requires. Defined terms herein shall include
in the singular number the plural and in the plural the singular:
"Acceptance Fee" means an amount equal to the product of (a) the
Applicable Percentage for Bankers' Acceptances; (b) the aggregate Face
Amount of Bankers' Acceptances accepted by a Canadian Lender on the date
of the requested Bankers' Acceptances; and (c) a fraction (i) the
numerator of which is the term to maturity of such Bankers' Acceptances,
and (ii) the denominator of which is 365 days.
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"Acquisition" means the acquisition of (a) all of the capital stock
of another Person or (b) all or substantially all of the assets of another
Person.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" means NationsBank, N.A., a national
banking association.
"Administrative Agent Fee Letter" means the letter agreement dated
as of April 13, 1997 among the U.S. Borrower, the Administrative Agent and
NationsBanc Capital Markets, Inc., as amended, modified and replaced from
time to time.
"Advance Request" means the request by a Borrower for a Revolving
Loan in the form of Exhibit 2.1.
"Affiliate" of any Person means any other Person directly or
indirectly controlling (including but not limited to all directors and
officers of such Person), controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power
(a) to vote 10% or more of the securities having ordinary voting power for
the election of directors of such corporation or (b) to direct or cause
direction of the management and policies of such corporation, whether
through the ownership of voting securities, by contract or otherwise.
"Agents" means the Administrative Agent and the Canadian
Administrative Agent.
"Applicable Percentage" means for Eurodollar Loans, Bankers'
Acceptances, the Letter of Credit Fee and the Unused Fees, the appropriate
applicable percentages corresponding to the Debt Coverage Ratio in effect
as of the most recent Calculation Date as shown below:
==============================================================================================
Applicable
Percentage Applicable
for Percentage
Pricing Debt Coverage Eurodollar for Bankers' Letter of Unused
Level Ratio Loans Acceptance Credit Fee Fee
----------------------------------------------------------------------------------------------
I Greater than or equal to 2.5 to 1.0 1.000% 1.000% 1.000% .300%
----------------------------------------------------------------------------------------------
II Greater than or equal to 2.0 to 1.0 .750% .750% .750% .250%
but Less than 2.5 to 1.0
----------------------------------------------------------------------------------------------
III Greater than or equal to 1.5 to 1.0 .625% .625% .625% .200%
but Less than 2.0 to 1.0
----------------------------------------------------------------------------------------------
IV Less than 1.5 to 1.0 .500% .500% .500% .175%
==============================================================================================
The initial Applicable Percentage for Eurodollar Loans, Bankers'
Acceptances, the
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Letter of Credit Fee and the Unused Fees shall be based on Pricing Level
II and shall remain at Pricing Level II until the first Calculation Date
(as defined below) occurring after the Effective Date. Thereafter, the
Applicable Percentage for Eurodollar Loans, Bankers' Acceptances, the
Letter of Credit Fee and the Unused Fees shall, in each case, be
determined and adjusted quarterly on the date five Business Days after the
date by which the U.S. Borrower is required to provide the officer's
certificate in accordance with the provisions of Section 7.1(c) hereof
(each a "Calculation Date"). Such Applicable Percentage shall be effective
from such Calculation Date until the next such Calculation Date. Any
adjustment in the Applicable Percentage shall be applicable to all
existing Loans and Letters of Credit as well as any new Loans made or
Letters of Credit issued.
"Asset Disposition" means the disposition of any or all of the
assets of a member of the Consolidated Shorewood Group whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise,
other than (a) sales of inventory in the ordinary course of business, (b)
sales of equipment, the proceeds of which are at the time of receipt
thereof scheduled for reinvestment in replacement equipment within 180
days from (before or after) such sale pursuant to notice thereof from the
Borrowers (provided that if such reinvestment does not occur within 180
days then the Borrowers shall notify the Administrative Agent of same and
such sale shall be considered an Asset Disposition), (c) leases of
equipment in the ordinary course of business, (d) transfers of assets
among members of the Consolidated Shorewood Group that are domiciled in
the United States or Canada and (e) any loss, destruction, condemnation or
liquidation of assets without value.
"BA Documents" means, with respect to any Bankers' Acceptance, such
documents and agreements as the Canadian Lenders may require in connection
with the creation of such Bankers' Acceptance.
"BA Revolving Obligations" means all obligations of the Canadian
Borrower with respect to Bankers' Acceptances created under the Canadian
Revolving Loan Commitment.
"Bankers' Acceptance" means a bill of exchange (a) drawn by the
Canadian Borrower under the Canadian Revolving Loan Commitment and
accepted by a Canadian Lender, (b) denominated in Canadian dollars, and
(c) issued and payable only in Canada.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (a) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its property or ordering the winding up or
liquidation of its affairs; or (b) any proceeding shall be instituted
against such Person seeking to adjudicate it as bankrupt or insolvent, or
seeking liquidation, winding-up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
receiver, trustee,
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or other similar official for it or for any substantial part of its
property including, but not limited to, an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect is commenced against a Person and any such proceeding or petition
remains unstayed and in effect for a period of 60 consecutive days; or (c)
such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under
any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or any substantial part of its property
or make any general assignment for the benefit of creditors; or (d) such
Person shall generally not pay its debts as such debts become due or shall
admit in writing its inability to pay its debts generally as they become
due or any action shall be taken by such Person in furtherance of any of
the aforesaid purposes.
"Base Rate Loans" means all Loans accruing interest at the U.S.
Base Rate, the Canadian Prime Rate or the BNS U.S. Base Rate.
"Base Rate Revolving Loans" means the Canadian Base Rate
Revolving Loans and the U.S. Base Rate Revolving Loans.
"BNS U.S. Base Rate" means the higher of (a) the Federal Funds
Rate plus .5% or (b) the BNS U.S. Prime Rate; provided, however, that
if, in the reasonable judgment of the Canadian Administrative Agent,
the Federal Funds Rate cannot be determined then the BNS U.S. Prime
Rate.
"BNS U.S. Prime Rate" means, for any day, the fluctuating rate of
interest publicly announced by the Canadian Administrative Agent as its
"prime rate" or "reference rate" for loans made in U.S. dollars, which
rate is not necessarily the best or lowest rate of interest offered for
loans in U.S. dollars by the Canadian Administrative Agent.
"Borrower" means either the U.S. Borrower or the Canadian
Borrower.
"Borrowers" means the U.S. Borrower and the Canadian Borrower.
"Borrowers Obligations" means all payment obligations of the
Borrowers to the Lenders, whenever arising, under the Loan Documents.
"Business Day" means any day other than a Saturday, a Sunday, a
legal holiday in Charlotte, North Carolina or New York, New York or a day
on which banking institutions located in Charlotte, North Carolina or New
York, New York are authorized by law or other governmental actions to
close; except that (a) in the case of Eurodollar Loans, a Business Day
shall also be a day on which dealings between banks are carried on in U.S.
dollar deposits in the London interbank Eurodollar market and (b) in the
case of Loans made or to be made by the Canadian Lenders, the term
Business Day shall not include any day in which banking institutions in
Toronto, Ontario are authorized by law or other governmental
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actions to close.
"Canadian Administrative Agent" means The Bank of Nova Scotia.
"Canadian Administrative Agent Fee Letter" means the letter
agreement dated as of April 14, 1997 between the Canadian Borrower and the
Canadian Administrative Agent, as amended, modified and replaced from time
to time.
"Canadian Base Rate Revolving Loans" means the Revolving Loans made
by the Canadian Lenders accruing interest at either the Canadian Prime
Rate or the BNS U.S. Base Rate, as applicable.
"Canadian Borrower" means Shorewood Corporation of Canada
Limited, an Ontario corporation.
"Canadian Lenders" means The Bank of Nova Scotia, and such other
Lenders having lending offices in Canada as may be added as a Canadian
Lender in accordance with the terms of this Agreement.
"Canadian Letter of Credit" means a Letter of Credit issued under
the Canadian LOC Subfacility, as referenced in Section 2.11(a) plus
Existing Canadian Letters of Credit.
"Canadian LOC Obligations" means LOC Obligations relating to
Canadian Letters of Credit.
"Canadian LOC Subfacility" means the Letter of Credit subfacility
established pursuant to Section 2.11.
"Canadian Prime Rate" means, for any day, the greater of (a) the
variable rate of interest per annum equal to the rate of interest
determined by the Canadian Administrative Agent from time to time as its
respective prime rate for Canadian dollar loans made by the Canadian
Administrative Agent in Canada, being a variable per annum reference rate
of interest adjusted automatically upon change by the Canadian
Administrative Agent, and calculated on the basis of a year of 365 days
and (b) the sum of (i) the rate per annum for a Canadian dollar bankers'
acceptance having a term of 30 days that appears on the Reuters Screen
CDOR Page as of 10:00 a.m. (Toronto, Ontario time) on the date of
determination, as reported by the Canadian Administrative Agent plus (ii)
.625% per annum.
"Canadian Revolving Loan Commitment" means $25,000,000 (U.S.) or
its equivalent in Canadian dollars, as such amount may be reduced in
accordance with Section 2.10 of this Agreement.
"Canadian Revolving Loan Commitment Percentage" means, for each
Canadian Lender, the percentage identified as its Canadian Revolving Loan
Commitment Percentage opposite such Canadian Lender's name on Schedule
1.1(a) as such percentage may be
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modified by assignment in accordance with the terms of this Agreement.
"Canadian Revolving Loans" means the revolving loans made by the
Canadian Lenders to the Canadian Borrower and the U.S. Borrower
pursuant to Section 2.4 of this Agreement.
"Canadian Unused Revolving Commitment" means, for any period, the
amount by which (a) the then applicable Canadian Revolving Loan Commitment
exceeds (b) the daily average sum for such period of the outstanding
aggregate principal amount of all Canadian Revolving Loans and BA
Revolving Obligations and Canadian LOC Obligations.
"Capital Expenditures" means any current expenditure by the
Consolidated Shorewood Group for fixed or capital assets as reflected on
the financial statement of the Consolidated Shorewood Group, as prepared
in accordance with GAAP; provided, however, that (a) Capital Expenditures
incurred in the purchase of ink blending systems pursuant to that certain
Requirements & Cooperation Agreement, dated as of August 1, 1996, between
the U.S. Borrower and Sun Chemical Corporation in an amount not to exceed,
in the aggregate, $1,000,000, and (b) Capital Expenditures incurred in
China in an amount not to exceed, in the aggregate, $36 million shall not,
for the purposes of this Agreement, be considered to be Capital
Expenditures.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or Canada or any
agency or instrumentality thereof (provided that the full faith and credit
of the United States of America or Canada is pledged in support thereof)
having maturities of not more than one year from the date of acquisition,
(b) U.S. or Canadian dollar denominated time deposits and certificates of
deposit of (i) any United States or Canadian commercial bank of recognized
standing having capital and surplus in excess of $100,000,000 or (ii) any
bank whose short-term commercial paper rating from Standard & Poor's
Corporation ("S&P") is at least A-1 or the equivalent thereof or from
Moody's Investors Service, Inc. ("Moody's") is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"), in each case
with maturities of not more than one year from the date of acquisition,
(c) commercial paper and variable or fixed rate notes issued by, any
Approved Bank (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within one year of the date of
acquisition and (d) repurchase agreements with a bank or trust company or
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the
United States of America or Canada in which a member of the Consolidated
Shorewood Group shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a
fair market value of at least 100% of the amount of the repurchase
obligations.
"Change of Control" means the occurrence of any of the following
events: (a) the acquisition, directly or indirectly, whether voluntarily
or by operation of law, by any person
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(as such term in used in Section 13(d) of the Exchange Act), other than a
Permitted Person (as defined below) of (i) beneficial ownership of more
than 30% of the outstanding shares of common stock of the U.S. Borrower or
(ii) all or substantially all of the assets of the U.S. Borrower; or (b)
the replacement or resignation (other than by reason of death, illness or
incapacity), within any two-year period, of a majority of the members of
the Board of Directors of the U.S. Borrower (the "Board") or a change in
the size of the Board, within any two-year period, which results in
members of the Board who were in office at the beginning of such two-year
period constituting less than a majority of the members of the Board
(unless such replacement, resignation or change in size of the Board shall
have been effected or initiated by a majority of the members of the Board
in office at the beginning of such two-year period). As used herein,
"Permitted Person" means (i) any Person which as of the Closing Date is an
Affiliate of the U.S. Borrower as set forth on Schedule 6.15 hereof; (ii)
Marc P. Shore and any member of Marc P. Shore's "immediate family" (as
such term is defined in Rule 16A-1 promulgated under the Securities
Exchange Act of 1934, as amended) and (iii) with respect to each Person
described in clauses (i) and (ii) above, each Affiliate, heir, successor
or estate of such Person.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Commitments" means the U.S. Revolving Loan Commitment, the
Canadian Revolving Loan Commitment, the U.S. Term Loan Commitment and
the Swing Line Loan Commitment.
"Consolidated Shorewood Group" means the Borrowers and all of their
Subsidiaries whether direct or indirect and whether now owned or hereafter
acquired.
"Current Assets" means, at any time, all items which, in accordance
with GAAP, would be classified as current assets on a consolidated balance
sheet of the Consolidated Shorewood Group.
"Current Liabilities" means, at any time, all items which, in
accordance with GAAP, would be classified as current liabilities on a
consolidated balance sheet of the Consolidated Shorewood Group.
"Debt Coverage Ratio" means, as measured at the end of each fiscal
quarter of the U.S. Borrower, the ratio of (a) total Funded Debt of the
Consolidated Shorewood Group, as determined in accordance with GAAP, to
(b) EBITDA, as calculated for the four fiscal quarter period ending on
such date.
"Default" means any event, act or condition which with notice or
lapse of time, or
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both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, at such
time, (a) has failed to make a Loan or purchase a Participation Interest
required pursuant to the terms of this Agreement, (b) has failed to pay to
the Administrative Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Agreement or (c) has been deemed insolvent
or has become subject to a receiver, trustee or similar official.
"EBITDA" means, for any period, an amount equal to the sum of (a)
Net Income (excluding extraordinary gains or losses and non-cash
cumulative effect adjustments) for such period, plus (b) an amount which,
in the determination of Net Income for such period, has been deducted for
(i) Interest Expense for such period, (ii) total Federal, state, local,
provincial and foreign income and similar taxes of the Consolidated
Shorewood Group for such period, (iii) total depreciation expenses of the
Consolidated Shorewood Group for such period and (iv) total amortization
expenses of the Consolidated Shorewood Group for such period, all as
determined in accordance with GAAP.
"Effective Date" means the date on which all of the conditions set
forth in Section 5.1 hereof have been fulfilled or waived by the Lenders.
"Environmental Laws" means any current or future Requirement of Law
of any Governmental Authority applicable to members of the Consolidated
Shorewood Group pertaining to (a) the protection of health, safety, and
the environment, (b) the conservation, management, or use of natural
resources and wildlife, (c) the protection or use of surface water and
groundwater or (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of, or
exposure to, any hazardous or toxic substance or material and includes,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901
et seq., Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended,
42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et
seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq.,
Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et
seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning
and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National
Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water
Act of 1974, as amended, 42 USC 300(f) et seq., Ontario Water Resources
Act, Canadian Environmental Protection Act, any analogous implementing or
successor law, and any amendment, rule, regulation, order, or directive
issued thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules
and regulations
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thereunder, all as the same may be in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor
sections.
"ERISA Affiliate" means an entity, whether or not incorporated,
which is under common control with the U.S. Borrower within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group which it includes
the U.S. Borrower and which is treated as a single employer under Sections
414(b) or (c) of the Code.
"ERISA Event" means (a) with respect to any Plan, the occurrence of
a Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (b) the withdrawal of the U.S.
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a
plan year in which it was a substantial employer (as such term is defined
in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer
Plan; (c) the distribution of a notice of intent to terminate or the
actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
ERISA; (d) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (e) the
termination of, or the appointment of a trustee to administer, any Plan
pursuant to Section 4042 of ERISA; (f) the complete or partial withdrawal
of the U.S. Borrower or any ERISA Affiliate from a Multiemployer Plan; (g)
the conditions for imposition of a Lien under Section 302(f) of ERISA
exist with respect to any Plan; or (h) the adoption of an amendment to any
Plan requiring the application of Section 307 of ERISA.
"Eurodollar Loans" means Loans accruing interest at the Adjusted
Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including continuations and
conversions), a per annum interest rate determined pursuant to the
following formula:
Eurodollar Rate = London Interbank Offered Rate
-------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate
of Eurodollar Loans is determined), whether or not a Lender has any
Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities
and as such shall be deemed subject to reserve requirements without
benefits of credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
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"Eurodollar Revolving Loans" means the Revolving Loans in U.S.
Dollars made to the U.S. Borrower or the Canadian Borrower accruing
interest at the Adjusted Eurodollar Rate.
"Event of Default" has the meaning specified in Section 9.1.
"Existing Canadian Letters of Credit" means those Existing
Letters of Credit identified as Canadian Letters of Credit on Schedule
1.1(b).
"Existing Letters of Credit" means the Letters of Credit described
by date, issuance, letter of credit number, undrawn amount, name of
beneficiary and the date of expiry set forth on Schedule 1.1(b).
"Existing U.S. Letters of Credit" means those Existing Letters of
Credit identified as U.S. Letters of Credit on Schedule 1.1(b).
"Face Amount" means, in respect of a Bankers' Acceptance, the amount
payable to the holder thereof on maturity.
"Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve Bank of New York, or if such rate is not released on any Business
Day, the arithmetic average (rounded upwards to the next 1/100th of 1%),
as determined by the Administrative Agent, of the quotations for the day
of such transactions, received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Statements" means such term as defined in Section 6.6.
"Fixed Charge Ratio" means, as of the last day of any fiscal
quarter, (a) the difference of: (i) EBITDA for the period of four
consecutive fiscal quarters ending on such day minus (ii) Capital
Expenditures for the period of four consecutive fiscal quarters ending on
such day divided by (b) the sum of: (i) cash Interest Expense for the
period of four fiscal quarters ending on such day plus (ii) cash dividends
paid by the U.S. Borrower for the period of four consecutive fiscal
quarters ending on such day plus (iii) all scheduled principal payments on
long term Funded Debt of the Consolidated Shorewood Group for the period
of four consecutive fiscal quarters beginning on such day.
"Funded Debt" means, without duplication, the sum of (a) all
Indebtedness of the Consolidated Shorewood Group for borrowed money (other
than purchase money Indebtedness (as distinguished from capital lease
obligations) incurred in accordance with the terms of Section 8.1), (b)
the principal portion of all obligations of the Consolidated Shorewood
Group under capital leases (including capital leases incurred in
accordance with the terms of Section 8.1), (c) all commercial letters of
credit and the maximum or face amount of all performance and standby
letters of credit issued or bankers' acceptance
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facilities created for the account of a member of the Consolidated
Shorewood Group, including, without duplication, all unreimbursed draws
thereunder, (d) all Guaranty Obligations of the Consolidated Shorewood
Group with respect to Funded Debt of another Person, (e) all Funded Debt
of another entity secured by a Lien on any property of the Consolidated
Shorewood Group whether or not such Funded Debt has been assumed by a
member of the Consolidated Shorewood Group, (f) all Funded Debt of any
partnership or unincorporated joint venture to the extent a member of the
Consolidated Shorewood Group is legally obligated or has a reasonable
expectation of being liable with respect thereto, net of any assets of
such partnership or joint venture and (g) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product of a
member of the Consolidated Shorewood Group where such transaction is
considered borrowed money indebtedness for tax purposes but is classified
as an operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.2 hereof.
"Government Acts" means such term as defined in Section 2.2(k)(i).
"Governmental Authority" means any Federal, State, Provincial, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantor" means each Person who executes a Guaranty Agreement
(whether on the Closing Date or at any time thereafter).
"Guaranty Agreements" means the Amended and Restated Guaranty
Agreement executed by the U.S. Borrower with respect to the obligations of
the Canadian Borrower, the Amended and Restated Guaranty Agreements
executed by the applicable Guarantors with respect to the obligations of
the U.S. Borrower and the Canadian Borrower and any future Guaranty
Agreement executed in accordance with the terms of this Agreement, as each
such Guaranty Agreement may be amended, modified or replaced from time to
time.
"Guaranty Obligations" of any Person means any obligations (other
than (a) endorsements in the ordinary course of business of negotiable
instruments for deposit or collection, (b) obligations arising under the
Guaranty Agreements and (c) obligations arising under guaranties by a
member of the Consolidated Shorewood Group of another member of the
Consolidated Shorewood Group) guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations of any other Person
in any manner, whether direct or indirect, and including, without
limitation, any obligation, whether or not contingent to, (i) purchase any
such Indebtedness or other obligation or any property constituting
security therefor, (ii) advance or provide funds or other support for the
payment or purchase of such indebtedness or obligation or to maintain
working capital, solvency or other balance sheet condition of such other
Person (including, without limitation, keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements), (iii)
lease or purchase property, securities or services primarily for the
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purpose of assuring the owner of such Indebtedness or obligation, or (iv)
otherwise assure or hold harmless the owner of such Indebtedness or
obligation against loss in respect thereof.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person with respect to Funded Debt, (b) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person to the
extent of the value of such property (other than customary reservations or
retentions of title under agreements with suppliers entered into in the
ordinary course of business), (d) all obligations, including without
limitation intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person
which would appear as liabilities on a balance sheet of such Person, (e)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of Property owned or
acquired by such Person, whether or not the obligations secured thereby
have been assumed, (f) all Guaranty Obligations of such Person, (g) the
principal portion of all obligations of such Person under (i) capital
leases and (ii) any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP,
(h) all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, or other interest or
exchange rate or commodity price hedging agreements, (i) the maximum
amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (j)
all preferred stock issued by such Person and required by the terms
thereof to be redeemed, or for which mandatory sinking fund payments are
due, by a fixed date, (k) all other obligations which would be shown as a
liability on the balance sheet of such Person and (l) the aggregate
purchase price paid by third parties for the purchase of the accounts
receivable of such Person subject at such time to a sale of receivables
(or similar transaction) regardless of whether such transaction is
effected without recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with GAAP. The
Indebtedness of any Person shall include the Indebtedness of any
partnership or unincorporated joint venture but only to the extent such
Person is legally obligated or has a reasonable expectation of being
liable with respect thereto; provided, however, Indebtedness shall not
include (i) any accumulated provisions for deferred taxes or deferred
credits reflected as a liability on the balance sheet of such Person, or
(ii) any Indebtedness in respect of which moneys sufficient to pay and
discharge the same in full (either on the expressed date of maturity
thereof or on such earlier date as such indebtedness may be duly called
for redemption and payment) have been deposited with a depositary, agency
or trustee in trust for the payment thereof. Further, "Indebtedness" shall
not include obligations relating to puts and calls for the purchase or
sale of any class of stock or equity interest in the U.S. Borrower now or
hereafter outstanding.
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"Interest Expense" means, for any period, all interest expense of
the Consolidated Shorewood Group for such period, as determined in
accordance with GAAP.
"Interest Payment Date" means (a) as to all Loans, other than
Eurodollar Loans, the last day of each month and (b) as to Eurodollar
Loans, the last day of each applicable Interest Period; provided, that if
the Interest Period for a Eurodollar Loan is greater than three months,
then the Interest Payment Date shall be on the date three months from the
beginning of the Interest Period and the last day of the applicable
Interest Period and provided further that if an Interest Payment Date
falls on a date which is not a Business Day, such Interest Payment Date
shall be deemed to be the next succeeding Business Day, except that in the
case of an Interest Period where the next succeeding Business Day falls in
the next succeeding calendar month, then on the next preceding Business
Day.
"Interest Period" means, with respect to Eurodollar Loans, a period
of one, two, three or six month's duration, as the Borrowers may elect
from time to time, commencing in each case, on the date of the borrowing
(or continuation or conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (b)
no Interest Period shall extend beyond the Revolving Loans Maturity Date
or the Term Loans Maturity Date, as the case may be, (c) where an Interest
Period begins on a day for which there is no numerically corresponding day
in the calendar month in which the Interest Period is to end, such
Interest Period shall end on the last Business Day of such calendar month
and (d) with respect to the U.S. Term Loan, no Interest Period shall
extend beyond the next date scheduled for a principal amortization payment
on the U.S. Term Loan unless the portion of the U.S. Term Loan comprised
of Base Rate Loans together with the portion of the U.S. Term Loan
comprised of Eurodollar Loans with Interest Periods expiring before the
date of such principal amortization payment is at least equal to the
amount of such principal amortization payment.
"Investment" means, with respect to any Person, (a) the acquisition
(whether for cash, property, services, assumption of Indebtedness or
securities or otherwise) of assets, shares of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities
of another Person, (b) any deposit with, or advance, loan or other
extension of credit to, such other Person (other than deposits made in
connection with the purchase of equipment or other assets in the ordinary
course of business) or (c) any other investment in such other Person,
including without limitation, any Guaranty Obligation for the benefit of
such other Person.
"Issuing Lender" means (i) as to the U.S. LOC Subfacility,
NationsBank, N.A., or such other willing U.S. Lender which the U.S.
Borrower may request and the Required Lenders agree and (ii) as to the
Canadian LOC Subfacility, The Bank of Nova Scotia, or such other willing
Canadian Lender which the Canadian Borrower may request and the Required
Lenders agree.
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"Issuing Lender's Fee" shall have the meaning assigned to such term
in Section 4.5.
"Lenders" means U.S. Lenders and Canadian Lenders.
"Letter of Credit" means (a) a Letter of Credit issued for the
account of the U.S. Borrower or one of its Subsidiaries by the Issuing
Lender pursuant to Section 2.2, as such Letter of Credit may be amended,
modified, extended, renewed or replaced, (b) a Letter of Credit issued for
the account of the Canadian Borrower or one of its Subsidiaries by the
Issuing Lender pursuant to Section 2.11 as such Letter of Credit may be
amended, modified, extended, renewed or replaced and (c) any Existing
Letters of Credit.
"Letter of Credit Fee" shall have the meaning assigned to such term
in Section 4.5.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority, hypothec or charge of any kind
(including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any financing or similar
statement filed under the Uniform Commercial Code or Personal Property
Security Act (Ontario) as adopted and in effect in the relevant
jurisdiction, or other similar recording or notice statute, and any lease
in the nature thereof.
"Loan Documents" means this Agreement, the Revolving Credit Notes,
the Swing Line Loan Note, the Term Notes, the Guaranty Agreements, the
Stock Pledge Agreements, the LOC Documents, the BA Documents and all other
documents and instruments executed or delivered
in connection herewith.
"Loans" means the Revolving Loans and the Term Loans.
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered
thereunder, and any other agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or at risk or (b) any collateral
security for such obligations.
"LOC Obligations" means, at any time, the sum of (a) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under all Letters of Credit then outstanding, assuming compliance
with all requirements for drawings referred to in such Letters of Credit
plus (b) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed.
"London Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) appearing on Telerate Page 3750 (or any successor
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page) as the London interbank offered rate for deposits in U.S. dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Telerate
Page 3750, the applicable rate shall be the arithmetic mean of all such
rates. If, for any reason, such rate is not available, the term "London
Interbank Offered Rate" shall mean, with respect to any Eurodollar Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
"Material Adverse Effect" means a material adverse effect, after
taking into account any applicable insurance (to the extent the provider
of such insurance has the financial ability to support its obligations
with respect thereto and is not disputing or refusing to acknowledge
same), on (a) the operations, financial condition, business or prospects
of the Consolidated Shorewood Group taken as a whole, (b) the ability of
(i) the U.S. Borrower to perform its material obligations under this
Credit Agreement or any of the other Loan Documents, (ii) the Canadian
Borrower to perform its material obligations under this Credit Agreement
or any of the other Loan Documents, or (iii) the members of the
Consolidated Shorewood Group, taken as a whole, to perform their material
obligations under this Agreement or any of the other Loan Documents, or
(c) the validity or enforceability of this Agreement, any of the other
Loan Documents, or the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer
Plan) which the U.S. Borrower or any ERISA Affiliate and at least one
other employer other than the U.S. Borrower or any ERISA Affiliate are
contributing sponsors.
"NationsBank" means NationsBank, N.A.
"Net Income" means, for any period, the net income after taxes of
the Consolidated Shorewood Group for such period, as determined in
accordance with GAAP.
"Net Proceeds" means all cash proceeds received in connection with
an Asset Disposition, or in connection with the incurrence of debt, net of
(a) the actual cash costs incurred in connection with and attributable to
such Asset Disposition, or issuance of debt, (b) any tax liability
attributable to such transaction and (c) with respect to an Asset
Disposition, amounts applied to repayment of Indebtedness (other than
Borrowers Obligations) secured by a Permitted Lien on a disposed asset.
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"Net Worth" means, at any time, the consolidated net stockholders'
equity of the Consolidated Shorewood Group at such time as determined in
accordance with GAAP.
"Notes" means the Revolving Credit Notes, the Swing Line Loan
Note and the Term Notes.
"Notice of Continuation/Conversion" means a request by a Borrower to
continue an existing Eurodollar Loan, convert a U.S. Base Rate Loan to a
Eurodollar Loan, convert a Eurodollar Loan to a U.S. Base Rate Loan,
convert a Canadian Base Rate Loan to a Bankers' Acceptance or convert a
Bankers' Acceptance to a Canadian Base Rate Loan in the form of Exhibit
4.1.
"Participation Interest" means the purchase of a participation in
Letters of Credit or LOC Obligations pursuant to Section 2.2 or in Loans
pursuant to Section 2.3(c) or Section 4.6.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereof.
"Permitted Acquisitions" means Acquisitions that (a) are in a
similar line of business as conducted by the Consolidated Shorewood Group
as of the Closing Date, (b) do not exceed $20 million, in the aggregate,
in cash (or other assets) consideration paid, the face amount of seller
financing relating thereto and Indebtedness assumed (other than trade
payables) in any one fiscal year of the Borrowers and (c) after giving
effect to any such Permitted Acquisition, the Consolidated Shorewood Group
is in compliance with the financial covenants set forth in Section 7.13.
"Permitted Investments" means (a) cash and Cash Equivalents; (b)
money market investment programs that invest exclusively in Cash
Equivalents and that are classified as a current asset in accordance with
GAAP and that are administered by broker-dealers reasonably acceptable to
the Administrative Agent; (c) Investments of a Borrower into any of its
Subsidiaries that guaranty the obligations of such Borrower under the Loan
Documents; (d) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses incidental to
carrying on the business of the Borrowers; (e) accounts receivable arising
from the sale of goods and services in the ordinary course of business of
the Borrowers; (f) stock or securities received in settlement of debts
(created in the ordinary course of business) owing to a member of the
Consolidated Shorewood Group; (g) Investments in Persons organized and
existing in the United States or Canada, whether or not such Persons are
wholly-owned upon consummation of such Investment, to the extent acquired
by the issuance or exchange of common stock in the U.S. Borrower, (h)
Investments in Persons organized and existing outside of the United States
or Canada, whether or not such Persons are wholly-owned upon consummation
of such Investment, in an aggregate amount at any time outstanding (on a
cost basis) not to exceed an amount equal to the sum of $50 million plus
an amount equal to 50% of cumulative Net Income earned subsequent to the
fiscal quarter ending closest to April 30, 1997 (determined
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on a quarterly basis) minus an amount equal to 100% of cumulative
Restricted Payments made since the date of this Agreement, and (i) other
Investments not to exceed $15 million, in the aggregate, at any time
outstanding (on a cost basis).
"Permitted Liens" means (a) Liens in favor of the Lenders; (b) Liens
for taxes not yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established; (c) Liens in respect of
property imposed by law arising in the ordinary course of business such as
materialmen's, mechanics', warehousemen's, supplier's or vendor's and
other like Liens provided that such Liens secure only amounts not yet due
and payable or if overdue are being contested in good faith by appropriate
actions or proceedings and adequate reserves have been established; (d)
pledges or deposits made to secure payment of worker's compensation
insurance, unemployment insurance, pensions or social security programs;
(e) Liens arising from good faith deposits in connection with or to secure
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed money); (f)
easements, rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar charges or
encumbrances not impairing, in any material respect, the use of such
property for its intended purposes or interfering, in any material
respect, with the ordinary conduct of business of the Consolidated
Shorewood Group; (g) Liens securing purchase money indebtedness (it being
understood for the purposes of this Agreement that conditional sales
contracts shall constitute purchase money indebtedness) permitted by
Section 8.1(d); (h) Liens existing on property or assets of a member of
the Consolidated Shorewood Group as of the date of this Agreement and
disclosed on Schedule 8.1 attached hereto; provided that the Liens set
forth on Schedule 8.1 shall not extend to or secure any Indebtedness other
than any such Indebtedness outstanding on the date hereof; (i) Liens
granted by a Subsidiary of a Borrower to secure debt owing to such
Borrower or to another member of the Consolidated Shorewood Group; (j)
judgments and other similar Liens arising in connection with court
proceedings; provided the execution or other enforcement of such Lien is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings; (k) Liens on
specific plant, property or equipment financed with the proceeds of and
relating to industrial development revenue bonds or other similar
tax-advantaged financing assumed in connection with a Permitted
Acquisition and (l) Liens (excluding blanket Liens on accounts, inventory,
equipment or general intangibles) securing Indebtedness not in excess of
$25,000 in any instance or $250,000 in the aggregate, at any time
outstanding. Notwithstanding anything contained herein to the contrary,
"Permitted Liens" shall not include any Lien on any Subsidiary or interest
in a Person organized and domiciled in the Peoples Republic of China.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
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"Plan" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which the U.S.
Borrower or any ERISA Affiliate is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Premium Packaging Business" means the business acquired pursuant
to the Purchase Agreement.
"Purchase Agreement" means that certain Purchase Agreement dated
December 23, 1993 between Shorewood Acquisition Corp. of Delaware and
Shorewood Paperboard Corporation Limited as purchasers and Paperboard
Industries Corporation and Paperboard Industries, Inc. as sellers.
"Regulation G, U or X" means Regulation G, U or X, respectively, of
the Board of Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof establishing
reserve requirements.
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"Required Lenders" means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitute at least 51% of the aggregate Credit
Exposure of all Lenders at such time; provided, however, that if any
Lender shall be a Defaulting Lender at such time then there shall be
excluded from the determination of Required Lenders at such time the
aggregate principal amount of Credit Exposure of such Lender at such time.
For purposes of the preceding sentence, the term "Credit Exposure" as
applied to each Lender shall mean (a) at any time prior to the termination
of the Commitments, the sum of (i) the U.S. Revolving Loan Commitment
Percentage of such Lender multiplied times the U.S. Revolving Loan
Commitments; plus (ii) the Canadian Revolving Loan Commitment Percentage
of such Lender multiplied times the Canadian Revolving Loan Commitments;
plus (iii) the U.S. Term Loan Commitment Percentage of such Lender
multiplied times the principal amount of U.S. Term Loan outstanding at
that time and (b) at any time after the termination of the Commitments,
the sum of (i) the principal balance of outstanding Loans of such Lender
plus (ii) such Lender's Participation Interests in the face amount of
outstanding Letters of Credit.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to our
binding upon such Person or to which any of its property is subject.
"Restricted Payments" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock
or other equity interest in the U.S. Borrower now or hereafter
outstanding, except a dividend payable solely in shares of
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that class to holders of that class, (b) any redemption, retirement,
sinking fund or other similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock or other
equity interest in the U.S. Borrower now or hereafter outstanding, and (c)
obligations relating to puts and calls for the purchase or sale of any
class of stock or equity interest in the U.S. Borrower now or hereafter
outstanding.
"Revolving Credit Notes" means the promissory notes of the Borrowers
in favor of each Lender evidencing the Revolving Loans and substantially
in the form of Exhibit 2.9, as such promissory notes may be amended,
modified, supplemented or replaced from time to time.
"Revolving Loan Commitments" means the U.S. Revolving Loan
Commitment and the Canadian Revolving Loan Commitment.
"Revolving Loans" means the loans made pursuant to Section 2.1
and 2.4 hereof, which may be U.S. Revolving Loans and/or Canadian
Revolving Loans.
"Revolving Loans Maturity Date" means April 30, 2002.
"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer
Plan.
"Solvent" means, with respect to any Person as of a particular date,
that on such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (c) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's assets would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry
in which such Person is engaged or is to engage, (d) the fair value of the
assets of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and
(e) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
"Stock Pledge Agreements" means the amended and restated pledge and
security agreements executed and delivered by the U.S. Borrower, the
Canadian Borrower, and such other members of the Consolidated Shorewood
Group, as appropriate, whether on the Closing Date or in the future in
accordance with the terms of this Agreement, as such Stock Pledge
Agreements may be amended, modified, extended, renewed, restated or
replaced from time to time.
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"Subsidiary" of any Person means (a) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of the capital stock of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries of such
Person, and (b) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries of
such Person has more than 50% of the equity interest at any time.
"Swing Line Loan Commitment" means $2,000,000 (U.S.), as such amount
may be reduced in accordance with Section 2.3.
"Swing Line Loans" means the loans made by NationsBank to the
U.S. Borrower pursuant to Section 2.3.
"Swing Line Loan Note" means the promissory note of the U.S.
Borrower in favor of NationsBank evidencing the Swing Line Loans and
substantially in the form of Exhibit 2.3 hereto as such promissory note
may be amended, modified, supplemented, or replaced from time to time.
"Term Loans" means the U.S. Term Loan.
"Term Loans Maturity Date" means April 30, 2002.
"Term Notes" means the promissory notes of the Borrowers in favor of
the Lenders evidencing the Term Loans and substantially in the form of
Exhibit 3.5, as such promissory notes may be amended, modified,
supplemented or replaced from time to time.
"Unused Fees" has the meaning set forth in Section 4.5.
"U.S. Base Rate" means the higher of (a) the Federal Funds Rate
plus .5% or (b) the U.S. Prime Rate; provided, however, that if in the
reasonable judgment of the Administrative Agent the Federal Funds Rate
cannot be determined then the U.S. Prime Rate.
"U.S. Base Rate Loans" means any Loans accruing interest at the
U.S. at the U.S. Base Rate or the BNS U.S. Base Rate.
"U.S. Base Rate Revolving Loans" means the Revolving Loans made
by the U.S. Lenders accruing interest at the U.S. Base Rate.
"U.S. Borrower" means Shorewood Packaging Corporation, a Delaware
corporation.
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"U.S. Lenders" means the Lenders identified as such on Schedule
1.1(a) and such other Lenders as may be added in accordance with the
terms of this Agreement.
"U.S. Letter of Credit" means a Letter of Credit issued under the
U.S. LOC Subfacility, as referenced in Section 2.2(a) plus Existing
U.S. Letters of Credit.
"U.S. LOC Obligations" means LOC Obligations relating to U.S.
Letters of Credit.
"U.S. LOC Subfacility" means the Letter of Credit subfacility
established pursuant to Section 2.2.
"U.S. Prime Rate" means the per annum rate of interest established
from time to time by the Administrative Agent at its principal office in
Charlotte, North Carolina (or such other principal office of the
Administrative Agent as communicated in writing to the Borrowers and the
Lenders) as its Prime Rate. Any change in the interest rate resulting from
a change in the U.S. Prime Rate shall become effective as of 12:01 a.m. of
the Business Day on which each change in the U.S. Prime Rate is announced
by the Administrative Agent. The U.S. Prime Rate is a reference rate used
by the Administrative Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"U.S. Revolving Loan Commitment" means $100,000,000 (U.S.) as
such amount may be reduced in accordance with Section 2.10.
"U.S. Revolving Loan Commitment Percentage" means, for each U.S.
Lender, the percentage identified as its U.S. Revolving Loan Commitment
Percentage opposite such U.S. Lender's name on Schedule 1.1(a), as such
percentage may be modified by assignment in accordance with the terms
of this Agreement.
"U.S. Revolving Loans" means the revolving loans made by the U.S.
Lenders to the U.S. Borrower pursuant to Section 2.1 of this Agreement.
"U.S. Term Loan" means the term loan made by the U.S. Lenders to
the U.S. Borrower pursuant to Section 3.1 of this Agreement.
"U.S. Term Loan Commitment" means $75,000,000 (U.S.).
"U.S. Term Loan Commitment Percentage" means, for each U.S.
Lender, the percentage identified as its Term Loan Commitment
Percentage opposite such U.S. Lender's name on Schedule 1.1(a), as such
percentage may be modified by assignment in accordance with the terms
of this Agreement.
"U.S. Unused Revolving Commitment" means, for any period, the
amount by which (a) the then applicable U.S. Revolving Loan Commitment
exceeds (b) the daily average sum for such period of the outstanding
aggregate principal amount of all U.S.
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Revolving Loans plus the daily average balance of U.S. LOC Obligations for
such period.
1.2 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with those used in the
preparation of the latest annual or quarterly financial statements under Section
7.1 (or prior to the delivery of the first financial statements under Section
7.1 used in the preparation of the financial statements described in Section
6.6); provided, however, if (a) the U.S. Borrower shall have objected to
determining such compliance on such basis at the time of delivery of such
financial statements or (b) the Administrative Agent or the Required Lenders
shall so object in writing within 30 days after delivery of such financial
statements, then such calculations shall be made on a basis consistent with
those used in the preparation of the latest financial statements as to which no
such objection shall have been made.
The Borrowers shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 7.1 hereof
(a) a description in reasonable detail of any material variation between the
application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the most recent preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the
paragraph above and (b) reasonable estimates of the difference between such
statements arising as a consequence thereof.
1.3 Computation of Time Periods and Other Definitional Provisions.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding." References in this Agreement to "Articles", "Sections", "Schedules"
or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
SECTION 2
THE REVOLVING LOANS
2.1 The U.S. Revolving Loans.
(a) U.S. Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each U.S. Lender agrees, severally and not
jointly, at any time and from time to time from the Effective Date to the
Revolving Loans Maturity Date, to make revolving loans (each a "U.S.
Revolving Loan" and collectively, the "U.S. Revolving Loans") in U.S.
dollars to the U.S. Borrower; provided, however, that (i) the aggregate
amount of U.S.
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Revolving Loans outstanding plus U.S. LOC Obligations outstanding plus
Swing Line Loans outstanding at any one time may not exceed the U.S.
Revolving Loan Commitment; (b) the aggregate amount of U.S. Revolving
Loans outstanding plus Canadian Revolving Loans outstanding plus LOC
Obligations outstanding plus BA Revolving Obligations outstanding plus
Swing Line Loans outstanding may not exceed $125,000,000 (U.S.); and (c)
with regard to each individual U.S. Lender (other than NationsBank with
respect to Swing Line Loans), the U.S. Lender's pro rata share of
outstanding U.S. Revolving Loans plus U.S. LOC Obligations outstanding
(plus, if applicable, such U.S. Lender's pro rata share of the Swing Line
Loans) shall not exceed such U.S. Lender's U.S. Revolving Loan Commitment
Percentage of the U.S. Revolving Loan Commitment. U.S. Revolving Loans may
consist of U.S. Base Rate Revolving Loans or Eurodollar Revolving Loans
(or a combination thereof) as the U.S. Borrower may request, and the U.S.
Borrower may borrow, repay and reborrow in accordance with the terms
hereof. All U.S. Revolving Loans advanced on the Effective Date shall be
U.S. Base Rate Revolving Loans and thereafter may be converted to
Eurodollar Revolving Loans in accordance with Section 4.1.
(b) Method of Borrowing for U.S. Revolving Loans.
(i) U.S. Base Rate Revolving Loans. By no later than 10:00
a.m., Charlotte, North Carolina time, on the date of the request,
the U.S. Borrower shall submit an Advance Request to the
Administrative Agent setting forth the amount requested, the desire
to have such Revolving Loan accrue interest at the U.S. Base Rate
and complying in all respects with Section 5.2 hereof.
(ii) Eurodollar Revolving Loans. By no later than 10:00 a.m.,
Charlotte, North Carolina time, three Business Days prior to the
date of the requested Eurodollar Revolving Loan, the U.S. Borrower
shall submit an Advance Request to the Administrative Agent setting
forth the amount thereof, the desire to have such Revolving Loan
accrue interest at the Adjusted Eurodollar Rate, the Interest Period
applicable thereto and complying in all respects with Section 5.2
hereof.
2.2 U.S. Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any Lien
(not otherwise contemplated by this Agreement) to be given by any member
of the Consolidated Shorewood Group or conflict with any obligation of, or
detract from any action which may be taken by, either Borrower or their
Subsidiaries under this Agreement), the Issuing Lender shall from time to
time upon request issue, in U.S. dollars, and the U.S. Lenders shall
participate in, letters of credit (the "U.S. Letters of Credit") for the
account of the U.S. Borrower or any of its Subsidiaries, from the
Effective Date until the Revolving Loans Maturity Date, in a form
reasonably acceptable to the Issuing Lender; provided, however, that (i)
the aggregate amount of
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U.S. LOC Obligations shall not at any time exceed $15,000,000 (U.S.), (ii)
the sum of the aggregate amount of U.S. LOC Obligations outstanding plus
U.S. Revolving Loans outstanding plus Swing Line Loans outstanding shall
not exceed the U.S. Revolving Loan Commitment, (iii) with respect to each
individual U.S. Lender (other than NationsBank with respect to Swing Line
Loans), the U.S. Lender's pro rata share of outstanding U.S. Revolving
Loans plus its pro rata share of outstanding U.S. LOC Obligations plus its
pro rata share of Swing Line Loans, if any, shall not exceed such U.S.
Lender's Revolving Loan Commitment Percentage of the U.S. Revolving Loan
Commitment and (iv) the sum of U.S. Revolving Loans outstanding plus
Canadian Revolving Loans outstanding plus Swing Line Loans outstanding
plus LOC Obligations outstanding plus BA Revolving Obligations outstanding
shall not exceed $125,000,000. The issuance and expiry date of each U.S.
Letter of Credit shall be a Business Day. Except as otherwise expressly
agreed upon by all the U.S. Lenders, no U.S. Letter of Credit shall have
an original expiry date more than one year from the date of issuance, or
as extended, shall have an expiry date extending beyond the Revolving
Loans Maturity Date. Each U.S. Letter of Credit shall be either (x) a
standby letter of credit issued to support the obligations (including
pension or insurance obligations), contingent or otherwise, of the U.S.
Borrower or any of its Subsidiaries, or (y) a commercial letter of credit
in respect of the purchase of goods or services by the U.S. Borrower or
any of its Subsidiaries in the ordinary course of business. Each U.S.
Letter of Credit shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of a U.S.
Letter of Credit shall be submitted to the Issuing Lender at least three
Business Days prior to the requested date of issuance. The Issuing Lender
will, at least quarterly and more frequently upon request, provide to the
Administrative Agent for dissemination to the Lenders a detailed report
specifying the Letters of Credit which are then issued and outstanding and
any activity with respect thereto which may have occurred since the date
of the prior report, and including therein, among other things, the
account party, the beneficiary, the face amount, and the expiry date as
well as any payments or expirations which may have occurred. The Issuing
Lender will further provide to the Administrative Agent, promptly upon
request, copies of the Letters of Credit.
(c) Participations.
(i) On the Effective Date, each U.S. Lender shall
automatically acquire a participation in the liability of the
Issuing Lender under each Existing U.S. Letter of Credit in an
amount equal to its U.S. Revolving Loan Commitment Percentage of
such U.S. Existing Letters of Credit. Each U.S. Existing Letter
of Credit shall be deemed for all purposes of this Agreement and
the other Loan Documents to be a U.S. Letter of Credit.
(ii) Each U.S. Lender, upon issuance of a U.S. Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such U.S. Letter of Credit
and the obligations arising thereunder and any collateral relating
thereto, in each case in an amount equal to its U.S. Revolving Loan
Commitment Percentage of the obligations under such U.S. Letter of
Credit,
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and shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to the
Issuing Lender therefor and discharge when due, its U.S. Revolving
Loan Commitment Percentage of the obligations arising under such
U.S. Letter of Credit. Without limiting the scope and nature of each
U.S. Lender's participation in any U.S. Letter of Credit, to the
extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such U.S. Letter of Credit, each such U.S.
Lender shall pay to the Issuing Lender its U.S. Revolving Loan
Commitment Percentage of such unreimbursed drawing in same day funds
on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The
obligation of each U.S. Lender to so reimburse the Issuing Lender
shall be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other occurrence
or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the U.S. Borrower or any other member of
the Consolidated Shorewood Group to reimburse the Issuing Lender
under any U.S. Letter of Credit, together with interest as
hereinafter provided.
(d) Reimbursement. In the event of any drawing under any U.S. Letter
of Credit, the Issuing Lender will promptly notify the U.S. Borrower.
Unless the U.S. Borrower shall immediately notify the Issuing Lender of
its intent to otherwise reimburse the Issuing Lender, the U.S. Borrower
shall be deemed to have requested a U.S. Revolving Loan at the U.S. Base
Rate in the amount of the drawing as provided in subsection (e) hereof,
the proceeds of which will be used to satisfy the reimbursement
obligations. The U.S. Borrower shall reimburse the Issuing Lender on the
day of drawing under any U.S. Letter of Credit either with the proceeds of
an U.S. Revolving Loan obtained hereunder or otherwise in same day funds
as provided herein or in the LOC Documents. If the U.S. Borrower shall
fail to reimburse the Issuing Lender as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum
rate equal to the U.S. Base Rate plus two percent (2%). Subject to Section
2.2(k)(v), the Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of (but
without waiver of) any rights of set-off, counterclaim or defense to
payment the applicable account party or the U.S. Borrower may claim or
have against the Issuing Lender, the Administrative Agent, the U.S.
Lenders, the beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation, any defense based on any failure of
the applicable account party, the U.S. Borrower or any other member of the
Consolidated Shorewood Group to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The
Issuing Lender will promptly notify the U.S. Lenders of the amount of any
unreimbursed drawing and each U.S. Lender shall promptly pay to the
Administrative Agent for the account of the Issuing Lender, in Dollars and
in immediately available funds, the amount of such U.S. Lender's Revolving
Loan Commitment Percentage of such unreimbursed drawing. Such payment
shall be made on the day such notice is received by such U.S. Lender from
the Issuing Lender if such notice is received at or before 2:00 p.m.,
otherwise such payment shall be made at or before 12:00 Noon on the
Business Day next succeeding the day such notice is received. If such U.S.
Lender does not pay such amount to the Issuing Lender in full upon
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such request, such U.S. Lender shall, on demand, pay to the Administrative
Agent for the account of the Issuing Lender interest on the unpaid amount
during the period from the date the U.S. Lender received the notice
regarding the unreimbursed drawing until such U.S. Lender pays such amount
to the Issuing Lender in full at a rate per annum equal to, if paid within
two Business Days of the date of drawing, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each U.S. Lender's obligation
to make such payment to the Issuing Lender, and the right of the Issuing
Lender to receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to the
termination of this Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment
by an U.S. Lender to the Issuing Lender, such U.S. Lender shall,
automatically and without any further action on the part of the Issuing
Lender or such U.S. Lender, acquire a participation in an amount equal to
such payment (excluding the portion of such payment constituting interest
owing to the Issuing Lender) in the related unreimbursed drawing portion
of the LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the U.S. Borrower and the other
members of the Consolidated Shorewood Group with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the U.S.
Borrower shall have requested, or been deemed to have requested, a U.S.
Revolving Loan borrowing to reimburse a drawing under a U.S. Letter of
Credit, the Administrative Agent shall give notice to the U.S. Lenders
that a Revolving Loan has been requested or deemed requested in connection
with a drawing under a U.S. Letter of Credit, in which case a U.S.
Revolving Loan borrowing comprised solely of Base Rate Loans (each such
borrowing, a "Mandatory Borrowing") shall be immediately made from all
U.S. Lenders (without giving effect to any termination of the Commitments
pursuant to Section 9.2) pro rata based on each U.S. Lender's respective
U.S. Revolving Loan Commitment Percentage and the proceeds thereof shall
be paid directly to the Issuing Lender for application to the respective
LOC Obligations. Each such U.S. Lender hereby irrevocably agrees to make
such U.S. Revolving Loans immediately upon any such request or deemed
request on account of each such Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not comply with
the minimum amount for borrowings of U.S. Revolving Loans otherwise
required hereunder, (ii) whether any conditions specified in Section 5.2
are then satisfied, (iii) whether a Default or Event of Default then
exists, (iv) failure of any such request or deemed request for U.S.
Revolving Loans to be made by the time otherwise required hereunder, (v)
the date of such Mandatory Borrowing, or (vi) any reduction in the
Revolving Committed Amount or any termination of the Commitments. In the
event that any Mandatory Borrowing 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 U.S. Borrower or any other member of the Consolidated Shorewood
Group), then each such U.S. Lender hereby agrees that it shall forthwith
fund (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the U.S. Borrower on
or after such date and prior
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to such purchase) its Participation Interest in the outstanding U.S. LOC
Obligations; provided, further, that in the event any U.S. Lender shall
fail to fund its Participation Interest on the day the Mandatory Borrowing
would otherwise have occurred, then the amount of such U.S. Lender's
unfunded Participation Interest therein shall bear interest payable to the
Issuing Lender upon demand, at the rate equal to, if paid within two
Business Days of such date, the Federal Funds Rate, and thereafter at a
rate equal to the Base Rate.
(f) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Agreement, a U.S. Letter of
Credit issued hereunder may contain a statement to the effect that such
U.S. Letter of Credit is issued for the account of a Subsidiary of the
U.S. Borrower; provided that notwithstanding such statement, the U.S.
Borrower shall be the actual account party for all purposes of this
Agreement for such Letter of Credit and such statement shall not affect
the U.S. Borrower's reimbursement obligations hereunder with respect to
such Letter of Credit.
(g) Modification and Extension. The issuance of any supplement,
modification, amendment, renewal, or extensions to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be incorporated therein
and deemed in all respects to be a part thereof.
(i) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the U.S.
Lenders are only those expressly set forth in this Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent
set forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2 shall be
deemed to prejudice the right of any U.S. Lender to recover from the
Issuing Lender any amounts made available by such U.S. Lender to the
Issuing Lender pursuant to this Section 2.2 in the event that it is
determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit constituted gross negligence or willful
misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict
between this Agreement and any LOC Document, this Agreement shall govern.
(k) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this
Agreement, the U.S. Borrower hereby agrees to protect, indemnify,
pay and save the Issuing Lender harmless from and against any and
all claims, demands, liabilities, damages, losses,
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costs, charges and expenses (including reasonable attorneys' fees)
that the Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any U.S. Letter of Credit
or (B) the failure of the Issuing Lender to honor a drawing under a
U.S. 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").
(ii) As between the U.S. Borrower and the Issuing Lender,
the U.S. Borrower shall assume all risks of the acts, omissions or
misuse of any U.S. Letter of Credit by the beneficiary thereof. The
Issuing Lender shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and
issuance of any U.S. Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer
or assign any U.S. 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; (C) failure of the
beneficiary of a U.S. Letter of Credit to comply fully with
conditions required in order to draw upon a U.S. Letter of Credit;
(D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make
a drawing under a U.S. Letter of Credit or of the proceeds thereof;
and (G) any consequences arising from causes beyond the control of
the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting
of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any U.S.
Letter of Credit or the related certificates, if taken or omitted in
good faith, shall not put the Issuing Lender under any resulting
liability to the U.S. Borrower or any other member of the
Consolidated Shorewood Group. It is the intention of the parties
that this Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in
the issuance of the U.S. Letters of Credit, all of which risks are
hereby assumed by the Borrower, including, without limitation, any
and all risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts. The Issuing
Lender shall not, in any way, be liable for any failure by the
Issuing Lender or anyone else to pay any drawing under any U.S.
Letter of Credit as a result of any Government Acts or any other
cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (k) is intended to limit the
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reimbursement obligation of the U.S. Borrower contained in this
Section 2.2. The obligations of the U.S. Borrower under this
subsection (k) shall survive the termination of this Agreement. No
act or omission of any current or prior beneficiary of a U.S. Letter
of Credit shall in any way affect or impair the rights of the
Issuing Lender to enforce any right, power or benefit under this
Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (k), the U.S. Borrower shall have no obligation to
indemnify the Issuing Lender in respect of any liability incurred by
the Issuing Lender arising solely out of the gross negligence or
willful misconduct of the Issuing Lender, as determined by a court
of competent jurisdiction. Nothing in this Agreement shall relieve
the Issuing Lender of any liability to the U.S. Borrower in respect
of any action taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing Lender or a
violation of the UCP or Uniform Commercial Code (as applicable), as
determined by a court of competent jurisdiction.
2.3 Swing Line Loan Subfacility.
(a) Swing Line Loan Commitment. Subject to the terms and conditions
set forth herein, NationsBank agrees to make revolving loans to the U.S.
Borrower in U.S. dollars from time to time from the Effective Date to the
Revolving Loans Maturity Date (each such loan, a "Swing Line Loan" and
collectively, the "Swing Line Loans"); provided that (i) the aggregate
amount of the Swing Line Loans outstanding at any one time shall not
exceed the Swing Line Loan Commitment, (ii) the sum of the aggregate
amount of Swing Line Loans outstanding plus the amount of U.S. Revolving
Loans outstanding plus the U.S. LOC Obligations outstanding at any one
time may not exceed the U.S. Revolving Loan Commitment and (iii) the
aggregate amount of Swing Line Loans outstanding plus U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC Obligations
outstanding plus BA Revolving Obligations may not exceed $125,000,000
(U.S.). The Swing Line Loan Commitment may be reduced or terminated by
NationsBank, in its sole discretion, upon two Business Days' notice to the
U.S. Borrower. Prior to the Revolving Loans Maturity Date, Swing Line
Loans may be repaid and reborrowed by the U.S. Borrower in accordance with
the provisions hereof. Upon the request of any U.S. Lender, NationsBank
shall provide such U.S. Lender a schedule of Swing Line Loans then
outstanding.
(b) Method of Borrowing Swing Line Loans. By no later than 10:00
a.m., Charlotte, North Carolina time, on the date of the requested
borrowing of Swing Line Loans, the U.S. Borrower shall submit an Advance
Request to NationsBank in the form of Exhibit 2.3(b) setting forth (i) the
amount of the requested Swing Line Loan and (ii) the date of the requested
Swing Line Loan.
(c) Payment and Participations of Swing Line Loans. The U.S.
Borrower agrees to repay all Swing Line Loans then outstanding within one
Business Day of demand therefor by NationsBank, which may be accomplished
by requesting a U.S. Revolving
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Loan. In the event that the U.S. Borrower shall fail to repay any Swing
Line Loan within three Business Days after demand therefor by NationsBank,
and in any event upon (i) a request by NationsBank, (ii) the occurrence of
an Event of Default described in Section 9.1(f) or (iii) the acceleration
of any Loan or termination of any Commitment pursuant to Section 9.2, each
other U.S. Lender shall irrevocably and unconditionally purchase from
NationsBank, without recourse or warranty, an undivided interest and
participation in such Swing Line Loan in an amount equal to such other
U.S. Lender's U.S. Revolving Loan Commitment Percentage thereof, by
directly purchasing a participation in such Swing Line Loan in such amount
(regardless of whether the conditions precedent thereto set forth in
Section 5.2 hereof are then satisfied, whether or not the U.S. Borrower
has made an Advance Request and whether or not the Revolving Loan
Commitments are then in effect, any Event of Default exists or all the
Loans have been accelerated) and paying the proceeds thereof to
NationsBank at the address provided in Section 11.1, or at such other
address as NationsBank may designate, in lawful money of the United States
of America and in immediately available funds. NationsBank agrees to
notify each U.S. Lender that is obligated to purchase a participation in
Swing Line Loans hereunder of the occurrence of any event described in
clause (ii) or (iii) above promptly after NationsBank becomes aware
thereof, but the failure to give such notice will not affect the
obligation of any such U.S. Lender to purchase any such participation. If
such amount is not in fact made available to NationsBank by any U.S.
Lender, NationsBank shall be entitled to recover such amount on demand
from such U.S. Lender, together with accrued interest thereon for each day
from the date of demand thereof, at the Federal Funds Rate. If such U.S.
Lender does not pay such amount forthwith upon NationsBank's demand
therefor, and until such time as such U.S. Lender makes the required
payment, NationsBank shall be deemed to continue to have outstanding Swing
Line Loans in the amount of such unpaid participation obligation for all
purposes of the Loan Documents other than those provisions requiring the
other U.S. Lenders to purchase a participation therein. Further, such U.S.
Lender shall be deemed to have assigned any and all payments made of
principal and interest on its Loans, amounts due with respect to its
Letters of Credit (or its Participation Interests therein) and any other
amounts due to it hereunder to NationsBank to fund Swing Line Loans in the
amount of the participation in Swing Line Loans that such U.S. Lender
failed to purchase pursuant to this Section 2.3(c) until such amount has
been purchased (as a result of such assignment or otherwise). Upon the
purchase of a Participation Interest in respect of such Swing Line Loan by
a U.S. Lender pursuant to this Section 2.3(c), the amount so funded shall
become a U.S. Revolving Loan by the purchasing U.S. Lender hereunder and
shall no longer be a Swing Line Loan. On the date that the U.S. Lenders
are required to purchase participations in Swing Line Loans under this
Section 2.3(c), NationsBank's pro rata share of such Swing Line Loans
shall no longer be a Swing Line Loan hereunder but shall be a U.S.
Revolving Loan.
(d) Swing Line Note. The Swing Line Loans made by NationsBank shall
be evidenced by a duly executed promissory note of the U.S. Borrower to
NationsBank in the face amount of the Swing Line Committed Amount and in
substantially the form of Exhibit 2.3.
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2.4 The Canadian Revolving Loans.
(a) Canadian Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Canadian Lender agrees, severally and
not jointly, at any time and from time to time from the Effective Date to
the Revolving Loans Maturity Date, to make revolving loans (each a
"Canadian Revolving Loan" and collectively, the "Canadian Revolving
Loans") to the Canadian Borrower in Canadian dollars or U.S. Dollars and
to the U.S. Borrower in U.S. dollars; provided, however, that (i) the
aggregate amount of Canadian Revolving Loans outstanding plus BA Revolving
Obligations outstanding plus Canadian LOC Obligations outstanding at any
one time may not exceed the Canadian Revolving Loan Commitment; (ii) the
aggregate amount of U.S. Revolving Loans outstanding plus Canadian
Revolving Loans outstanding plus LOC Obligations outstanding plus BA
Revolving Obligations outstanding plus Swing Line Loans outstanding may
not exceed $125,000,000 (U.S.); and (iii) with regard to each individual
Canadian Lender, the Canadian Lender's pro rata share of Canadian
Revolving Loans outstanding plus BA Revolving Obligations outstanding plus
Canadian LOC Obligations outstanding shall not exceed such Canadian
Lender's Canadian Revolving Loan Commitment Percentage of the Canadian
Revolving Loan Commitment. Canadian Revolving Loans shall consist of
Canadian Base Rate Revolving Loans or Eurodollar Revolving Loans as the
Borrowers may request and the Borrowers may borrow, repay and reborrow in
accordance with the terms hereof. All Canadian Revolving Loans advanced on
the Effective Date shall be Canadian Base Rate Revolving Loans and may
thereafter be converted to Eurodollar Revolving Loans or Bankers'
Acceptances in accordance with Section 4.1.
(b) Method of Borrowing for Canadian Revolving Loans.
(i) Canadian Base Rate Revolving Loans. By no later than 10:00
a.m., Toronto, Ontario time, on the date of the request, the
Canadian Borrower or the U.S. Borrower shall submit an Advance
Request to the Canadian Administrative Agent setting forth the
amount requested, the desire to have such Revolving Loan accrue
interest at either (A) for the Canadian Borrower at the Canadian
Prime Rate or (B) for the U.S. Borrower at the BNS U.S. Prime Rate
and complying in all respects with Section 5.2 hereof.
(ii) Eurodollar Revolving Loans. By no later than 10:00 a.m.,
Toronto, Ontario time, three Business Days prior to the date of the
requested Eurodollar Revolving Loan, the U.S. Borrower shall submit
an Advance Request to the Canadian Administrative Agent setting
forth the amount thereof, the desire to have such Revolving Loan
accrue interest at the Adjusted Eurodollar Rate, the Interest Period
applicable thereto and complying in all respects with Section 5.2
hereof.
2.5 Bankers' Acceptances.
(a) Issuance. Subject to the terms and conditions hereof and of the
BA Documents, if any, executed in connection with the creation of each
Banker's Acceptance
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and any other terms and conditions which the Canadian Lenders may
reasonably require, (so long as such terms and conditions do not impose
any financial obligation on or require any Lien (not otherwise
contemplated by this Agreement) to be given by any member of the
Consolidated Shorewood Group or conflict with any obligation of, or
detract from any action which may be taken by, either Borrower or their
Subsidiaries under this Agreement) each Canadian Lender agrees, severally
and not jointly, at any time and from time to time from the Effective Date
to the Revolving Loans Maturity Date, to create Bankers' Acceptances by
accepting drafts of the Canadian Borrower presented to it for acceptance
equal to such Canadian Lender's Canadian Revolving Loan Commitment
Percentage of such Bankers' Acceptances as the Canadian Borrower may
request on such date; provided, however, that (i) the aggregate amount of
Canadian Revolving Loans outstanding plus BA Revolving Obligations
outstanding plus Canadian LOC Obligations outstanding may not exceed the
Canadian Revolving Loan Commitment and (ii) the sum of U.S. Revolving
Loans outstanding plus Canadian Revolving Loans outstanding plus LOC
Obligations outstanding plus BA Revolving Obligations outstanding plus
Swing Line Loans outstanding shall not at any time exceed $125,000,000.
Upon the acceptance of any draft of the Canadian Borrower pursuant hereto,
the Canadian Borrower shall pay to each of the Canadian Lenders, in
advance, the Acceptance Fee. Forthwith after each request for drawdown of,
continuation of or conversion into Bankers' Acceptances, the Canadian
Administrative Agent shall notify each Canadian Lender of the amount and
denomination Bankers' Acceptances to be accepted by such Canadian Lender.
The Canadian Lenders may, but are not obligated to, purchase any of the
Bankers' Acceptances. The Canadian Borrower shall as soon as practical
deliver to the Canadian Administrative Agent a notice confirming the
issuance of Bankers' Acceptances and specifying the net proceeds derived
therefrom. For greater certainty, with respect to each extension of credit
by way of Bankers' Acceptance, each Bankers' Acceptance shall have the
same term and, upon sale, each Bankers' Acceptance shall be discounted at
the rate relating to the Canadian Lender accepting the Bankers'
Acceptance.
(b) Requirements of Bankers' Acceptances. Each Bankers' Acceptance
shall comply with the related BA Documents and shall be executed by the
Canadian Borrower and presented to the Canadian Lenders pursuant to such
procedures as are provided for in such BA Documents or as otherwise
provided or required by a Canadian Lender. The creation and maturity date
of each Bankers' Acceptance shall be a Business Day and no Bankers'
Acceptance shall have a maturity date later than the Revolving Loans
Maturity Date or Term Loans Maturity Date, as the case may be.
(c) Method of Requesting a Bankers' Acceptance. By no later than
10:00 a.m., Toronto, Ontario time, three Business Days prior to the date
of the requested Bankers' Acceptance, the Canadian Borrower shall submit
an Advance Request to the Canadian Administrative Agent setting forth the
aggregate amount of Bankers' Acceptances requested and the maturity date
of the requested Bankers' Acceptances which shall be 30, 60, 90 or 180
days, at the election of the Canadian Borrower, and complying in all
respects with Section 5.2.
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(d) Safekeeping of Drafts. The Canadian Lenders agree that, in
respect of the safekeeping of executed drafts of the Canadian Borrower
which are delivered to them for acceptance hereunder, they shall exercise
the same degree of care which the Canadian Lenders give to their own
property, provided that the Canadian Lenders shall not be deemed to be
insurers thereof.
(e) Maturity/Continuations. The Canadian Borrower shall pay to the
Canadian Administrative Agent, and there shall become due and payable, at
1:00 p.m. (Toronto, Ontario time) on the maturity date for each Bankers'
Acceptance an amount in Canadian Dollars in same day funds equal to the
Face Amount of such Bankers' Acceptance (notwithstanding that any Canadian
Lender which accepted any such Bankers' Acceptance may be the holder
thereof at maturity); provided, however, that subject to Section 4.10(b)
and provided that the Canadian Borrower has, by giving notice in
accordance with Section 2.5(c) or 4.1, requested the Canadian Lenders to
accept its drafts to replace all or a portion of outstanding Bankers'
Acceptances as they mature, each Canadian Lender shall, on the maturity of
such Bankers' Acceptances and concurrent with the payment by the Canadian
Borrower to the Canadian Lenders of the Face Amount of such Bankers'
Acceptances or the portion thereof to be replaced, accept the Canadian
Borrower's draft or drafts having an aggregate Face Amount equal to its
pro rata share of the aggregate Face Amount of the matured Bankers'
Acceptances or the portion thereof to be replaced.
(f) Repayments Prior to Maturity. Except as required by Section
4.4(b), no repayment of a Bankers' Acceptance shall be made by the
Canadian Borrower to the Canadian Lenders prior to the maturity date
thereof. Any such repayment required by Section 4.4(b) shall be made to
the Canadian Administrative Agent and such monies shall be held by the
Canadian Administrative Agent, in a cash collateral account hypothecated
to the Canadian Administrative Agent, to be paid to the Canadian Lenders
on the maturity date of the Bankers' Acceptances which have been accepted
by it. The Canadian Borrower shall be entitled to the benefit of any
interest accruing thereon, in each case, on the respective maturity date
of each Bankers' Acceptance in respect of which repayment is made, and
upon the maturity of each such Bankers' Acceptance the Canadian Lenders
shall apply the interest thereon in payment of amounts owed by the
Canadian Borrower hereunder. Any such payment by the Canadian Borrower to
the Canadian Lenders shall satisfy the Canadian Borrower's obligations
under the Bankers' Acceptance to which it relates and the Canadian Lender
which has accepted such Bankers' Acceptance shall thereafter be solely
responsible for the payment of such Bankers' Acceptance.
2.6 Minimum Amounts.
Each Revolving Loan shall be (a) in the case of Eurodollar Revolving
Loans, in a minimum aggregate principal amount of the lesser of $3,000,000 or
the remaining amount available to be borrowed with respect to the U.S. Revolving
Loans or the Canadian Revolving Loans, as applicable, and (b) in the case of
Base Rate Revolving Loans, in a minimum aggregate principal amount of the lesser
of $1,000,000 or the remaining amount available to be borrowed with respect to
the U.S. Revolving Loans or the Canadian Revolving Loans, as applicable. Any
Revolving Loan
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requested shall be in an integral multiple of $1,000,000 unless the request is
for all of the remaining amount available to be borrowed. Each Bankers'
Acceptance shall be in a minimum aggregate amount of Cnd. $1,000,000 and in
integral multiples of Cnd. $1,000,000 above such amount. Each Swing Line Loan
shall be in a minimum aggregate principal amount of $100,000 and in integral
multiples of $25,000 above such amount.
2.7 Funding of Advances to Borrowers.
(a) U.S. Revolving Loans. Upon receipt of an Advance Request
requesting U.S. Revolving Loans, the Administrative Agent shall promptly
inform the U.S. Lenders as to the terms thereof. Each U.S. Lender will
make its pro rata share of each U.S. Revolving Loan available to the
Administrative Agent by 1:00 p.m., Charlotte, North Carolina time, on the
date specified in the Advance Request by deposit (in U.S. dollars) of
immediately available funds at the offices of the Administrative Agent at
the address provided in Section 11.1, or at such other address as the
Administrative Agent may designate in writing. All U.S. Revolving Loans
shall be made by the U.S. Lenders pro rata on the basis of each U.S.
Lender's U.S. Revolving Loan Commitment Percentage. The amount of the U.S.
Revolving Loans will then be made available to the U.S. Borrower by the
Administrative Agent by crediting the account of the U.S. Borrower on the
books of such office of the Administrative Agent to the extent of the
amount of such U.S. Revolving Loans are made available to the
Administrative Agent.
(b) Canadian Revolving Loans. Upon receipt of an Advance Request
requesting Canadian Revolving Loans, the Canadian Administrative Agent
shall promptly inform the Canadian Lenders of the receipt thereof. Each
Canadian Lender will make its pro rata share of each Canadian Revolving
Loan available to the Canadian Administrative Agent by 1:00 p.m., Toronto,
Ontario time on the date specified in the Advance Request by deposit (in
Canadian dollars or U.S. dollars, as appropriate, if the request was made
by the Canadian Borrower and in U.S. dollars if the request was made by
the U.S. Borrower) of immediately available funds at the offices of the
Canadian Administrative Agent at the address provided in Section 11.1. All
Canadian Revolving Loans shall be made by the Canadian Lenders pro rata on
the basis of each Canadian Lender's Canadian Revolving Loan Commitment
Percentage. The amount of the Canadian Revolving Loans will then be made
available to the Canadian Borrower or the U.S. Borrower, as applicable, by
the Canadian Administrative Agent by crediting the account of the Canadian
Borrower or the U.S. Borrower, as applicable, on the books of such office
of the Canadian Administrative Agent to the extent of the amount of such
Canadian Revolving Loans are made available to the Canadian Administrative
Agent.
(c) Bankers' Acceptances.
(i) Subject to subsection (ii) below, each Canadian Lender shall,
not later than 1:00 p.m., Toronto, Ontario time, on the date of
creation of the Bankers' Acceptances, accept drafts of the Canadian
Borrower which are presented to it for acceptance in an amount equal
to each Canadian Lender's Canadian Revolving
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Loan Commitment Percentage of the aggregate amount of Bankers'
Acceptances created on such date. Subject to the provisions hereof,
the Canadian Administrative Agent shall be responsible for making
all necessary arrangements with each of the Canadian Lenders with
respect to the stamping of Bankers' Acceptances.
(ii) Subject to Section 4.10, in the sole judgment of a Canadian
Lender, if such Canadian Lender is unable to create a Bankers'
Acceptance in accordance with this Agreement, such Canadian Lender
shall give an irrevocable notice to such effect to the Canadian
Administrative Agent and the Canadian Borrower prior to 10:00 a.m.,
Toronto, Ontario time, on the date of the requested creation of the
Bankers' Acceptances. If the Bankers' Acceptance was requested in
connection with the Canadian Revolving Loan Commitment, such
Canadian Lender shall make available to the Canadian Borrower prior
to 1:00 p.m., Toronto, Ontario time, on the date of such requested
Bankers' Acceptance a Canadian dollar loan in a principal amount
equal to such Canadian Lender's pro rata share of the aggregate
amount of Bankers' Acceptance to be created on such date, such loan
to be funded in the same manner as the Bankers' Acceptances provided
by the other Canadian Lenders. Such loan shall have the same term as
the Bankers' Acceptance for which it is a substitute and shall bear
such interest per annum throughout the term thereof as shall permit
such Canadian Lender to obtain the same effective rate as if such
Canadian Lender had accepted and purchased a Bankers' Acceptance at
the same acceptance fee and pricing in which the Canadian
Administrative Agent would have accepted and purchased on the bid
side of the market, such Bankers' Acceptance at approximately 1:00
p.m., Toronto, Ontario time, on the date such loan is made. The
Canadian Borrower hereby agrees that if such loan is made by a
Canadian Lender interest shall be payable in advance on the date of
such loan by deducting the interest payable in respect thereof from
the principal amount of such loan.
(d) Swing Line Loans. Upon receipt of an Advance Request requesting
a Swing Line Loan, NationsBank shall fund such amount to the U.S. Borrower
by 2:00 p.m., Charlotte, North Carolina time, on the date specified in the
Advance Request by crediting the account of the U.S. Borrower on the
books of NationsBank.
The Canadian Administrative Agent shall promptly inform the Administrative
Agent and the Administrative Agent shall promptly inform the Canadian
Administrative Agent, by telecopy, of the funding of any Revolving Loan or the
creation of Bankers' Acceptances and the terms thereof. No Lender shall be
responsible for the failure or delay by any other Lender in its obligation to
make Revolving Loans or create Bankers' Acceptances hereunder; provided,
however, that the failure of any Lender to fulfill its Commitment hereunder
shall not relieve any other Lender of its Commitment hereunder. Unless the
Administrative Agent or the Canadian Administrative Agent, as the case may be,
shall have been notified by any Lender prior to the date of any Revolving Loan
advance that such Lender does not intend to make available to the
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Administrative Agent or the Canadian Administrative Agent, as the case may be,
its portion of the Revolving Loan advance to be made on such date, the
Administrative Agent or the Canadian Administrative Agent, as the case may be,
may assume that such Lender has made such amount available to the Administrative
Agent or the Canadian Administrative Agent, as the case may be, on the date of
such Revolving Loan advance, and the Administrative Agent or the Canadian
Administrative Agent, as the case may be, in reliance upon such assumption, may
(in its sole discretion without any obligation to do so) make available to a
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent or the Canadian Administrative Agent,
as the case may be, the Administrative Agent or the Canadian Administrative
Agent, as the case may be, shall be entitled to recover such corresponding
amount from such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's or, as the case may be, the Canadian
Administrative Agent's demand therefor, the Administrative Agent or the Canadian
Administrative Agent, as the case may be, will promptly notify the applicable
Borrower and such Borrower shall immediately pay such corresponding amount to
the Administrative Agent or the Canadian Administrative Agent, as the case may
be. The Administrative Agent or the Canadian Administrative Agent, as the case
may be, shall also be entitled to recover from such Lender or such Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent or the Canadian Administrative Agent, as the case may be, to such Borrower
to the date such corresponding amount is recovered by the Administrative Agent
or the Canadian Administrative Agent, as the case may be, at a per annum rate
equal to the Federal Funds Rate.
2.8 Term.
The obligation of the Lenders to make Revolving Loans or create Bankers'
Acceptances shall expire at the Administrative Agent's close of business in
Charlotte, North Carolina on the Revolving Loans Maturity Date or such earlier
date if the Commitments are terminated pursuant to Section 9.2. On the Revolving
Loans Maturity Date, the entire outstanding principal balance of all amounts
outstanding under the U.S. Revolving Loan Commitment and the Canadian Revolving
Loan Commitment, together with accrued but unpaid interest and all other sums
owing under this Agreement, shall be due and payable in full, unless accelerated
sooner pursuant to Section 9.2.
2.9 Revolving Notes.
The Revolving Loans made by each Lender shall be evidenced by a duly
executed promissory note of the applicable Borrower, dated as of the Closing
Date, in an original principal amount equal to such Lender's U.S. Revolving Loan
Commitment or Canadian Revolving Loan Commitment, as applicable, and
substantially in the form of Exhibit 2.9.
2.10 Reduction of Revolving Loan Commitments.
Upon at least three Business Days' notice, (a) the Borrowers may, from
time to time, permanently reduce the Canadian Revolving Loan Commitment in whole
or in part; provided that, (i) such reduction must be in a minimum amount of
$5,000,000 and in integral multiples of $1,000,000 above such amount and (ii) no
reduction shall be made which would reduce the Canadian Revolving Loan
Commitment to an amount less than the sum of Canadian Revolving Loans then
outstanding plus BA Revolving Obligations then outstanding plus Canadian LOC
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Obligations outstanding; and (b) the U.S. Borrower may from time to time
permanently reduce the U.S. Revolving Loan Commitment in whole or in part;
provided that, (i) such reduction must be in a minimum amount of $5,000,000 and
in integral multiples of $1,000,000 above such amount and (ii) no reduction
shall be made which would reduce the U.S. Revolving Loan Commitment to an amount
less than the sum of U.S. Revolving Loans then outstanding plus U.S. LOC
Obligations then outstanding plus Swing Line Loans then outstanding.
Notwithstanding anything above to the contrary, any permanent reduction of the
Revolving Loan Commitments must be done on a basis such that both the Canadian
Revolving Loan Commitment and the U.S. Revolving Loan Commitment reduce
simultaneously on a pro rata basis.
2.11 Canadian Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require (so long as such terms and
conditions do not impose any financial obligation on or require any Lien
(not otherwise contemplated by this Agreement) to be given by any member
of the Consolidated Shorewood Group or conflict with any obligation of, or
detract from any action which may be taken by, the Canadian Borrower or
its Subsidiaries under this Agreement), the Issuing Lender shall from time
to time upon request issue, in U.S. dollars or Canadian dollars, and the
Canadian Lenders shall participate in, letters of credit (the "Canadian
Letters of Credit") for the account of the Canadian Borrower or any of its
Subsidiaries, from the Effective Date until the Revolving Loans Maturity
Date, in a form reasonably acceptable to the Issuing Lender; provided,
however, that (i) the aggregate amount of Canadian LOC Obligations shall
not at any time exceed $5,000,000 (U.S.), (ii) the sum of the aggregate
amount of Canadian Revolving Loans outstanding plus BA Revolving
Obligations outstanding plus Canadian LOC Obligations outstanding shall
not exceed the Canadian Revolving Loan Commitment, (iii) with respect to
each individual Canadian Lender, the Canadian Lender's pro rata share of
outstanding Canadian Revolving Loans plus its pro rata share of
outstanding Canadian LOC Obligations plus its pro rata share of BA
Revolving Obligations, if any, shall not exceed such Canadian Lender's
Revolving Loan Commitment Percentage of the Canadian Revolving Loan
Commitment and (iv) the sum of U.S. Revolving Loans outstanding plus
Canadian Revolving Loans outstanding plus Swing Line Loans outstanding
plus LOC Obligations outstanding plus BA Revolving Obligations outstanding
shall not exceed $125,000,000. The issuance and expiry date of each
Canadian Letter of Credit shall be a Business Day. Except as otherwise
expressly agreed upon by all the Canadian Lenders, no Canadian Letter of
Credit shall have an original expiry date more than one year from the date
of issuance, or as extended, shall have an expiry date extending beyond
the Revolving Loans Maturity Date. Each Canadian Letter of Credit shall be
either (x) a standby letter of credit issued to support the obligations
(including pension or insurance obligations), contingent or otherwise, of
the Canadian Borrower or any of its Subsidiaries, or (y) a commercial
letter of credit in respect of the purchase of goods or services by the
Canadian Borrower or any of its Subsidiaries in the ordinary course of
business. Each Canadian Letter of Credit shall comply with the related LOC
Documents.
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(b) Notice and Reports. The request for the issuance of a Canadian
Letter of Credit shall be submitted to the Issuing Lender at least three
Business Days prior to the requested date of issuance. The Issuing Lender
will, at least quarterly and more frequently upon request, provide to the
Administrative Agent for dissemination to the Lenders a detailed report
specifying the Letters of Credit which are then issued and outstanding and
any activity with respect thereto which may have occurred since the date
of the prior report, and including therein, among other things, the
account party, the beneficiary, the face amount, and the expiry date as
well as any payments or expirations which may have occurred. The Issuing
Lender will further provide to the Administrative Agent, promptly upon
request, copies of the Letters of Credit.
(c) Participations.
(i) On the Effective Date, each Canadian Lender shall
automatically acquire a participation in the liability of the
Issuing Lender under each Existing Canadian Letter of Credit in an
amount equal to its Canadian Revolving Loan Commitment Percentage of
such Existing Canadian Letters of Credit. Each Existing Canadian
Letter of Credit shall be deemed for all purposes of this Agreement
and the other Loan Documents to be a Canadian Letter of Credit.
(ii) Each Canadian Lender, upon issuance of a Canadian Letter
of Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Canadian Letter of
Credit and the obligations arising thereunder and any collateral
relating thereto, in each case in an amount equal to its Canadian
Revolving Loan Commitment Percentage of the obligations under such
Canadian Letter of Credit, and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Issuing Lender therefor and discharge when
due, its Canadian Revolving Loan Commitment Percentage of the
obligations arising under such Canadian Letter of Credit. Without
limiting the scope and nature of each Canadian Lender's
participation in any Canadian Letter of Credit, to the extent that
the Issuing Lender has not been reimbursed as required hereunder or
under any such Canadian Letter of Credit, each such Canadian Lender
shall pay to the Issuing Lender its Canadian Revolving Loan
Commitment Percentage of such unreimbursed drawing in same day funds
on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The
obligation of each Canadian Lender to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected
by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Canadian Borrower or any
other member of the Consolidated Shorewood Group to reimburse the
Issuing Lender under any Canadian Letter of Credit, together with
interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Canadian
Letter of Credit, the Issuing Lender will promptly notify the Canadian
Borrower. Unless the
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Canadian Borrower shall immediately notify the Issuing Lender of its
intent to otherwise reimburse the Issuing Lender, the Canadian Borrower
shall be deemed to have requested a Canadian Revolving Loan at the
Canadian Prime Rate or the BNS U.S. Prime Rate, as appropriate, in the
amount of the drawing as provided in subsection (e) hereof, the proceeds
of which will be used to satisfy the reimbursement obligations. The
Canadian Borrower shall reimburse the Issuing Lender on the day of drawing
under any Canadian Letter of Credit either with the proceeds of an
Canadian Revolving Loan obtained hereunder or otherwise in same day funds
as provided herein or in the LOC Documents. If the Canadian Borrower shall
fail to reimburse the Issuing Lender as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum
rate equal to the Canadian Prime Rate or the BNS U.S. Prime Rate, as
appropriate, plus two percent (2%). Subject to Section 2.11(k)(v), the
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of (but without waiver
of) any rights of set-off, counterclaim or defense to payment the
applicable account party or the Canadian Borrower may claim or have
against the Issuing Lender, the Administrative Agent, the Canadian
Lenders, the beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation, any defense based on any failure of
the applicable account party, the Canadian Borrower or any other member of
the Consolidated Shorewood Group to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The
Issuing Lender will promptly notify the Canadian Lenders of the amount of
any unreimbursed drawing and each Canadian Lender shall promptly pay to
the Administrative Agent for the account of the Issuing Lender, in
immediately available funds, the amount of such Canadian Lender's
Revolving Loan Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Canadian
Lender from the Issuing Lender if such notice is received at or before
2:00 p.m., otherwise such payment shall be made at or before 12:00 Noon on
the Business Day next succeeding the day such notice is received. If such
Canadian Lender does not pay such amount to the Issuing Lender in full
upon such request, such Canadian Lender shall, on demand, pay to the
Administrative Agent for the account of the Issuing Lender interest on the
unpaid amount during the period from the date the Canadian Lender received
the notice regarding the unreimbursed drawing until such Canadian Lender
pays such amount to the Issuing Lender in full at a rate per annum equal
to, if paid within two Business Days of the date of drawing, the Federal
Funds Rate and thereafter at a rate equal to the Canadian Prime Rate or
the BNS U.S. Prime Rate, as appropriate. Each Canadian Lender's obligation
to make such payment to the Issuing Lender, and the right of the Issuing
Lender to receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to the
termination of this Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the obligations
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment
by an Canadian Lender to the Issuing Lender, such Canadian Lender shall,
automatically and without any further action on the part of the Issuing
Lender or such Canadian Lender, acquire a participation in an amount equal
to such payment (excluding the portion of such payment constituting
interest owing to the Issuing Lender) in the related unreimbursed drawing
portion of the LOC Obligation and in the
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interest thereon and in the related LOC Documents, and shall have a claim
against the Canadian Borrower and the other members of the Consolidated
Shorewood Group with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the Canadian
Borrower shall have requested, or been deemed to have requested, a
Canadian Revolving Loan borrowing to reimburse a drawing under a Canadian
Letter of Credit, the Administrative Agent shall give notice to the
Canadian Lenders that a Revolving Loan has been requested or deemed
requested in connection with a drawing under a Canadian Letter of Credit,
in which case a Canadian Revolving Loan borrowing comprised solely of Base
Rate Loans (each such borrowing, a "Mandatory Borrowing") shall be
immediately made from all Canadian Lenders (without giving effect to any
termination of the Commitments pursuant to Section 9.2) pro rata based on
each Canadian Lender's respective Canadian Revolving Loan Commitment
Percentage and the proceeds thereof shall be paid directly to the Issuing
Lender for application to the respective LOC Obligations. Each such
Canadian Lender hereby irrevocably agrees to make such Canadian Revolving
Loans immediately upon any such request or deemed request on account of
each such Mandatory Borrowing in the amount and in the manner specified in
the preceding sentence and on the same such date notwithstanding (i) the
amount of Mandatory Borrowing may not comply with the minimum amount for
borrowings of Canadian Revolving Loans otherwise required hereunder, (ii)
whether any conditions specified in Section 5.2 are then satisfied, (iii)
whether a Default or Event of Default then exists, (iv) failure of any
such request or deemed request for Canadian Revolving Loans to be made by
the time otherwise required hereunder, (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the Revolving Committed Amount or any
termination of the Commitments. In the event that any Mandatory Borrowing
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 Canadian Borrower
or any other member of the Consolidated Shorewood Group), then each such
Canadian Lender hereby agrees that it shall forthwith fund (as of the date
the Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Canadian Borrower on or after such date and
prior to such purchase) its Participation Interest in the outstanding
Canadian LOC Obligations; provided, further, that in the event any
Canadian Lender shall fail to fund its Participation Interest on the day
the Mandatory Borrowing would otherwise have occurred, then the amount of
such Canadian Lender's unfunded Participation Interest therein shall bear
interest payable to the Issuing Lender upon demand, at the rate equal to,
if paid within two Business Days of such date, the Federal Funds Rate, and
thereafter at a rate equal to the Base Rate.
(f) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Agreement, a Canadian Letter of
Credit issued hereunder may contain a statement to the effect that such
Canadian Letter of Credit is issued for the account of a Subsidiary of the
Canadian Borrower; provided that notwithstanding such statement, the
Canadian Borrower shall be the actual account party for all purposes of
this Agreement for such Letter of Credit and such statement shall not
affect the Canadian
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Borrower's reimbursement obligations hereunder with respect to such Letter
of Credit.
(g) Modification and Extension. The issuance of any supplement,
modification, amendment, renewal, or extensions to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be incorporated therein
and deemed in all respects to be a part thereof.
(i) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the
Canadian Lenders are only those expressly set forth in this Agreement and
that the Issuing Lender shall be entitled to assume that the conditions
precedent set forth in Section 5.2 have been satisfied unless it shall
have acquired actual knowledge that any such condition precedent has not
been satisfied; provided, however, that nothing set forth in this Section
2.11 shall be deemed to prejudice the right of any Canadian Lender to
recover from the Issuing Lender any amounts made available by such
Canadian Lender to the Issuing Lender pursuant to this Section 2.11 in the
event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict
between this Agreement and any LOC Document, this Agreement shall govern.
(k) Indemnification of Issuing Lender.
(i) In addition to its other obligations under this
Agreement, the Canadian Borrower hereby agrees to protect,
indemnify, pay and save the Issuing Lender harmless from and against
any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) that the
Issuing Lender may incur or be subject to as a consequence, direct
or indirect, of (A) the issuance of any Canadian Letter of Credit or
(B) the failure of the Issuing Lender to honor a drawing under a
Canadian Letter of Credit as a result of any Government Act.
(ii) As between the Canadian Borrower and the Issuing
Lender, the Canadian Borrower shall assume all risks of the acts,
omissions or misuse of any Canadian Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible
for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection
with the application for and issuance of any Canadian Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or
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forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Canadian 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; (C) failure of the beneficiary of a
Canadian Letter of Credit to comply fully with conditions required
in order to draw upon a Canadian Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under a Canadian Letter
of Credit or of the proceeds thereof; and (G) any consequences
arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any
Canadian Letter of Credit or the related certificates, if taken or
omitted in good faith, shall not put the Issuing Lender under any
resulting liability to the Canadian Borrower or any other member of
the Consolidated Shorewood Group. It is the intention of the parties
that this Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in
the issuance of the Canadian Letters of Credit, all of which risks
are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts. The Issuing
Lender shall not, in any way, be liable for any failure by the
Issuing Lender or anyone else to pay any drawing under any Canadian
Letter of Credit as a result of any Government Acts or any other
cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (k) is intended to limit the
reimbursement obligation of the Canadian Borrower contained in this
Section 2.11. The obligations of the Canadian Borrower under this
subsection (k) shall survive the termination of this Agreement. No
act or omission of any current or prior beneficiary of a Canadian
Letter of Credit shall in any way affect or impair the rights of the
Issuing Lender to enforce any right, power or benefit under this
Agreement.
(v) Notwithstanding anything to the contrary contained in
this subsection (k), the Canadian Borrower shall have no obligation to indemnify
the Issuing Lender in respect of any liability incurred by the Issuing Lender
arising solely out of the gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent jurisdiction. Nothing in this
Agreement shall relieve the Issuing Lender of any liability to the Canadian
Borrower in respect of any action taken by the Issuing Lender which action
constitutes gross negligence or willful misconduct of the Issuing Lender or a
violation of the UCP or Uniform
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Commercial Code (as applicable), as determined by a court of competent
jurisdiction.
SECTION 3
THE TERM LOANS
3.1 U.S. Term Loan Commitment.
Subject to the terms and conditions set forth herein, each U.S. Lender
agrees severally and not jointly, on the Effective Date, to make a term loan
(collectively, the "U.S. Term Loan") to the U.S. Borrower, in U.S. dollars,
in an amount equal to each U.S. Lender's U.S. Term Loan Commitment Percentage
of the U.S. Term Loan Commitment. Once repaid, the U.S. Term Loan cannot be
reborrowed.
3.2 [Intentionally Left Blank]
3.3 Funding of Term Loan.
On the Effective Date, each U.S. Lender will make its U.S. Term Loan
Commitment Percentage of the U.S. Term Loan Commitment available to the
Administrative Agent by deposit, in U.S. dollars and in immediately available
funds, at the offices of the Administrative Agent at its principal office in
Charlotte, North Carolina or at such other address as the Administrative Agent
may designate in writing. The amount of the U.S. Term Loan will then be made
available to the U.S. Borrower by the Administrative Agent by crediting the
account of the U.S. Borrower on the books of such office of the Administrative
Agent, to the extent the amount of such U.S. Term Loan is made available to the
Administrative Agent. On the Effective Date, all of the U.S. Term Loan shall
accrue interest at the Eurodollar Rate. Thereafter, all or any portion of the
U.S. Term Loan may be converted into Eurodollar Loans in accordance with the
terms of Section 4.1.
3.4 Scheduled Repayments.
The U.S. Term Loan shall be due and payable in twenty equal quarterly
principal installments of $3,090,000 each with the first such principal
amortization payment due on July 31, 1997 and each remaining payment due on the
last day of each fiscal quarter of the U.S. Borrower until the Term Loans
Maturity Date at which time all remaining principal amounts owning under the
U.S. Term Loan, if any, shall be due and payable in full.
3.5 The Term Notes.
The U.S. Term Loan made by each Lender shall be evidenced by a duly
executed promissory notes of the applicable Borrower, dated as of the Closing
Date, in an original principal amount equal to such Lender's U.S. Term Loan
Commitment Percentage and substantially in the form of Exhibit 3.5 attached
hereto.
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SECTION 4
ADDITIONAL PROVISIONS REGARDING LOANS AND LETTERS OF CREDIT
4.1 Continuations and Conversions.
(a) U.S. Borrower. The U.S. Borrower shall have the option, on any
Business Day, to continue an existing Eurodollar Revolving Loan into a
subsequent Interest Period, to convert a Base Rate Loan into a Eurodollar
Loan or to convert a Eurodollar Loan into a Base Rate Loan; provided,
however, that (i) each such continuation must be requested by the U.S.
Borrower pursuant to a written Notice of Continuation/Conversion, in the
form of Exhibit 4.1, in compliance with the terms set forth below and (ii)
except as provided in Section 4.11, Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an Interest Period applicable
thereto; (iii) Eurodollar Loans may be continued and Base Rate Loans may
be converted into Eurodollar Loans only if no Default or Event of Default
is in existence on the date of continuation or conversion; and (iv)
failure by the U.S. Borrower to properly continue a Eurodollar Loan at the
end of an Interest Period shall be deemed a conversion to a Base Rate
Loan. Each continuation or conversion must be requested by the U.S.
Borrower no later than 10:00 a.m., Charlotte, North Carolina time, (A) on
the date of a requested conversion of a Eurodollar Loan to a Base Rate
Loan or (B) three Business Days prior to the date of a requested
continuation of a Eurodollar Loan or conversion of a Base Rate Loan to a
Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Administrative Agent which shall
set forth (x) whether the Loans to be continued or converted are U.S.
Revolving Loans, Canadian Revolving Loans or U.S. Term Loans, (y) whether
the U.S. Borrower wishes to continue or convert such Loans and (z) if the
request is to continue a Eurodollar Loan or convert a Base Rate Loan to a
Eurodollar Loan, the Interest Period applicable thereto.
(b) Canadian Borrower. The Canadian Borrower shall have the option,
on any Business Day, to convert a Base Rate Loan accruing interest at the
Canadian Prime Rate into a Bankers' Acceptance, to continue a maturing
Bankers' Acceptance in accordance with Section 2.5(c) or to convert a
maturing Bankers' Acceptance into a Base Rate Loan; provided, however, (i)
each such continuation or conversion must be requested by the Canadian
Borrower pursuant to a written Notice of Continuation/Conversion, in the
form of Exhibit 4.1, in compliance with the terms set forth below and (ii)
the Canadian Borrower must comply with all the requirements of Section
2.5, and (iii) failure by the Canadian Borrower to properly continue a
Bankers' Acceptance shall be deemed a conversion to a Base Rate Loan. Each
continuation or conversion must be requested by the Canadian Borrower no
later than 10:00 a.m., Toronto, Ontario time, (A) the date of a requested
conversion of a Bankers' Acceptance to a Base Rate Loan or (B) three
Business Days prior to the date of a requested continuation of a Bankers'
Acceptance or conversion of a Base Rate Loan to a Bankers' Acceptance, in
each case pursuant to a written Notice of Continuation/ Conversion
submitted to the Canadian Administrative Agent which shall set forth (x)
whether the Loans to be continued or converted are Canadian Revolving
Loans, (y)
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whether the Canadian Borrower wishes to continue or convert such Loans and
(z) if the request is to continue a Bankers' Acceptance or convert a Base
Rate Loan to a Bankers' Acceptance, the maturity date applicable thereto.
4.2 Interest.
(a) Interest Rate. All Swing Line Loans shall accrue interest at the
U.S. Base Rate. All U.S. Base Rate Revolving Loans and that portion of the
U.S. Term Loan that is a Base Rate Loan shall accrue interest at the U.S.
Base Rate. All Canadian Base Rate Revolving Loans made in Canadian dollars
shall accrue interest at the Canadian Prime Rate payable in Canadian
dollars. All Canadian Base Rate Revolving Loans made in U.S. dollars shall
accrue interest at the BNS U.S. Prime Rate or the Adjusted Eurodollar
Rate, as appropriate, payable in U.S. dollars. All Eurodollar Revolving
Loans and that portion of the U.S. Term Loan that is a Eurodollar Loan
shall accrue interest at the Adjusted Eurodollar Rate for the applicable
Interest Period. Except for Canadian Base Rate Revolving Loans accruing
interest at the Canadian Prime Rate for which interest shall accrue on the
basis of a 365 or 366 day year, as the case may be, all interest is
calculated for the actual days elapsed on the basis of a year consisting
of 360 days.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing (but
not timely paid) hereunder or under the other Loan Documents (including
without limitation fees and expenses) shall bear interest, payable on
demand, at a per annum rate equal to 2% plus the rate which would
otherwise be applicable (or if no rate is applicable, then the U.S. Base
Rate plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due and payable in
arrears on each Interest Payment Date; provided that Swing Line Loans
shall also be due upon demand. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case of Eurodollar
Loans where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding day.
(d) Computation of Interest and Fees. Except as otherwise provided
herein, all computations of interest and fees hereunder shall be made on
the basis of the actual number of days elapsed over a year of 360 days.
Each Borrower hereby acknowledges that the rate or rates of interest
applicable to the Indebtedness may be computed on the basis of a year of
360 days and paid for the actual number of days elapsed. For purposes of
the Interest Act (Canada), at any time and from time to time, the yearly
rate of interest to which any such interest at the rate or rates is
equivalent provided in the Loan Documents, which is payable by the
Canadian Borrower pursuant thereto, may be determined by multiplying the
applicable rate of interest by the number of days in such calendar year
and dividing such product by 360.
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4.3 Place and Manner of Payments.
All payments of principal, interest and fees in connection with the
Canadian Revolving Loans shall be made by the Borrowers to the Canadian
Administrative Agent on the date due by 2:00 p.m., Toronto, Ontario time, (in
Canadian dollars or U.S. Dollars, as applicable) in immediately available funds.
All other payments of principal, interest, fees, expenses and other amounts to
be made by the Borrowers under this Agreement (including, but not limited to,
the U.S. Revolving Loans, the U.S. Term Loan and the Swing Line Loans) shall be
received not later than 2:00 p.m., Charlotte, North Carolina time, on the date
when due in U.S. Dollars and in immediately available funds, by the
Administrative Agent (or in the case of Swing Line Loans, by NationsBank) at its
offices at NationsBank Corporate Center, Charlotte, North Carolina. A Borrower
shall, at the time it makes any payment under this Agreement, specify to the
Administrative Agent, or the Canadian Administrative Agent as applicable, the
Loans, Letters of Credit, Bankers' Acceptances, fees or other amounts payable by
the Borrowers hereunder to which such payment is to be applied (and in the event
that it fails to specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent, or the Canadian Administrative Agent as
applicable, shall distribute such payment to the Lenders in the manner described
in Section 4.6). The Canadian Administrative Agent shall inform the
Administrative Agent and the Administrative Agent shall inform the Canadian
Administrative Agent, by telecopy as of the first Business Day of each month, of
all principal, interest or fees received from the Borrowers during the prior
month, except for fees received pursuant to Section 4.5(c). The Administrative
Agent or the Canadian Administrative Agent, as applicable, will distribute such
payments to the applicable Lenders on the date of receipt if any such payment is
received prior to 2:00 p.m. (Charlotte, North Carolina time or Toronto, Ontario
time, as applicable); otherwise the Administrative Agent or the Canadian
Administrative Agent, as applicable, will distribute such payment to the
applicable Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day (subject
to accrual of interest and fees for the period of such extension), except that
in the case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead be
made on the next preceding Business Day.
4.4 Prepayments.
(a) Voluntary Prepayments. The Borrowers shall have the right to
prepay Revolving Loans and the Term Loans in whole or in part from time to
time without premium or penalty; provided, however, that (i) Eurodollar
Loans may only be prepaid on three Business Day's prior written notice to
the Administrative Agent or the Canadian Administrative Agent, as the case
may be, and any prepayment of Eurodollar Loans will be subject to Section
4.14; (ii) that portion of the Canadian Revolving Loan Commitment subject
to the creation of a Bankers' Acceptance may not be prepaid prior to the
maturity of such Bankers' Acceptance; (iii) each such partial prepayment
of Loans (other than Swing Line Loans) shall be in the minimum principal
amount of $1,000,000; and (iv) any partial prepayment of Swing Line Loans
shall be in a minimum aggregate principal amount of $25,000. Amounts
prepaid hereunder shall be applied as the Borrowers may elect; provided,
that (A) any voluntary prepayments on the Term Loans must be made first to
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accrued interest and then to remaining payments in the inverse order of
maturity, (B) if the U.S. Borrower fails to specify a voluntary prepayment
as to the U.S. Revolving Loans then such prepayment shall be applied first
to U.S. Base Rate Revolving Loans and then to Eurodollar Revolving Loans
in direct order of Interest Period maturities and (c) if the Canadian
Borrower or the U.S. Borrower fails to specify a voluntary prepayment as
to the Canadian Revolving Loan Commitment then such prepayments shall be
applied first to Canadian Base Rate Revolving Loans and then to BA
Revolving Obligations (as set forth in Section 2.5(f)) in direct order of
maturities.
(b) Mandatory Prepayments.
(i) Revolving Loan Overadvance. If, at any time (A) the sum
of U.S. Revolving Loans outstanding plus Canadian Revolving Loans
outstanding plus LOC Obligations outstanding plus BA Revolving
Obligations outstanding plus Swing Line Loans outstanding exceeds
$125 million; (B) the U.S. Revolving Loans outstanding plus the U.S.
LOC Obligations outstanding plus the Swing Line Loans outstanding
exceed the U.S. Revolving Loan Commitment; (C) the Canadian
Revolving Loans outstanding plus BA Revolving Obligations
outstanding plus Canadian LOC Obligations outstanding exceed the
Canadian Revolving Loan Commitment; or (D) the Swing Line Loans
outstanding exceed the Swing Line Loan Commitment, then the
Borrowers (or the applicable Borrower) shall immediately make a
payment in an amount equal to the deficiency. Payments made under
(A) shall be applied first pro rata to U.S. Base Rate Revolving
Loans and Canadian Base Rate Revolving Loans and then to Eurodollar
Revolving Loans (pro rata between those made under the Canadian
Revolving Loans and the U.S. Revolving Loans) in direct order of
Interest Period maturities. Payments made under (B) shall be applied
first to U.S. Base Rate Revolving Loans and then to Eurodollar
Revolving Loans in direct order of Interest Period maturities.
Payments made under (C) shall be applied first to Canadian Base Rate
Revolving Loans then to Eurodollar Revolving Loans (pro rata between
those made under the Canadian Revolving Loans and the U.S. Revolving
Loans) in direct order of Interest Period maturities and finally to
that portion of the Canadian Revolving Loan Commitment subject to
the creation of Bankers' Acceptances in accordance with the terms of
Section 2.5(f).
For the purpose of determining compliance with this subsection (i),
the amount outstanding in Canadian dollars under the Canadian
Revolving Loans shall be converted to U.S. dollars based on an
exchange rate (y) on the date of each Advance Request and Notice of
Continuation/Conversion and (z) on the last day of each fiscal
quarter, such determination to be made by the Canadian
Administrative Agent in accordance with its normal practices.
(ii) Asset Sales. Immediately upon the receipt by any member
of the Consolidated Shorewood Group of proceeds from any Asset
Disposition, the Borrowers shall prepay the Borrowers Obligations
(in the order provided in Section
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4.4(c) below) in an amount equal to the Net Proceeds of such Asset
Disposition; provided, however, that (A) the Borrowers shall not be
required to prepay the Borrowers Obligations with respect to the
first $5,000,000 in any calendar year, in the aggregate, received by
the Consolidated Shorewood Group from Asset Dispositions and (B) the
Borrowers shall only be required to forward money received from an
Asset Disposition, to prepay Borrowers Obligations under this
Subsection (ii) , when the amount then received and held by the
Borrowers from one or more Asset Dispositions is equal to or greater
than $1,000,000 (for example, if the Net Proceeds received by the
Borrowers from an Asset Disposition is less than $1,000,000, then
the Borrowers may hold such funds until the aggregate amount of Net
Proceeds received from Asset Dispositions, and not previously
forwarded to the Lenders, is in excess of $1,000,000 and then all
such funds must be forwarded to the Lenders).
(iii) Incurrences of Debt. Immediately upon receipt by any
member of the Consolidated Shorewood Group of proceeds from any
incurrence of debt (other than debt permitted by Section 8.1), the
Borrowers shall prepay the Borrowers Obligations (in the order
provided in Section 4.4(c) below) in an amount equal to the Net
Proceeds of such issuance of debt.
(c) Application of Certain Prepayments. All amounts required to
prepay Borrowers Obligations pursuant to Section 4.4(ii) or (iii) above
shall be applied to the U.S. Term Loan first to accrued interest and then
to remaining payments in the inverse order of maturity and then to U.S.
Revolving Loans and Canadian Revolving Loans on a pro rata basis (first to
Base Rate Revolving Loans, then to Eurodollar Revolving Loans in direct
order of maturities, then to the BA Revolving Obligations in accordance
with Section 2.5(f) and then to Swing Line Loan). Prepayments on the
Revolving Loans, the Bankers' Acceptances and the Swing Line Loans in
accordance with this subsection shall immediately and permanently reduce
the applicable Revolving Loan Commitment in an amount equal to such
prepayment. All prepayments shall be subject to Section 4.14. Payments on
Loans denominated in U.S. Dollars shall be made in U.S. dollars and
payments on Loans denominated in Canadian dollars shall be made in
Canadian dollars.
4.5 Fees.
(a) Unused Fees. In consideration of the Revolving Loan Commitments
being made available by the Lenders hereunder, the Borrowers agree to pay
(i) to the Administrative Agent, for the account of the U.S. Lenders, a
per annum fee equal to the Applicable Percentage for the Unused Fees
(calculated on the basis of the actual number of days elapsed in a 360 day
year) on the U.S. Unused Revolving Commitment and (ii) to the Canadian
Administrative Agent, for the account of the Canadian Lenders, a per annum
fee equal to the Applicable Percentage for the Unused Fees (calculated on
the basis of the actual number of days elapsed in a 360 day year) on the
Canadian Unused Revolving Commitment (collectively, the "Unused Fees").
The accrued Unused Fees shall be due and payable quarterly in arrears on
the 15th day of each February, May, August and November
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(as well as on the Revolving Loans Maturity Date and on any date that a
Revolving Loan Commitment is reduced) for the immediately preceding fiscal
quarter (or portion thereof), beginning with the first of such dates to
occur after the Closing Date.
Notwithstanding anything above to the contrary, all U.S. Lenders
(other than NationsBank) shall receive their Unused Fees with respect to
the U.S. Unused Revolving Commitment as if no Swing Line Loans were
outstanding during the period for calculation of such Unused Fee, and
NationsBank shall receive a reduced Unused Fee with respect to the U.S.
Unused Revolving Commitment resulting from Swing Line Loans outstanding
during such period.
(b) Letter of Credit Fees.
(i) Letter of Credit Fee. In consideration of the issuance
of Letters of Credit hereunder, the U.S. Borrower agrees to pay to
each Issuing Lender in respect of U.S. Letters of Credit for the pro
rata benefit of the U.S. Lenders (based on each U.S. Lender's U.S.
Revolving Loan Commitment Percentage of the U.S. Revolving Loan
Commitment) and, the Canadian Borrower agrees to pay to each Issuing
Lender in respect of Canadian Letter of Credit for the pro rata
benefit of the Canadian Lenders (based on each Canadian Lender's
Canadian Revolving Loan Commitment Percentage of the Canadian
Revolving Commitment), a fee (the "Letter of Credit Fee") equal to
the Applicable Percentage for the Letter of Credit Fee (but in any
event not less than $1,000 annually for any Letter of Credit) on the
average daily maximum amount available to be drawn under each such
Letter of Credit from the date of issuance to the date of
expiration. The Letter of Credit Fee will be payable quarterly in
arrears on the last day of each fiscal quarter of the respective
Borrower and on the Revolving Loans Maturity Date.
(ii) Issuing Lender Fees. In addition to the Letter of
Credit Fees payable pursuant to subsection (i) above, each the
Borrowers shall pay to the Issuing Lender for its own account,
without sharing by the other Lenders, (A) a fee equal to one-fourth
of one percent (.25%) per annum on the total sum of all Letters of
Credit issued by the Issuing Lender, such fee to be paid quarterly
in arrears on the last day of each fiscal quarter of the respective
Borrower (as well as on the Revolving Loans Maturity Date) and (B)
the customary charges from time to time to the Issuing Lender for
its services in connection with the issuance, amendment, payment,
transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the "Issuing
Lender Fees").
(c) Administrative Fees. The U.S. Borrower agrees to pay to the
Administrative Agent, for its own account, an annual fee as agreed to
between the U.S. Borrower and the Administrative Agent in the
Administrative Agent Fee Letter and the Canadian Borrower agrees to pay to
the Canadian Administrative Agent, for its own account, an annual fee as
agreed to between the Canadian Borrower and the Canadian Administrative
Agent in the Canadian Administrative Agent Fee Letter.
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4.6 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including, without
limitation, each Mandatory Borrowing), each payment or prepayment of
principal of any Loan (other than a Swing Line Loan), each payment of fees
(other than the Issuing Lender Fees retained by each of the Issuing
Lenders for its own account and the administrative fees retained by the
Administrative Agent and the Canadian Administrative Agent for its own
account), each reduction of the U.S. Revolving Loan Commitment or the
Canadian Revolving Loan Commitment, and each conversion or continuation of
any Loan (other than a Swing Line Loan), shall be allocated pro rata among
the relevant Lenders in accordance with the respective U.S. Revolving Loan
Commitment Percentages, Canadian Revolving Loan Commitment Percentages or
U.S. Term Loan Commitment Percentages, as applicable, of such Lenders; it
being understood that payments under the U.S. Revolving Loans shall be
allocated pro rata among the U.S. Lenders, payments under the Canadian
Revolving Loans shall be allocated pro rata among the Canadian Lenders,
etc. (or, if the Commitments of such Lenders have expired or been
terminated, in accordance with the respective principal amounts of the
outstanding Loans and Participation Interests of such Lenders); provided
that, if any Lender shall have failed to pay its applicable pro rata share
of any Revolving Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this subsection (a) shall instead be
payable to the Administrative Agent or the Canadian Administrative Agent,
as applicable; provided further, that in the event any amount paid to any
Lender pursuant to this subsection (a) is rescinded or must otherwise be
returned by the Administrative Agent or the Canadian Administrative Agent,
as applicable, each Lender shall, upon the request of the Administrative
Agent or the Canadian Administrative Agent, as applicable, repay to the
Administrative Agent or the Canadian Administrative Agent, as applicable
the amount so paid to such Lender, with interest for the period commencing
on the date such payment is returned by the Administrative Agent or the
Canadian Administrative Agent, as applicable until the date the
Administrative Agent or the Canadian Administrative Agent, as applicable
receives such repayment at a rate per annum equal to, during the period to
but excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the U.S. Base Rate plus two percent (2%) per
annum; and
(b) Letters of Credit. Each payment of unreimbursed drawings in
respect of LOC Obligations shall be allocated to each U.S. Lender pro rata
in accordance with its U.S. Lender Revolving Loan Commitment Percentage or
to each Canadian Lender pro rata in accordance with its Canadian Lender
Revolving Loan Commitment Percentage, as appropriate; provided that, if
any Lender shall have failed to pay its applicable pro rata share of any
drawing under any Letter of Credit, then any amount to which such Lender
would otherwise be entitled pursuant to this subsection (b) shall instead
be payable to the Issuing Lender; provided further, that in the event any
amount paid to any Lender pursuant to this subsection (b) is rescinded or
must otherwise be returned by the Issuing Lender, each
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Lender shall, upon the request of the Issuing Lender, repay to the
Administrative Agent for the account of the Issuing Lender the amount so
paid to such Lender, with interest for the period commencing on the date
such payment is returned by the Issuing Lender until the date the Issuing
Lender receives such repayment at a rate per annum equal to, during the
period to but excluding the date two Business Days after such request, the
Federal Funds Rate, and thereafter, the U.S. Base Rate, the Canadian Prime
Rate or the BNS U.S. Prime Rate, as appropriate, plus two percent (2%) per
annum.
4.7 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Agreement, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by an Agent or any Lender on account of amounts
outstanding under any of the Loan Documents or in respect of the collateral
shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agents in connection with enforcing the rights of the Lenders under the
Loan Documents and any protective advances made by the Agents with respect
to the collateral under or pursuant to the terms of the Stock Pledge
Agreements;
SECOND, to payment of any fees owed to an Agent or a Issuing
Lender;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses, (including, without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the Loan
Documents;
FOURTH, to the payment of all accrued fees and interest payable
to the Lenders hereunder;
FIFTH, to the payment of the outstanding principal amount of the
Loans and to the payment or cash collateralization of the outstanding LOC
Obligations and BA Revolving Obligations, pro rata, as set forth below;
SIXTH, to all other obligations which shall have become due and
payable under the Loan Documents and not repaid pursuant to clauses
"FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans, LOC
Obligations and BA Revolving Obligations held by such Lender bears to the
aggregate then outstanding Loans, LOC Obligations and BA Revolving Obligations)
of amounts available to
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be applied pursuant to clauses "THIRD", "FOURTH," "FIFTH," and "SIXTH" above;
and (c) the extent that any amounts available for distribution pursuant to
clause "FIFTH" above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Administrative
Agent in a cash collateral account and applied (x) first, to reimburse the
Issuing Lender from time to time for any drawings under such Letters of Credit
and (y) then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses "FIFTH" and "SIXTH" above in the
manner provided in this Section 4.7.
4.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect of
any Loan, unreimbursed drawing with respect to any LOC Obligations or any other
obligation owing to such Lender under this Agreement through the exercise of a
right of setoff, banker's lien or counterclaim, or pursuant to a secured claim
under Section 506 of the U.S. Bankruptcy Code (or similar provision of the
Canadian bankruptcy laws) or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, in excess
of its pro rata share of such payment as provided for in this Agreement, such
Lender shall promptly pay in cash or purchase from the other applicable Lenders
a participation in such Loans, LOC Obligations, BA Revolving Obligations and
other obligations in such amounts, and make such other adjustments from time to
time, as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each applicable Lender which shall have shared the
benefit of such payment shall, by payment in cash or a repurchase of a
participation theretofore sold, return its share of that benefit (together with
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrowers
agree that any Lender so purchasing such a participation may, to the fullest
extent permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as fully as if
such Lender were a holder of such Loan, LOC Obligation, BA Revolving Obligation
or other obligation in the amount of such participation. Except as otherwise
expressly provided in this Agreement, if any Lender or an Agent shall fail to
remit to an Agent or any other Lender an amount payable by such Lender or such
Agent to such Agent or such other Lender pursuant to this Agreement on the date
when such amount is due, such payments shall be made together with interest
thereon for each date from the date such amount is due until the date such
amount is paid to such Agent or such other Lender at a rate per annum equal to
the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section 4.8 applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 4.8 to share in the benefits of any
recovery on such secured claim.
4.9 Capital Adequacy.
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If, after the date hereof, any Lender has determined that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender, or its parent corporation, 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, has or would have the effect of reducing the
rate of return on such Lender's (or parent corporation's) capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender, or its parent corporation, could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Lender's (or parent corporation's) policies with respect to capital adequacy),
then, upon notice from such Lender to the Borrowers, the Borrowers shall be
obligated to pay to such Lender such additional amount or amounts as will
compensate such Lender on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified) for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
4.10 Inability To Determine Interest Rate or Create Bankers'
Acceptances.
(a) If prior to the first day of any Interest Period, the
Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the U.S. Borrower
absent manifest error) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the
Administrative Agent shall give telecopy or telephonic notice thereof to
the U.S. Borrower and the U.S. Lenders as soon as practicable thereafter,
and will also give prompt written notice to the U.S. Borrower when such
conditions no longer exist. If such notice is given (i) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall
be made as Base Rate Loans, (ii) any Loans that were to have been
converted on the first day of such Interest Period to or continued as
Eurodollar Loans shall be converted to or continued as Base Rate Loans and
(iii) any outstanding Eurodollar Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. Until such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the U.S. Borrower have the right to convert
Base Rate Loans to Eurodollar Loans.
(b) If the Canadian Administrative Agent determines in good faith,
which determination shall be final, conclusive and binding upon the
Canadian Borrower absent manifest error, and notifies the Canadian
Borrower and each of the Canadian Lenders that, by reason of circumstances
affecting the money market (i) there is no market for Bankers'
Acceptances; or (ii) the demand for Bankers' Acceptances is insufficient
to allow the sale or trading of the Bankers' Acceptances created and
purchased hereunder, then,
(A) the right of the Canadian Borrower to request a borrowing
by way of Bankers' Acceptances shall be suspended until the Canadian
Administrative Agent
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determines in good faith that the circumstances causing such
suspension no longer exist and the Canadian Administrative Agent so
notifies the Canadian Borrower; and
(B) any notice of requested Bankers' Acceptances which is
outstanding shall be canceled and the Bankers' Acceptance requested
therein shall not be made.
(C) The Canadian Administrative Agent shall promptly notify
the Canadian Borrower of the suspension of the Canadian Borrower's
right to request a Bankers' Acceptance and of the termination of any
such suspension.
4.11 Illegality.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Agreement, (a) such Lender
shall promptly give written notice of such circumstances to the U.S. Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans shall forthwith be suspended and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 4.14.
4.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof applicable to any Lender, or compliance by
any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date (or, if later, the date on which such Lender
becomes a Lender):
(a) shall subject such Lender to any tax of any kind whatsoever with
respect to any Letter of Credit, any Loans made by it or Bankers'
Acceptances issued by it or its obligation to make or issue any of the
foregoing, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section 4.13
(including Non-Excluded Taxes imposed solely by reason of any failure of
such Lender to comply with its obligations under Section 4.13(b)) and
changes in taxes measured by or imposed upon the overall net income, or
franchise tax (imposed in lieu of such net income tax), of such Lender or
its applicable lending office, branch, or any affiliate
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thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the applicable interest or discount rate or fee hereunder; or
(c) shall impose on such Lender any other condition (excluding
any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Loans or issuing or participating in Letters of Credit
or issuing Bankers' Acceptances or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, upon notice to the Borrowers from such
Lender, through either of the Agents, in accordance herewith, the Borrowers
shall be obligated to promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender on an after-tax basis (after taking
into account applicable deductions and credits in respect of the amount
indemnified) for such increased cost or reduced amount receivable, provided
that, in any such case, the Borrowers may elect to convert the Eurodollar Loans
made by such Lender hereunder to Base Rate Loans by giving the Administrative
Agent at least one Business Day's notice of such election, in which case the
Borrowers shall promptly pay to such Lender, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 4.14. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section 4.12,
it shall provide prompt notice thereof to the Borrowers, through the
Administrative Agent, certifying (x) that one of the events described in this
Section 4.12 has occurred and describing in reasonable detail the nature of such
event, (y) as to the increased cost or reduced amount resulting from such event
and (z) as to the additional amount demanded by such Lender and a reasonably
detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 4.12 submitted by such
Lender, through the Administrative Agent, to the Borrowers shall be conclusive
and binding on the parties hereto in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
4.13 Taxes.
(a) Except as provided below in this Section 4.13, all payments made
by the Borrowers under this Agreement, any Notes and any documents
relating hereto shall be made free and clear of, and without deduction or
withholding 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 court, or governmental body, agency or other official,
including interest, penalties and liabilities with respect thereto
("Taxes"), excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or
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taxes on the overall capital or net worth of any Lender or its applicable
lending office, or any branch or affiliate thereof, in each case imposed
in lieu of net income taxes, imposed: (i) by the jurisdiction under the
laws of which such Lender, applicable lending office, branch or affiliate
is organized or is located, or in which its principal executive office is
located, or any nation within which such jurisdiction is located or any
political subdivision thereof; or (ii) by reason of any connection between
the jurisdiction imposing such tax and such Lender, applicable lending
office, branch or affiliate other than a connection arising solely from
such Lender having executed, delivered or performed its obligations, or
received payment under or enforced, this Agreement or any Notes. If any
such non-excluded Taxes, ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to an Agent or any Lender hereunder or
under any Notes or other documents relating thereto, (A) the Borrowers
shall withhold and remit such Taxes to the relevant authority when and as
due, (B) the amounts so payable to an Agent or such Lender shall be
increased to the extent necessary to yield to an Agent or such Lender
(after payment of all Non-Excluded Taxes, including Non-Excluded Taxes in
respect of additional amounts payable hereunder) interest or any such
other amounts payable hereunder or under the Notes or any other document
relating hereto at the rates or in the amounts specified in this Agreement
and any Notes, provided, however, that the Borrowers shall be entitled to
deduct and withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Lender that is not organized
under the laws of the United States of America or a state thereof if such
Lender fails to comply with the requirements of paragraph (b) of this
Section 4.13 whenever any Non-Excluded Taxes are payable by the Borrowers,
and (C) as promptly as possible thereafter the Borrowers shall send to
such Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by
the Borrowers showing prompt payment thereof. If the Borrowers fail to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrowers shall indemnify an Agent and
any Lender for any incremental Taxes, interest or penalties that may
become payable by an Agent or any Lender as a result of any such failure.
If a Lender shall change its office that makes or maintains a Loan
hereunder, the Borrowers shall not be required to pay any increased
amounts to the Lender in respect of any Non-Excluded Taxes pursuant to
this subsection 4.13 over and above any obligation to withhold or deduct
any amount with respect to such Non-Excluded Taxes that existed on the
date the Lender changed such office, unless the Lender changed the office
at the request of the Borrowers in which case the Borrower shall indemnify
the Lender in respect of such increased amounts. The agreements in this
subsection shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) on or before the date of any payment by the U.S.
Borrower under this Agreement or Notes to such Lender, deliver to
the U.S. Borrower and the Administrative Agent (x) two duly
completed copies of United States Internal
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Revenue Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive payments
under this Agreement and any Notes without deduction or withholding
of any United States federal income taxes and (y) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, certifying that it is entitled to an exemption from
United States backup withholding tax;
(B) deliver to the U.S. Borrower and the Administrative
Agent two further copies of any such form or certification on or
before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
U.S. Borrower; and
(C) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested
by the U.S. Borrower or the Administrative Agent; or
(ii) in the case of any such Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (A) represent to the U.S. Borrower (for the benefit of the
U.S. Borrower and the Administrative Agent) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (B) agree to furnish to the U.S. Borrower, on or before the
date of any payment by the U.S. Borrower, with a copy to the
Administrative Agent, two accurate and complete original signed
copies of Internal Revenue Service Form W-8, or successor applicable
form certifying to such Lender's legal entitlement at the date of
such certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Internal Revenue Code with
respect to payments to be made under this Agreement and any Notes
(and to deliver to the U.S. Borrower and the Administrative Agent
two further copies of such form on or before the date it expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recently provided form and, if necessary, obtain
any extensions of time reasonably requested by the U.S. Borrower or
the Administrative Agent for filing and completing such forms), and
(C) agree, to the extent legally entitled to do so, upon reasonable
request by the U.S. Borrower, to provide to the U.S. Borrower (for
the benefit of the U.S. Borrower and the Administrative Agent) such
other forms as may be reasonably required in order to establish the
legal entitlement of such Lender to an exemption from withholding
with respect to payments under this Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or regulation has
occurred after the date such Person becomes a Lender hereunder which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and
such Lender so advises the U.S. Borrower and the Administrative Agent then
such Lender shall be exempt from such requirements. Each Person that shall
become a Lender or a participant of a Lender pursuant to Section 11.3
shall, upon the effectiveness of
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the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this subsection (b);
provided that in the case of a participant of a Lender, the obligations of
such participant of a Lender pursuant to this subsection (b) shall be
determined as if the participant of a Lender were a Lender except that
such participant of a Lender shall furnish all such required forms,
certifications and statements to the Lender from which the related
participation shall have been purchased.
(c) If any such Taxes shall be or become applicable after the date
of this Agreement to such payments by the Borrowers to a Lender, such
Lender shall use reasonable efforts to make, fund or maintain the Loan or
Loans, as the case may be, through another lending office located in
another jurisdiction so as to reduce, to the fullest extent possible, the
Borrowers' liability hereunder, if the making, funding or maintenance of
such Loan or Loans through such other office does not, in the reasonable
judgment of the Lender, materially affect the Lender of such Loan. If the
Borrowers are required to make any additional payment to a Lender pursuant
to this Section 4.13, and any such Lender receives, or is entitled to
receive, a credit against, remission for, or repayment of, any tax paid or
payable by it in respect of, or calculated with reference to, the taxes
giving rise to such payment, such Lender shall, within a reasonable time
after it receives such credit, relief, remission or repayment, reimburse
the Borrowers the amount of any such credit, relief, remission or
repayment.
4.14 Compensation.
The Borrowers promise to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur (other
than through such Lender's gross negligence or willful misconduct) as a
consequence of (a) default by a Borrower in making a borrowing of, conversion
into or continuation of Eurodollar Loans after such Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by a Borrower in making any prepayment of a Eurodollar Loan after such
Borrower has given a notice thereof in accordance with the provisions of this
Agreement and (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to (i) the present value of the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Loans provided for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank Eurodollar market. Such a certificate as to any amounts
payable pursuant to this Section 4.14 submitted by a Lender, through the
Administrative Agent to the Lenders, shall be conclusive and binding in the
absence of manifest error. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
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SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Agreement is subject to
satisfaction of the following conditions (in form and substance acceptable to
the Administrative Agent):
(a) Executed Loan Documents. Receipt by the Administrative Agent of
duly executed copies of (i) this Agreement; (ii) the Revolving Credit
Notes; (iii) the Term Notes; (iv) the Swing Line Note; (v) the Guaranty
Agreements; (vi) the Stock Pledge Agreements; and (vii) all other Loan
Documents.
(b) No Default; Representations and Warranties. As of the Closing
Date (i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other Loan
Documents shall be true and correct in all material respects.
(c) Opinion of Counsel. Receipt by the Administrative Agent of an
opinion, or opinions, in form and substance satisfactory to the
Administrative Agent and the Canadian Administrative Agent, addressed to
the Agents on behalf of the Lenders and dated as of the Closing Date, from
legal counsel to the Consolidated Shorewood Group.
(d) Corporate Documents. Receipt by the Administrative Agent
of the following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of each
member of the Consolidated Shorewood Group that is a party to a Loan
Document, certified to be true and complete as of a recent date by
the appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary as of the Closing Date to be true and correct.
(ii) Resolutions. Copies of resolutions of the Board of
Directors of each member of the Consolidated Shorewood Group that is
party to a Loan Document, approving and adopting the Loan Documents
to which it is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary
or assistant secretary as of the Closing Date to be true and correct
and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of each member of the
Consolidated Shorewood Group that is a party to a Loan Document,
certified by a secretary or assistant secretary as of the Closing
Date to be true and correct and in
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force and effect as of such date.
(iv) Good Standing. Copies of (i) certificates of good
standing, existence or its equivalent with respect to each member of
the Consolidated Shorewood Group that is a party to a Loan Document,
certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing would have a Material Adverse Effect and (ii) where
available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(e) Stock Certificates and Powers. If not previously delivered to
the Administrative Agent, (i) delivery of 100% of the stock of each
Subsidiary of the U.S. Borrower domiciled in the United States and 66% of
the stock of each Subsidiary of the U.S. Borrower domiciled outside of the
United States (other than Subsidiaries domiciled in the Peoples Republic
of China) to secure the obligations of the U.S. Borrower under the Loan
Document and (ii) delivery of 100% of the stock of each Subsidiary of the
Canadian Borrower to secure the obligations of the Canadian Borrower under
the Loan Documents, along with duly executed stock powers, and such other
documents and instruments as required by the Stock Pledge Agreements.
(f) Personal Property Collateral. The Collateral Agent shall have
received to the extent not previously received by the Administrative
Agent, duly executed UCC or PPSA financing statements for each appropriate
jurisdiction as is necessary, in the Administrative Agent's sole
discretion, to perfect the Lenders' security interest in the collateral;
(g) No Material Adverse Effect. No event shall have occurred
since February 1, 1997 that has had or could be reasonably expected to
have a Material Adverse Effect.
(h) Litigation. No litigation shall be pending or threatened which,
in the reasonable determination of the Administrative Agent, would have or
reasonably be expected to have a Material Adverse Effect.
(i) Consent of Remaining Other Indebtedness. Receipt by the
Administrative Agent of evidence that all governmental, shareholder and
material third party consents and approvals necessary or desirable in
connection with the execution and delivery of the Loan Documents and the
consummation of the transactions set forth therein.
(j) Officer's Certificate. The Administrative Agent shall have
received a certificate or certificates executed by the chief financial
officer of the U.S. Borrower on behalf of the Consolidated Shorewood Group
as of the Closing Date stating that (A) each member of the Consolidated
Shorewood Group is in compliance with all existing material financial
obligations, (B) all governmental, shareholder and third party consents
and approvals, if any, with respect to the Loan Documents and the
transactions contemplated
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thereby have been obtained, (C) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator
or governmental instrumentality that purports to effect a member of the
Consolidated Shorewood Group or any transaction contemplated by the Loan
Documents, if such action, suit, investigation or proceeding could have or
could be reasonably expected to have a Material Adverse Effect, and (D)
immediately after giving effect to this Agreement, the other Loan
Documents and all the transactions contemplated therein to occur on such
date, (1) each member of the Consolidated Shorewood Group is Solvent, (2)
no Default or Event of Default exists, (3) all representations and
warranties contained herein and in the other Loan Documents are true and
correct in all material respects, and (4) the Consolidated Shorewood Group
is in compliance with each of the financial covenants set forth in Section
7.13.
(k) Fees and Expenses. All fees and expenses required to be paid
under this Agreement shall have been paid in full.
(l) Other. The receipt by the Administrative Agent of such
other documents, agreements or information as reasonably requested by
any Lender.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans or create Bankers' Acceptances nor
shall the Issuing Lender be required to issue or extend a Letter of Credit
unless:
(a) Notice. The applicable Borrower shall have delivered (i) in the
case of any Loan or Bankers' Acceptance, an Advance Request, duly executed
and completed, by the time specified in Sections 2.1, 2.3, 2.4 or 2.5, as
appropriate and (ii) in the case of any Letter of Credit, the Issuing
Lender shall have received an appropriate request for issuance in
accordance with the provisions of Section 2.2;
(b) Representations and Warranties. The representations and
warranties made by a member of the Consolidated Shorewood Group in any
Loan Document are true and correct in all material respects at and as
if made as of such date;
(c) No Default. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto;
(d) No Material Adverse Effect. There shall not have occurred
any Material Adverse Effect; and
(e) Availability. Immediately after giving effect to the making of a
Loan, the creation of a Bankers' Acceptance or the issuance of a Letter of
Credit, as the case may be, the Borrowers shall be in compliance with
Section 4.4(b)(i).
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The delivery of each Advance Request and each request for a Letter of Credit
shall constitute a representation and warranty by the applicable Borrower of the
correctness of the matters specified in subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Borrowers hereby represent and warrant to each Lender that:
6.1 Organization and Good Standing.
Each member of the Consolidated Shorewood Group domiciled in the United
States is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of its incorporation, is duly qualified and in good
standing as a foreign corporation authorized to do business in every
jurisdiction where the failure to so qualify would have a Material Adverse
Effect, and has the requisite corporate power and authority to own its
properties and to carry on its business as now conducted and as proposed to be
conducted. Each member of the Consolidated Shorewood Group domiciled in Canada
is a corporation duly incorporated and validly subsisting under the laws of its
jurisdiction of incorporation, is duly qualified, licensed or registered to
carry on its business in each jurisdiction where the failure to do so would have
a Material Adverse Effect and has the corporate power and authority to carry on
its business as now conducted and as proposed to be conducted.
6.2 Due Authorization.
Each member of the Consolidated Shorewood Group (a) has the requisite
corporate power and authority to execute, deliver and perform such of the Loan
Documents to which it is a party and to incur the obligations herein and therein
provided for, and (b) is duly authorized to, and has been authorized by all
necessary corporate action, to execute, deliver and perform such of the Loan
Documents to which it is a party.
6.3 No Conflicts.
With respect to each member of the Consolidated Shorewood Group, neither
the execution and delivery of the Loan Documents, nor the consummation of the
transactions contemplated therein, nor performance of and compliance with the
terms and provisions thereof will (a) violate or conflict in any material
respect with any material provision of its articles or certificate of
incorporation or bylaws, (b) violate, contravene or materially conflict with any
material law, regulation (including without limitation Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict in any material respect with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or instrument to
which it is a party or by which it may be bound, or (d) result in or require the
creation of any material Lien upon or
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with respect to its properties except in favor of the Lenders.
6.4 Consents.
No consent, approval, authorization or order of, or filing, registration
or qualification with, any court or governmental authority or third party in
respect of any member of the Consolidated Shorewood Group is required in
connection with the execution, delivery or performance of this Agreement or any
of the other Loan Documents other than those consents which have been obtained
and copies of which have been delivered to the Administrative Agent.
6.5 Enforceable Obligations.
This Agreement and the other Loan Documents have been duly executed and
delivered and constitute legal, valid and binding obligations of each member of
the Consolidated Shorewood Group (with regard to each agreement or instrument to
which it is a party) enforceable in accordance with their respective terms,
except as may be limited by bankruptcy or insolvency laws or similar laws
affecting creditors' rights generally.
6.6 Financial Condition.
The financial statements provided to the Lenders, consisting of (a) an
audited consolidated balance sheet of the Consolidated Shorewood Group dated as
of April 27, 1996, together with related consolidated statements of income,
stockholders' equity and changes in financial position or cash flow for the 52
weeks then ended and (b) an unaudited consolidated and consolidating balance
sheet of the Consolidated Shorewood Group dated as of February 1, 1997, together
with related consolidated and consolidating statements of income, and
consolidated statements of stockholders' equity and changes in financial
position or cash flow for the 40 week period then ended, fairly represent the
financial condition and business operations of the Consolidated Shorewood Group
as of such respective dates (together, the "Financial Statements"); such
financial statements were prepared in accordance with GAAP; and since the date
of such financial statements there have occurred no changes or circumstances
which have had or are reasonably likely to have a Material Adverse Effect.
6.7 No Default.
No Default or Event of Default presently exists.
6.8 Liens.
Except for Permitted Liens, each member of the Consolidated Shorewood
Group has good and marketable title to all of its properties and assets free and
clear of all Liens.
6.9 Indebtedness.
The Consolidated Shorewood Group has no Indebtedness (including without
limitation
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guaranty, reimbursement or other contingent obligations) except (a) as disclosed
in the Financial Statements referenced in Section 6.6, (b) as set forth in
Schedule 6.9, and (c) as otherwise permitted under the terms of this Agreement.
6.10 Litigation.
Except as disclosed in Schedule 6.10, there are no actions, suits or
legal, equitable, arbitration or administrative proceedings, pending or, to the
knowledge of the Borrowers threatened, against any member of the Consolidated
Shorewood Group which, if adversely determined, would have or be reasonably
likely to have a Material Adverse Effect.
6.11 Material Agreements.
No member of the Consolidated Shorewood Group is in default in any
material respect under any contract, lease, loan agreement, indenture, mortgage,
security agreement or other material agreement or obligation to which it is a
party or by which any of its properties is bound which default would have or be
reasonably likely to have a Material Adverse Effect.
6.12 Taxes.
Each member of the Consolidated Shorewood Group has filed, or caused to be
filed, all material tax returns (federal, state, local and foreign) required to
be filed and paid all amounts of taxes shown thereon to be due (including
interest and penalties) and has paid all other material taxes, fees, assessments
and other governmental charges (including mortgage recording taxes, documentary
stamp taxes and intangibles taxes) owing by it, except for such taxes (a) that
are not yet delinquent or (b) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being maintained in
accordance with GAAP. Neither Borrower is aware of any proposed material tax
assessments against it or any other member of the Consolidated Shorewood Group.
6.13 Compliance with Law.
Each member of the Consolidated Shorewood Group is in substantial and
material compliance with all laws, rules, regulations, orders and decrees
(including without limitation environmental laws) applicable to it, or to its
properties.
6.14 ERISA.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect, during the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best of the Borrowers' or any ERISA Affiliate's
knowledge, no event or condition has occurred or exists as a result of
which any ERISA Event could reasonably be expected to occur, with respect
to any Plan;
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(ii) no "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not waived,
has occurred with respect to any Plan; (iii) each Plan, Single Employer
Plan and, to the best of the Borrowers' or any ERISA Affiliate's
knowledge, each Multiemployer Plan has been maintained, operated, and
funded in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, and any other applicable federal or
state laws; and (iv) no Lien in favor or the PBGC or a Plan has arisen or
is reasonably likely to arise on account of any Plan.
(b) Except as set forth in the Financial Statements, the actuarial
present value of all "benefit liabilities" on a going concern basis,
whether or not vested, under each Single Employer Plan, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made (determined, in each case, utilizing the actuarial
assumptions used in such Plan's most recent actuarial valuation report),
did not exceed as of such valuation date the fair market value of the
assets of such Plan .
(c) Except as would not reasonably be expected to have a Material
Adverse Effect, neither the Borrowers nor any ERISA Affiliate has not
incurred, or, to the best of the Borrowers' or any ERISA Affiliate's
knowledge, is reasonably expected to incur, any withdrawal liability under
ERISA with respect to any Multiemployer Plan or Multiple Employer Plan.
Except as would not reasonably be expected to have a Material Adverse
Effect, neither Borrower nor any ERISA Affiliate would become subject to
any withdrawal liability under ERISA if such Borrower or any such ERISA
Affiliate were to withdraw completely from all Multiemployer Plans and
Multiple Employer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. Neither
Borrower nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section
4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA),
and no Multiemployer Plan is, to the best of the Borrowers' or any ERISA
Affiliate's knowledge, reasonably expected to be in reorganization,
insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject the
Borrowers or any ERISA Affiliate to any liability under Sections 406, 409,
502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which the Borrowers or any ERISA
Affiliate has agreed or is required to indemnify any person against any
such liability.
(e) Except as set forth in the Financial Statements, the Borrowers
and their ERISA Affiliates have no material liability with respect to
"expected post-retirement benefit obligations" within the meaning of the
Financial Accounting Standards Board Statement 106. Each Plan which is a
welfare plan (as defined in Section 3(1) of ERISA) to which Sections
601-609 of ERISA and Section 4980B of the Code apply has been administered
in compliance in all material respects with such sections.
(f) All Canadian benefit plans and Canadian pension plans and any
similar plans of the Canadian Borrower and its Subsidiaries are duly
registered under the provisions
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of the Income Tax Act (Canada), have been administered in accordance with
such statute and no event has occurred which would cause a loss of such
registered status. All material obligations of the Canadian Borrower and
its Subsidiaries (including fiduciary and funding obligations) under such
plans required to be performed have been performed. There are no
outstanding disputes concerning the assets held in the funding media for
such plans. All contributions or premiums required to be made by the
Canadian Borrower or its Subsidiaries to such plans have been made in a
timely fashion in accordance with the terms of such plans and applicable
laws. Each of such plans is fully funded and there exists no going concern
unfunded actuarial liabilities or solvency deficiencies in respect of such
plans.
6.15 Subsidiaries.
Set forth in Schedule 6.15 is a complete and accurate list of all
Affiliates and Subsidiaries of each member of the Consolidated Shorewood Group.
Information on the attached Schedule 6.15 includes jurisdiction of
incorporation; the number of shares of each class of capital stock or other
equity interests outstanding; the number and percentage of outstanding shares of
each class owned (directly or indirectly) by the member of the Consolidated
Shorewood Group, Subsidiary or Affiliate; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and similar rights.
6.16 Ownership of Stock.
The outstanding capital stock and other equity interests of all
Subsidiaries of the Borrowers is validly issued, fully paid and non-assessable
and is owned by the Borrowers, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in connection with the
Loan Documents).
6.17 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for the purposes
specified in Section 7.10. None of such proceeds will be used for the purpose of
purchasing or carrying any "margin stock" as defined in Regulation U, Regulation
X or Regulation G, or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry "margin stock" or for any
other purpose which might constitute this transaction a "purpose credit" within
the meaning of Regulation U, Regulation X or Regulation G.
6.18 Government Regulation.
No member of the Consolidated Shorewood Group is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 or the Interstate Commerce Act, each as amended.
In addition, none of the Consolidated Shorewood Group is (a) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, and is not controlled by such a company, or (b) a
"holding company," or a "Subsidiary company" of a
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"holding company," or an "affiliate" of a "holding company" or of a "Subsidiary"
or a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended. No director, executive officer or principal shareholder
of any member of the Consolidated Shorewood Group is a director, executive
officer or principal shareholder of any Lender. For purposes hereof, the terms
"director", "executive officer" and "principal shareholder" (when used with
reference to any Lender) shall have the meanings ascribed to them in Regulation
O issued by the Board of Governors of the Federal Reserve System.
6.19 Hazardous Substances.
Except as disclosed on Schedule 6.19 or except as would not reasonably be
expected to have a Material Adverse Effect, to the Borrowers' knowledge without
having undertaken any environmental audit, all real property owned or leased by
the Consolidated Shorewood Group or on which the Consolidated Shorewood Group
operate (the "Subject Property") is free from "hazardous substances"
"contaminants" or "pollutants" or similar substances as defined in the
applicable Environmental Laws in concentrations or amounts that require cleanup
under any Environmental Laws; no portion of the Subject Property is subject to
federal, provincial, state or local, complaint, investigation or, to the
Borrowers' knowledge without having undertaken any environmental audit,
liability under applicable Environmental Laws because of the presence of leaked
or spilled petroleum products, waste materials or debris, "PCB's" or PCB items
(as defined in 40 C.F.R. Section 763.3), underground storage tanks, "asbestos"
(as defined in 40 C.F.R. Section 763.63) or the past or present accumulation,
spillage or leakage of any such substance subject to regulation under the
Environmental Laws; and the Consolidated Shorewood Group is in substantial
compliance with all material Environmental Laws applicable in connection with
the operation of their businesses; and neither Borrower knows of any complaint
or investigation under Environmental Laws regarding real property which it or
any other member of the Consolidated Shorewood Group owns or leases or on which
it or any other member of the Consolidated Shorewood Group operates.
6.20 Patents, Franchises, etc.
Each member of the Consolidated Shorewood Group possesses all material
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, free from burdensome restrictions, that are necessary for the operation
of their respective businesses as presently conducted and as proposed to be
conducted. Each member of the Consolidated Shorewood Group has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective property and to the conduct of its
business.
6.21 Solvency.
Each member of the Consolidated Shorewood Group individually, and the
Consolidated Shorewood Group as a whole, is and, after consummation of this
Agreement and after giving effect to all Indebtedness incurred hereunder, will
be Solvent.
6.22 Location of Assets.
Set forth on Schedule 6.22 is the chief executive office of each member of
the Consolidated
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Shorewood Group and the location (city, county, state and country) of all assets
of each member of the Consolidated Shorewood Group.
SECTION 7
AFFIRMATIVE COVENANTS
Each Borrower hereby covenants and agrees that so long as this Agreement is
in effect and until the Loans and LOC Obligations, together with interest, fees
and other obligations hereunder, have been paid in full and the Commitments and
Letters of Credit hereunder shall have terminated that they will do or cause to
be done the following:
7.1 Information Covenants.
The Borrowers will furnish, or cause to be furnished, to the Administrative
Agent and each Lender:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the
Consolidated Shorewood Group, a consolidated balance sheet of the
Consolidated Shorewood Group as at the end of such fiscal year together
with related consolidated statements of income, shareholder's equity and of
cash flows for such fiscal year, setting forth in comparative form
consolidated figures for the preceding fiscal year, all in reasonable
detail and audited by independent certified public accountants of
recognized national standing and whose opinion shall be to the effect that
such consolidated financial statements have been prepared in accordance
with GAAP and shall not be limited as to the scope of the audit or
qualified as to the status of the Consolidated Shorewood Group as a going
concern. It is specifically understood and agreed that failure of the
annual financial statements to be accompanied by an opinion of such
accountants in form and substance as provided herein shall constitute an
Event of Default hereunder.
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each fiscal quarter (other than the
fourth fiscal quarter, in which case 90 days after the end thereof) of
each fiscal year of the Consolidated Shorewood Group, a consolidated and
consolidating balance sheet and statement of income of the Consolidated
Shorewood Group as at the end of such quarterly period together with
related consolidated statements of retained earnings, shareholder's equity
and of cash flows for such quarterly period and for the portion of the
fiscal year ending with such period, in each case setting forth in
comparative form figures for the corresponding period of the preceding
fiscal year, all in reasonable form and detail acceptable to the
Administrative Agent, and accompanied by a certificate of the chief
financial officer of the U.S. Borrower as being true and correct and as
having been prepared in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the financial
statements
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provided for in Sections 7.1(a) and (b) hereof, a certificate of the chief
financial officer or chief accounting officer of the U.S. Borrower
substantially in the form of Exhibit 7.1(c) to the effect that no Default
or Event of Default exists, or if any Default or Event of Default does
exist specifying the nature and extent thereof and what action the U.S.
Borrower proposes to take with respect thereto. In addition, the Officer's
Certificate shall demonstrate compliance with the financial covenants
contained in Section 7.13 by calculation thereof as of the end of each
such fiscal period (including, without limitation, calculation of the Debt
Coverage Ratio for purposes of calculating the Applicable Percentage).
(d) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants
to a member of the Consolidated Shorewood Group in connection with any
annual, interim or special audit of the books of the Consolidated
Shorewood Group.
(e) SEC and Other Reports. Promptly upon transmission or receipt
thereof, (i) copies of any filings and registrations with, and reports to
or from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements, notices and
reports as the Consolidated Shorewood Group shall send to its shareholders
or to the holders of any other Indebtedness in their capacity as such
holders and (ii) upon the request of the Administrative Agent, all
material reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible
for environmental matters, the United States Occupational Health and
Safety Administration, or any state or local agency responsible for health
and safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters relating to member of the
Consolidated Shorewood Group.
(f) Notices. Upon an executive officer of either Borrower obtaining
knowledge thereof, such Borrower will give written notice to the
Administrative Agent (i) immediately of the occurrence of an event or
condition consisting of a Default or Event of Default, specifying the
nature and existence thereof and what action the Borrowers propose to take
with respect thereto, and (ii) promptly, but in any event within 5
Business Days, of the occurrence of any of the following with respect to
the Consolidated Shorewood Group (A) the pendency or commencement of any
litigation, arbitral or governmental proceeding against a member of the
Consolidated Shorewood Group which, if adversely determined, would have or
be reasonably likely to have a Material Adverse Effect, (B) any levy of an
attachment, execution or other process against the assets of a member of
the Consolidated Shorewood Group having a value of $500,000 or more, (C)
the occurrence of an event or condition which shall constitute a default
or event of default under any Indebtedness of a member of the Consolidated
Shorewood Group in excess of $500,000, (D) any development in the business
or affairs of the Consolidated Shorewood Group which has resulted in, or
which either Borrower reasonably believes may result in, a Material
Adverse Effect, or (E) the institution of any proceedings against a member
of the Consolidated Shorewood Group with respect to, or the receipt of
notice by such Person of potential liability or responsibility for
violation, or alleged violation of any federal, state or local law,
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rule or regulation, including but not limited to, Environmental Laws, the
violation of which would have or be reasonably expected to have a Material
Adverse Effect.
(g) Annual Business Plan. At least 30 days prior to the end of each
fiscal year, beginning with the fiscal year ending in 1998, an annual
business plan of the Consolidated Shorewood Group containing, among other
things, pro forma financial statements for the next fiscal year.
(h) Environmental Update. Within 45 days after the end of each
fiscal quarter (90 days after the end of the fourth fiscal quarter), a
report from the Consolidated Shorewood Group identifying all material
environmental issues and matters arising under applicable Environmental
Laws concerning the Consolidated Shorewood Group or their properties of
which the Borrowers are aware and what action the Consolidated Shorewood
Group has been taking or plans to take to address or comply with same.
(i) Compliance with Certain Covenants. At the time the Borrowers
deliver the financial statements required by Section 7.1(b), the
Consolidated Shorewood Group shall deliver a certificate, in the form of
Exhibit 7.1(i) attached hereto, containing information regarding
expenditures made by the Consolidated Shorewood Group as to Investments,
Acquisitions, Capital Expenditures and Restricted Payments during the
prior fiscal quarter.
(j) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Consolidated Shorewood Group as the
Administrative Agent or the Lenders may reasonably request.
7.2 Preservation of Existence and Franchises.
Each Borrower will do all things necessary to preserve and keep (and will
cause each other member of the Consolidated Shorewood Group to keep) in full
force and effect its existence, rights, franchises and authority.
7.3 Books and Records.
The U.S. Borrower will keep (and will cause each other member of the
Consolidated Shorewood Group domiciled in the United States to keep) complete
and accurate books and records of its transactions in accordance with good
accounting practices on the basis of GAAP. The Canadian Borrower will keep (and
cause each other member of the Consolidated Shorewood Group domiciled in Canada
to keep) complete and accurate books and records of its transactions in
accordance with good accounting practices on the basis of generally accepted
accounting principles applicable in Canada.
7.4 Compliance with Law.
Each Borrower will comply (and will cause each other member of the
Consolidated
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Shorewood Group to comply) with all material laws, rules, regulations and orders
of, and all applicable restrictions imposed by all applicable Governmental
Authorities applicable to it (and to each other member of the Consolidated
Shorewood Group), including applicable Environmental Laws if noncompliance would
have or be reasonably likely to have a Material Adverse Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Borrower will pay and discharge (and cause each other member of the
Consolidated Shorewood Group to pay and discharge) (a) all material taxes,
assessments and governmental charges or levies imposed upon it or them, or upon
its or their income or profits, or upon any of its or their properties, before
they shall become delinquent, (b) all lawful claims (including claims for labor,
materials and supplies) which, if unpaid, might give rise to a Lien or charge
upon any of its or their properties, and (c) except as prohibited hereunder, all
of its other Indebtedness as it shall become due; provided, however, that there
is no requirement to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) shall give rise to an
immediate right to foreclosure on a Lien securing such amounts or (ii) otherwise
would have a Material Adverse Effect.
7.6 Insurance.
Each Borrower will maintain (and will cause each member of the
Consolidated Shorewood Group to maintain) at all times in full force and effect
insurance (including worker's compensation insurance, liability insurance,
casualty insurance and business interruption insurance) in such amounts,
covering such risks and liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice unless higher
limits or other types of coverage are required by the terms of the other Loan
Documents or are otherwise reasonably required by the Lender. The present
coverage of the Consolidated Shorewood Group is outlined as to carrier, policy
number, expiration date, type and amount on Schedule 7.6 hereto and is
acceptable to the Lenders as of the Closing Date.
7.7 Maintenance of Property.
Each Borrower will maintain and preserve (and cause each other member of
the Consolidated Shorewood Group to maintain and preserve) its properties and
equipment used or necessary in its business (in whomsoever's possession as they
may be) in good repair, working order and condition, normal wear and tear
excepted, and will make, or cause to be made, in such properties and equipment
from time to time all repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.8 Performance of Obligations.
Each Borrower will perform (and cause each other member of the
Consolidated Shorewood
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Group to perform) in all material respects all of its obligations (including,
except as may be otherwise prohibited or contemplated hereunder, payment of
Indebtedness in accordance with its terms) under the terms of all material
agreements, indentures, mortgages, security agreements or other debt instruments
to which it is a party or by which it is bound.
7.9 ERISA.
Upon the U.S. Borrower or any ERISA Affiliate obtaining knowledge thereof,
the U.S. Borrower will give written notice to the Administrative Agent promptly
(and in any event within five Business Days) of: (a) any event or condition,
including, but not limited to, any Reportable Event, that constitutes, or might
reasonably lead to, a ERISA Event; (b) with respect to any Multiemployer Plan,
the receipt of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the U.S. Borrower or any ERISA Affiliate, or of a
determination that any Multiemployer Plan is in reorganization or insolvent
(both within the meaning of Title IV of ERISA); (c) the failure to make full
payment on or before the due date (including extensions) thereof of all amounts
which the U.S. Borrower or any ERISA Affiliate is required to contribute to each
Plan pursuant to its terms and as required to meet the minimum funding standard
set forth in ERISA and the Code with respect thereto; or (d) any change in the
funding status of any Plan that could have or be reasonably expected to have a
Material Adverse Effect; together, with a description of any such event or
condition or a copy of any such notice and a statement by the principal
financial officer of the U.S. Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which has
been or is being taken or is proposed to be taken by the U.S. Borrower or any
ERISA Affiliate with respect thereto. Promptly upon request, the U.S. Borrower
shall furnish the Administrative Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested, including, but
not limited to, copies of each annual report/return (Form 5500 series), as well
as all schedules and attachments thereto required to filed with the Department
of Labor and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39) of
ERISA).
All Canadian benefit plans and Canadian pension plans and any similar plans
applicable to the Canadian Borrower and its Subsidiaries will be duly registered
under the provisions of the Income Tax Act (Canada), will be administered in
accordance with such statute and no event will be allowed to occur which would
cause a loss of such registered status. All material obligations of the Canadian
Borrower and its Subsidiaries (including fiduciary and funding obligations)
required to be performed in connection with such plans and the funding media
therefor will be performed. There will be no outstanding disputes concerning the
assets held in the funding media for such plans. All contributions or premiums
required to be made by the Canadian Borrower or its Subsidiaries to such plans
will be made in a timely fashion in accordance with the terms of such plans and
applicable laws. Each of such plans will be fully funded and no going concern
unfunded actuarial liabilities or solvency deficiencies in respect of such plans
will be allowed to exist.
7.10 Use of Proceeds.
The proceeds of the Loans hereunder will be used solely for (a) repayment
of all amounts
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owning under the Existing Credit Agreement and (b) for general corporate and
working capital purposes of each Borrower in the ordinary course of business and
(c) as otherwise permitted under this Agreement.
7.11 Additional Subsidiaries.
Promptly, or in any event within 30 days, upon any Person becoming a
Subsidiary of a Borrower or any other member of the Consolidated Shorewood
Group, the Borrowers shall so notify the Administrative Agent and the Canadian
Administrative Agent and shall, (a) in the case of a Person organized and
domiciled in the United States cause (i) such Person to execute a Guaranty
Agreement in substantially the same form as the Guaranty Agreements executed by
the other Guarantors organized and domiciled in the United States and (ii) 100%
of the stock of such Person to be pledged to the Lenders pursuant to a Stock
Pledge Agreement similar to those executed by other Guarantors organized and
domiciled in the United States, (b) in the case of a Person organized and
domiciled in Canada cause (i) such Person to execute a Guaranty Agreement in
substantially the same form as the Guaranty Agreements executed by the other
similar situated Guarantors organized and domiciled in Canada (i.e., depending
upon whether such Person is a first tier Subsidiary or a lower tier Subsidiary)
and (ii) the stock of such Person to be pledged to the Lenders in substantially
the same way and the same amount as other similar situated Guarantors organized
and domiciled in Canada and (c) in the case of a Person organized and domiciled
outside of the United States or Canada (other than a Person domiciled in the
Peoples Republic of China), cause 66% of the stock of such Person to be pledged
to the Lenders in a manner reasonably acceptable to the Agent.
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Borrower
will permit (and will cause each member of the Consolidated Shorewood Group to
permit) representatives appointed by the Administrative Agent, including,
without limitation, independent accountants, agents, attorneys, and appraisers
to visit and inspect any member of the Consolidated Shorewood Group's property,
including its books of account and other books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Administrative
Agent or its representatives to investigate and verify the accuracy of
information provided to the Lenders and to discuss all such matters with the
officers, employees and representatives of each member of the Consolidated
Shorewood Group.
7.13 Financial Covenants.
(a) Current Ratio. At any time, the ratio of Current Assets to
Current Liabilities shall be greater than or equal to 1.10 to 1.0.
(b) Fixed Charge Ratio.
(i) The Fixed Charge Ratio, as of the end of the fiscal
quarter
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ending closest to April 30, 1997 and as of the end of each fiscal
quarter thereafter through and including the fiscal quarter ending
closest to April 30, 1999, shall be greater than or equal to 1.25 to
1.0; and
(ii) The Fixed Charge Ratio, as of the end of the fiscal
quarter ending closest to July 31, 1999 and as of the end of each
fiscal quarter thereafter, shall be greater than or equal to 1.50 to
1.0.
(c) Net Worth. The consolidated Net Worth of the Consolidated
Shorewood Group shall be greater than or equal to:
(i) $75,000,000, plus
(ii) an amount, determined at the end of each fiscal
quarter, commencing with the quarterly fiscal period ending closest
to April 30, 1997, equal to 50% of Net Income earned by the
Consolidated Shorewood Group (with no reductions for any losses
incurred during any fiscal quarter).
(d) Debt Coverage Ratio.
(i) The Debt Coverage Ratio, as of the end of the fiscal
quarter ending closest to April 30, 1997 and as of the end of each
fiscal quarter thereafter through and including the fiscal quarter
ending closest to April 30, 1999, shall be less than or equal to 3.0
to 1.0; and
(ii) The Debt Coverage Ratio, as of the end of the fiscal
quarter ending closest to July 31, 1999 and as of the end of each
fiscal quarter thereafter, shall be less than or equal to 2.5 to
1.0.
SECTION 8
NEGATIVE COVENANTS
Each Borrower hereby covenants and agrees that so long as this Agreement
is in effect and until the Loans and LOC Obligations, together with interest,
fees and other obligations hereunder, have been paid in full and the Commitments
and Letters of Credit hereunder shall have terminated that it will do or cause
to be done the following:
8.1 Indebtedness.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) contract, create, incur, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness arising under this Agreement and the other
Loan Documents;
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(b) Indebtedness existing as of the Closing Date as referenced in
Section 6.9 (and renewals, refinancings or extensions thereof on terms and
conditions substantially the same as such existing Indebtedness and in a
principal amount not in excess of that outstanding as of the date of such
renewal, refinancing or extension);
(c) Indebtedness in respect of current accounts payable and accrued
expenses incurred in the ordinary course of business including, to the
extent not current, accounts payable and accrued expenses that are subject
to bona fide dispute;
(d) purchase money Indebtedness (including capital leases) incurred
by the Consolidated Shorewood Group to finance the purchase of fixed
assets; provided that (i) the total of all such Indebtedness for all of
the Consolidated Shorewood Group taken together shall not exceed an
aggregate principal amount of $15,000,000 at any one time outstanding
(including any such Indebtedness referred to in subsection (b) above);
(ii) such Indebtedness when incurred shall not exceed the purchase price
of the asset(s) financed; and (iii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(e) Indebtedness owing from the U.S. Borrower to its Subsidiaries
domiciled in the United States or from such Subsidiaries in the United
States to the U.S. Borrower;
(f) Indebtedness owing from the Canadian Borrower to its
Subsidiaries domiciled in Canada or from such Subsidiaries in Canada to
the Canadian Borrower;
(g) Indebtedness in the form of loans or advances owing by
Subsidiaries or Affiliates organized and existing outside of the United
States or Canada to members of the Consolidated Shorewood Group (subject
to the limitations of Section 8.10 by the member of the Consolidated
Shorewood Group making the loan or advance);
(h) Indebtedness assumed in connection with a Permitted Acquisition;
and
(i) other unsecured Indebtedness of the U.S. Borrower of up to
$3,000,000 in the aggregate at any time outstanding.
8.2 Liens.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) contract, create, incur, assume or permit to
exist any Lien with respect to any of its property or assets of any kind
(whether real or personal, tangible or intangible), whether now owned or after
acquired, except for Permitted Liens.
8.3 Nature of Business.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood
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Group to) substantively alter the character of its business from that conducted
as of the Closing Date.
8.4 Consolidation or Merger.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) enter into any transaction of merger or
consolidation or dissolve, liquidate, or wind up its affairs other than the
following:
(a) the merger or consolidation of a Subsidiary of a Borrower into
such Borrower or into a member of the Consolidated Shorewood Group;
provided that if such merger involves a Borrower such Borrower shall be
the surviving entity, or
(b) the merger or consolidation of any Person who is not a member of
the Consolidated Shorewood Group into a member of the Consolidated
Shorewood Group, provided that the member of the Consolidated Shorewood
Group shall be the surviving corporation, and management and control of
the member of the Consolidated Shorewood Group shall remain substantially
unchanged and no Default or Event of Default shall exist either
immediately prior to or after giving effect to such merger, and the Board
of Directors of the company which is the subject of the acquisition or
merger shall have approved the acquisition or merger.
8.5 Sale or Lease of Assets.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to), convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any part of
its business or assets whether now owned or hereafter acquired, including,
without limitation, inventory, receivables, equipment, real property interests
(whether owned or leasehold), and securities, other than (a) any inventory sold
or otherwise disposed of in the ordinary course of business; (b) the sale,
lease, transfer or other disposal by a Guarantor of any or all of its assets to
a Borrower or to another Guarantor; (c) obsolete, slow-moving, idle or worn-out
assets (including inventory) no longer used or useful in its business, (d) the
transfer of assets which constitute a Permitted Investment, (e) the termination,
liquidation or winding down of non-performing, obsolete or redundant businesses,
facilities or operations, (f) the sale of Permitted Investments or interests
therein, (g) sales and transfers described in clauses (b) and (c) of the
definition of "Asset Disposition", and (h) other sales and dispositions to the
extent the net proceeds thereof are used solely to make payment on the Loans and
obligations hereunder and a permanent reduction in the Commitments hereunder of
a like amount.
8.6 Acquisitions.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) make any Acquisitions other than Permitted
Acquisitions.
8.7 Transactions with Affiliates.
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The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) enter into any transaction or series of
transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder, Subsidiary or Affiliate except upon terms and
conditions no less favorable than would be obtainable in a comparable
arm's-length transaction with a Person other than an Affiliate.
8.8 Ownership of Subsidiaries.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) sell, transfer or otherwise dispose of, any
shares of capital stock of any of its Subsidiaries or permit any of its
Subsidiaries to issue, sell or otherwise dispose of, any shares of capital stock
of any of their Subsidiaries, except to members of the Consolidated Shorewood
Group or except as permitted by Section 8.5(f).
8.9 Fiscal Year.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) change its fiscal year without the prior
written consent of the Required Lenders, which consent shall not be unreasonably
denied or delayed, with appropriate modification of the financial covenants to
give effect to the partial year resulting therefrom.
8.10 Investments.
The Borrowers will not (nor will they permit any member of the
Consolidated Shorewood Group to) make any Investments except for Permitted
Investments.
8.11 Restricted Payments.
The U.S. Borrower will not declare or make any Restricted Payment if as a
result of such payment the aggregate amount of all Restricted Payments made from
the date of this Agreement would exceed the sum of $50 million plus an amount
equal to 50% of cumulative Net Income earned subsequent to the fiscal quarter
ending closest to April 30, 1997 (determined on a quarterly basis) minus the
aggregate amount of Investments (determined on a cost basis) outstanding at that
time of the type described in clause (h) of the definition of "Permitted
Investments".
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
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(a) Payment. Either Borrower shall default in the payment when due
of any principal or within three days of when due of any interest, fees or
other amounts owing hereunder, under any of the other Loan Documents or in
connection herewith;
(b) Representations. Any representation, warranty or statement made
or deemed to be made by any member of the Consolidated Shorewood Group
herein, in any of the Loan Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was deemed
to have been made;
(c) Covenants. Any member of the Consolidated Shorewood Group
shall
(i) default in the due performance or observance of any term
condition or agreement contained in Section 7.1(f)(i), 7.13 or 8.1
through 8.11, inclusive (except in the case of negative covenants
contained in Sections 8.1 through 8.11, those Defaults which may
occur or arise other than on account of or by affirmative or
intentional act by a member of the Consolidated Shorewood Group or
event or condition which members of the Consolidated Shorewood Group
shall with knowledge permit to exist, all of which shall be subject
to the provisions of clause (ii) hereof), or
(ii) default in the due performance or observance of any term,
covenant or agreement (other than those referred to in subsections
(a), (b) or (c)(i) of this Section 9.1) contained in this Agreement
and such default shall continue unremedied for a period of 30
Business Days after the earlier of a member of the Consolidated
Shorewood Group becoming aware of such default or notice thereof
given by the Administrative Agent;
(d) Other Loan Documents. (i) Any member of the Consolidated
Shorewood Group shall default in the due performance or observance of any
term, covenant or agreement in any of the other Loan Documents (subject to
applicable grace or cure periods, if any), or (ii) any Loan Document shall
fail to be in full force and effect or to give an Agent and/or the Lenders
the rights, powers and privileges purported to be created thereby;
(e) Guaranties. Any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under a Guaranty Agreement;
(f) Bankruptcy, etc. The occurrence of any Bankruptcy Event
with respect to a member of the Consolidated Shorewood Group;
(g) Defaults under Other Agreements. With respect to any Funded Debt
in excess of $3,000,000 (other than Funded Debt outstanding under this
Agreement), (i) a member of the Consolidated Shorewood Group shall (A)
default in any payment (beyond
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the applicable grace period with respect thereto, if any) with respect to
any such Funded Debt, or (B) default in the observance or performance
relating to such Funded Debt or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event or condition
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or permit, the holder or holders of such Funded
Debt (or trustee or agent on behalf of such holders) to cause (determined
without regard to whether any notice or lapse of time is required), any
such Funded Debt to become due prior to its stated maturity; or (ii) any
such Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to
the stated maturity thereof;
(h) Judgments. One or more judgments or decrees shall be entered
against a member of the Consolidated Shorewood Group involving a liability
of $1,000,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged coverage)
and any such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry thereof;
(i) ERISA. The occurrence of any of the following events or
conditions, if the result could have or be reasonably expected to have a
Material Adverse Effect: (A) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of the Code,
whether or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of the U.S. Borrower or any ERISA Affiliate in
favor of the PBGC or a Plan; (B) a ERISA Event shall occur with respect to
a Single Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (C) a ERISA Event shall occur with respect
to a Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (1)
the termination of such Plan for purposes of Title IV of ERISA, or (2) the
U.S. Borrower or any ERISA Affiliate incurring any liability in connection
with a withdrawal from, reorganization of (within the meaning of Section
4241 of ERISA), or insolvency or (within the meaning of Section 4245 of
ERISA) such Plan; or (D) any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject the U.S. Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
502(l) of ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the U.S. Borrower or any ERISA
Affiliate has agreed or is required to indemnify any person against any
such liability.
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the Required Lenders
or cured, the Administrative Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Borrowers,
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take any of the following actions without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against any member of
the Consolidated Shorewood Group, except as otherwise specifically provided for
herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration of Loans. Declare the unpaid principal of and any
accrued interest in respect of all Loans and any and all other
indebtedness or obligations of any and every kind owing by the Borrowers
to any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers.
(c) Cash Collateral. Direct the Borrowers to pay (and the Borrowers
agree that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 9.1(f), it will immediately pay) to the
Administrative Agent additional cash, to be held by the Administrative
Agent, for the benefit of the Lenders, in a cash collateral account as
security for the LOC Obligations in respect of subsequent drawings under
all then outstanding Letters of Credit in an amount equal to the maximum
aggregate amount which may be drawn under all Letters of Credits then
outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Loan Documents, including, without
limitation, the Guaranty Agreements and the Stock Pledge Agreements, and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all accrued interest in respect thereof, all accrued and unpaid fees and
other indebtedness or obligations owing to the Lenders hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Administrative Agent or the Lenders which notice or other action
is expressly waived by the Borrowers.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued and
unpaid interest in respect thereof, all accrued and unpaid fees and other
indebtedness or obligations owing to the Lenders hereunder shall immediately
become due and payable without the giving of any notice or other action by the
Agents or the Lenders, which notice or other action is expressly waived by the
Borrowers.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
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Each Lender hereby designates and appoints NationsBank, N.A. as
Administrative Agent and The Bank of Nova Scotia as Canadian Administrative
Agent to act as specified herein and the other Loan Documents, and each such
Lender hereby authorizes the Agents as the agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated by the terms hereof and of the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere herein and in the other Loan Documents, the
Agents shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any of the other Loan
Documents, or shall otherwise exist against the Agents. The provisions of this
Section are solely for the benefit of the Agents and the Lenders and none of the
members of the Consolidated Shorewood Group shall have any rights as a third
party beneficiary of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, the Agents shall act
solely as agent of the Lenders and do not assume and shall not be deemed to have
assumed any obligation or relationship of agency or trust with or for the
Borrowers or any other member of the Consolidated Shorewood Group.
10.2 Delegation of Duties.
The Agents may execute any of their respective duties hereunder or under
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agents shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected with reasonable care.
10.3 Exculpatory Provisions.
Each of the Agents or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates shall not be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection
herewith or in connection with any of the other Loan Documents (except for its
or such Person's own gross negligence or willful misconduct), or (b) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the member of the Consolidated
Shorewood Group contained herein or in any of the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by an Agent under or in connection herewith or in connection with
the other Loan Documents, or enforceability or sufficiency therefor of any of
the other Loan Documents, or for any failure of either of the Borrowers to
perform its obligations hereunder or thereunder. An Agent shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement, or any of the
other Loan Documents or for any representations, warranties, recitals or
statements made herein or therein or made by the Borrowers or any member of the
Consolidated Shorewood Group in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by an Agent to
the Lenders or by or on behalf of the Consolidated Shorewood Group to an Agent
or any Lender or be required to ascertain or
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inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the use
of the proceeds of the Loans or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or records of
the Consolidated Shorewood Group. The Agents are not trustees for the Lenders
and owe no fiduciary duty of the Lenders.
10.4 Reliance on Communications.
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers or any of the other member of the
Consolidated Shorewood Group, independent accountants and other experts selected
by the Administrative Agent with reasonable care). The Agents may deem and treat
the Lenders as the owner of their respective interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the appropriate Agent in accordance with Section
11.3(b). The Agents shall be fully justified in failing or refusing to take any
action under this Agreement or under any of the other Loan Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
under any of the other Loan Documents in accordance with a request of the
Required Lenders (or to the extent specifically provided in Section 11.6, all
the Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors and
assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender or a member of the Consolidated Shorewood Group referring
to the Loan Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that an Agent receives
such a notice, such Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be directed by the Required Lenders.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither of the Agents nor any of
their officers, directors, employees, agents, attorneys-in-fact or affiliates
(including, without limitation, NationsBanc Capital Markets, Inc. ("NCMI"); it
being understood that each reference to affiliate in this Section 10.6 shall
include NCMI)) has made any representations or warranties to it and that no act
by an Agent or any affiliate thereof hereinafter taken, including any review of
the affairs of the
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Consolidated Shorewood Group, shall be deemed to constitute any representation
or warranty by an Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon the Agents or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Consolidated Shorewood Group and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agents or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Consolidated Shorewood Group. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agents hereunder, the
Agents shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, assets,
property, financial or other conditions, prospects or creditworthiness of the
Consolidated Shorewood Group which may come into the possession of an Agent or
any of its respective officers, directors, employees, agents, attorneys-in-fact
or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as such (to the
extent not reimbursed by the Borrowers and without limiting the obligation of
the Borrowers to do so), ratably according to their respective Commitments, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any time
following the payment of the Borrowers Obligations) be imposed on, incurred by
or asserted against an Agent in its respective capacity as such in any way
relating to or arising out of this Agreement or the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by an Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of an Agent. If any
indemnity furnished to an Agent for any purpose shall, in the opinion of such
Agent, be insufficient or become impaired, such Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section shall
survive the payment of the Borrowers Obligations and all other amounts payable
hereunder and under the other Loan Documents.
10.8 Agent in its Individual Capacity.
An Agent and its affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrowers or any other member
of the Consolidated Shorewood Group as though the Agent were not a Agent
hereunder. With respect to the Loans made, the Agents shall have the same rights
and powers under this Agreement as any Lender and may
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exercise the same as though they were not a Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent and the Canadian Administrative
Agent in their individual capacities.
10.9 Successor Agent.
An Agent may, at any time, resign upon 20 days' written notice to the
Lenders, and be removed with or without cause by the Required Lenders upon 30
days' written notice to the Agents. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint a successor Administrative
Agent or Canadian Administrative Agent, as the case may be. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the notice of resignation or
notice of removal, as appropriate, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a commercial
bank organized under the laws of the United States of America or of any State
thereof and has a combined capital and surplus of at least $400,000,000. Upon
the acceptance of any appointment as Administrative Agent or Canadian
Administrative Agent, as the case may be, hereunder by a successor, such
successor Administrative Agent or Canadian Administrative Agent, as the case may
be, shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent or Canadian
Administrative Agent, as the case may be, and the retiring Administrative Agent
or Canadian Administrative Agent, as the case may be, shall be discharged from
its duties and obligations as Administrative Agent or Canadian Administrative
Agent, as the case may be, as appropriate, under this Agreement and the other
Loan Documents and the provisions of this Section 10.9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered by hand, (b) when transmitted via telecopy (or other facsimile
device), (c) the Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address or telecopy numbers set forth on Schedule 11.1 attached hereto, or
at such other address as such party may specify by written notice to the other
parties hereto; provided, however, that if any notice is delivered on a day
other than a Business Day then such notice shall not be effective until the next
Business Day.
11.2 Right of Set-Off.
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In addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default, each Lender is authorized at any time and from time to
time, without presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such Lender (including, without limitation branches,
agencies or Affiliates of such Lender wherever located) to or for the credit or
the account of a Borrower against obligations and liabilities of a Borrower to
such Lender hereunder, under the Notes, the other Loan Documents or otherwise,
irrespective of whether such Lender shall have made any demand hereunder and
although such obligations, liabilities or claims, or any of them, may be
contingent or unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such charge
is made or entered on the books of such Lender subsequent thereto. Each Borrower
hereby agrees that any Person purchasing a participation in the Loans and
Commitments hereunder pursuant to Section 11.3(c) may exercise all rights of
set-off with respect to its participation interest as fully as if such Person
were a Lender hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that a Borrower may not assign and transfer
any of its interests without prior written consent of the Lenders; and
provided further that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder shall be
limited as set forth in this Section 11.3.
(b) Assignments. Subject to the consent of the Borrowers (provided,
however, that no consent shall be required during the existence and
continuation of an Event of Default), which consent shall not be
unreasonably withheld, each Lender may assign all or a portion of its
rights and obligations hereunder pursuant to an assignment agreement
substantially in the form of Exhibit 11.3(b); provided that any such
assignment shall be in a minimum aggregate amount of $5,000,000 of the
Commitments and in integral multiples of $1,000,000 above such amount and
that each such assignment shall be of a constant, not varying, percentage
of all of the assigning Lender's rights and obligations under this
Agreement. Any assignment hereunder shall be effective upon satisfaction
of the conditions set forth in the preceding sentence and delivery to the
Administrative Agent of written notice of the assignment together with a
transfer fee of $2,500 (or with respect to an assignment of the Canadian
Revolving Loan Commitment, a transfer fee of Cdn. $1,250) payable to the
Administrative Agent for its own account; provided that any assignment of
the Canadian Revolving Loan Commitment shall require delivery of written
notice of the assignment to the Canadian Administrative Agent together
with a transfer fee of Cdn. $1,250 payable to the Canadian Administrative
Agent for its own account. Upon the effectiveness of any such assignment,
the assignee shall become a "Lender" for all purposes of this Agreement
and the other Loan Documents and, to the extent of such assignment, the
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assigning Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned. Along such
lines, the Borrowers agree that upon effectiveness of any such assignment
and surrender of the appropriate Note or Notes, it will promptly provide
to the assigning Lender and to the assignee separate promissory notes in
the amount of their respective interests substantially in the form of the
original Note (but with notation thereon that it is given in substitution
for and replacement of the original Note or any replacement notes
thereof). In addition to the assignments permitted under this Section
11.3(b), any Lender may (without notice to the Borrowers, the
Administrative Agent or any other Lender and without payment of any fee)
(i) assign and pledge all or any portion of its Loans and its Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A and
any Operating Circular issued by such Federal Reserve Bank and (ii) assign
all or any portion of its rights under this Agreement and its Loans and
its Notes to an Affiliate. No such assignment, as set forth in the
preceding sentence, shall release the assigning Lender from its
obligations hereunder.
By executing and delivering an assignment agreement in accordance with
this Section 11.3(b), the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (i) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim and the assignee warrants that
it is an Eligible Assignee; (ii) except as set forth in clause (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, any of the
other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto or the financial condition of any member of the
Consolidated Shorewood Group or the performance or observance by any
member of the Consolidated Shorewood Group of any of its obligations under
this Agreement, any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
assignment agreement; (iv) such assignee confirms that it has received a
copy of this Agreement, the other Loan Documents and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such assignment agreement; (v) such
assignee will independently and without reliance upon the Agents, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement
and the other Loan Documents; (vi) such assignee appoints and authorizes
the Agents to take such action on its behalf and to exercise such powers
under this Agreement or any other Loan Document as are delegated to the
Agents by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Agreement and the other Loan Documents are required to be
performed by it as a Lender.
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(c) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and
obligations hereunder; provided that (i) such selling Lender shall remain
a "Lender" for all purposes under this Agreement (such selling Lender's
obligations under the Loan Documents remaining unchanged) and the
participant shall not constitute a Lender hereunder, (ii) no such
participant shall have, or be granted, rights to approve any amendment or
waiver relating to this Agreement or the other Loan Documents except to
the extent any such amendment or waiver would (A) reduce the principal of
or rate of interest on or fees in respect of any Loans in which the
participant is participating, (B) postpone the date fixed for any payment
of principal (including extension of the Revolving Loans Maturity Date or
the Term Loans Maturity Date but excluding any mandatory prepayment),
interest or fees in which the participant is participating, or (C) release
all or substantially all of the guaranties or the collateral (except as
expressly provided in the Loan Documents) supporting any of the Loans or
Commitments in which the participant is participating, and (iii)
sub-participations by the participant (except to an affiliate, parent
company or affiliate of a parent company of the participant) shall be
prohibited. In the case of any such participation, the participant shall
not have any rights under this Agreement or the other Loan Documents (the
participant's rights against the selling Lender in respect of such
participation to be those set forth in the participation agreement with
such Lender creating such participation) and all amounts payable by the
Borrowers hereunder shall be determined as if such Lender had not sold
such participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 4.9 through 4.14 on
the same basis as if it were a Lender.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Loan Document and no
course of dealing between the Borrowers or any member of the Consolidated
Shorewood Group and an Agent or any Lender shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies provided herein are cumulative
and not exclusive of any rights or remedies which the Agents or any Lender would
otherwise have. No notice to or demand on the Borrowers in any case shall
entitle the Borrowers or any member of the Consolidated Shorewood Group to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Lenders to
any other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Borrowers agree to: (a) pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent and NationsBanc Capital Markets, Inc.
("NCMI") in connection with the negotiation, preparation, execution and delivery
and administration of this Agreement and the other Loan Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and expenses of Moore & Van Allen, special counsel to the
Agents
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as well as Canadian counsel to the Agents) and any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Borrowers under this Agreement
and of the Administrative Agent and the Lenders in connection with enforcement
of the Loan Documents and the documents and instruments referred to therein
(including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Administrative Agent and
each of the Lenders); (ii) pay and hold each of the Lenders harmless from and
against any and all claims for Non-Excluded Taxes as set forth in Section 4.13
and hold each of the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Lender) to pay such Non-Excluded Taxes; and (iii)
indemnify each Agent, NCMI and each Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not any Agent, NCMI or
Lender is a party thereto) related to the entering into and/or performance of
any Loan Document or the use of proceeds of any Loans (including other
extensions of credit) hereunder or the consummation of any other transactions
contemplated in any Loan Document, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such losses,
liabilities, claims, damages or expenses to the extent they relate to disputes
solely between or among the Lenders and/or the Agents, or they relate to a
material breach of this Agreement by the Lenders or they are incurred by reason
of gross negligence, willful misconduct or professional misconduct on the part
of the Person to be indemnified). Anything herein to the contrary
notwithstanding, no Borrower shall have any obligation to indemnify any Person
under this Section 11.5 from and against any expenses incurred by such Person as
a result of or in connection with any litigation, action or proceeding asserted
by either of them against the other in which such Borrower is the prevailing
party in a final and non-appealable judgment.
11.6 Amendments, Waivers and Consents.
In order for any amendment, change, waiver, discharge or termination of
this Agreement or any of the other Loan Documents to be binding on the Lenders
and the members of the Consolidated Shorewood Group, such amendment, change,
waiver, discharge or termination must be in writing and signed by the Required
Lenders; provided that to be binding no such amendment, change, waiver,
discharge or termination shall:
(a) extend the Revolving Loans Maturity Date or the Term Loans
Maturity Date without the consent of all the Lenders, or postpone or
extend the time for any payment or prepayment of principal to any Lender
without the consent of such Lender;
(b) reduce the rate (other than as a result of waiving the
applicability of any post-default increase in interest rates) or extend
the time of payment of interest on any Loan made by or any fees hereunder
for the account of any Lender without the consent of such Lender;
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(c) reduce or waive the principal amount of any Loan made by
any Lender without the consent of such Lender;
(d) increase or extend the Commitment of a Lender over the amount
thereof in effect without the consent of such Lender (it being understood
and agreed that a waiver of any Default or Event of Default or a waiver of
any mandatory reduction in the Commitments shall not constitute an
increase in the Commitment of any Lender);
(e) except as otherwise permitted in this Agreement or the Stock
Pledge Agreements, release a Borrower or substantially all of the
Guarantors from their respective obligations under the Loan Documents or
release all or substantially all of the collateral pledged under the Stock
Pledge Agreements without the consent of all the Lenders;
(f) amend, modify or waive any provision of this Section or Sections
4.4(b), 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 9.1(a), 11.2,
11.3 or 11.5 without the consent of all the Lenders;
(g) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders without the consent of all the Lenders;
or
(h) consent to the assignment or transfer by a Borrower of any of
its rights and obligations under (or in respect of) the Loan Documents.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any reorganization plan that affects the Loans or the
Letters of Credit, and each Lender acknowledges that the provisions of Section
1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set
forth herein and (y) the Required Lenders may consent to allow a member of the
Consolidated Shorewood Group to use cash collateral in the context of a
bankruptcy or insolvency proceeding.
11.7 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a Defaulting
Lender then it shall not be entitled to vote on any matter requiring the consent
of the Required Lenders or to object to any matter requiring the consent of all
the Lenders; provided, however, that all other benefits and obligations under
the Loan Documents shall apply to such Defaulting Lender.
11.8 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart. Delivery of an executed counterpart by telecopy shall be as
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effective as delivery of a manually executed counterpart hereto and shall
constitute a representation that an original executed counterpart will be
provided.
11.9 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
11.10 Survival of Indemnification and Representations and Warranties.
All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Agreement, the
making of the Loans, the issuance of the Letters of Credit, and the repayment of
the Loans, LOC Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 Currency.
The use of term "dollars" or "Dollars" or the symbol "$" or "U.S. $" in
the Loan Documents shall mean a reference to lawful money of the United States
of America unless specifically indicated otherwise.
11.12 Governing Law; Venue.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the
State of North Carolina in Mecklenburg County, or of the United States for
the Western District of North Carolina, and, by execution and delivery of
this Agreement, each Borrower hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction
of such courts. Each Borrower further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices pursuant to
Section 11.1, such service to become effective 30 days after such mailing.
Nothing herein shall affect the right of a Lender to serve process in any
other manner permitted by law or to commence legal proceedings or to
otherwise proceed against the Borrowers in any other jurisdiction.
(b) Each Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
or any other Loan Document brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in
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any such court has been brought in an inconvenient forum.
11.13 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.14 Severability.
If any provision of any of the Loan Documents is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Loan Entirety.
This Agreement together with the other Loan Documents represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Loan Documents or the transactions contemplated
herein and therein; provided, however, that the Confidentiality Letters executed
by the Lenders and all other Persons shall remain in effect subsequent to the
execution and delivery of this Agreement.
11.16 Binding Effect; Amendment and Restatement of Existing Credit
Agreement; Further Assurances.
This Agreement shall become effective at such time, on or after the
Closing Date, that the conditions precedent set forth in Section 5.1 have been
satisfied and when it shall have been executed by each Borrower and the Agents,
and the Agents shall receive copies hereof (telefaxed or otherwise) which, when
taken together, bear the signatures of each Lender (including the Issuing
Lenders), and thereafter this Agreement shall be binding upon and inure to the
benefit of each Borrower, each Lender (including the Issuing Lenders) and the
Agents, together with their respective successors and assigns. The Borrowers and
the Lenders (including the Issuing Lenders) party to the Existing Credit
Agreement each hereby agrees that, at such time as this Agreement shall have
become effective pursuant to the terms of the immediately preceding sentence,
(a) the Existing Credit Agreement automatically shall be deemed amended and
restated in its entirety by this Agreement, and all obligations and
indemnifications outstanding under the Existing Credit Agreement shall be
governed by the terms of this Agreement (as such obligations or commitments may
be modified or amended hereunder), and (b) all of the promissory notes executed
by the Borrowers in connection with the Existing Credit Agreement automatically
shall be substituted and replaced by the amended and restated promissory notes
executed in connection with this Agreement, and the Lenders agree to promptly
return such prior notes to the Borrowers. The Borrowers further agree, upon the
request of the Administrative Agent and/or the Required
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Lenders, to promptly take such actions, as reasonably requested, as is
appropriate to carry out the intent of this Agreement and the other Loans
Documents, including, but not limited to, such actions as are necessary to
ensure that the Lenders have a perfected security interest in all collateral
securing the Borrowers Obligations, subject to no Liens other than Permitted
Liens.
11.17 Confidentiality.
(a) The Agents and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agents or any such Lender by or on behalf of the Borrowers or
any members of the Consolidated Shorewood Group (whether before or after the
Closing Date) which relates to the Borrowers or any of their Subsidiaries (the
"Information"). Notwithstanding the foregoing, the Agents and Lenders shall be
permitted to disclose Information (i) to its affiliates, officers, directors,
employees, agents and representatives in connection with their participation in
any of the transactions evidenced by this Agreement or any other Loan Documents
or the administration of this Agreement or any other Loan Documents (so long as
such Persons are notified of the confidential nature of the information); (ii)
to the extent required by applicable laws and regulations or by any subpoena or
similar legal process, or requested by any Governmental Authority; (iii) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Credit Agreement or any agreement entered into pursuant to
clause (iv) below, (B) becomes available to the Agents or any Lender on a
non-confidential basis or (C) was available to the Agents or Lenders on a
non-confidential basis prior to its disclosure to the Agents or any Lender by
the Borrowers or any member of the Consolidated Shorewood Group; (iv) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first
specifically agrees in a writing furnished to and for the benefit of the parties
hereto to be bound by the terms of this Section; or (v) to the extent that the
Borrowers shall have consented in writing to such disclosure. Nothing set forth
in this Section shall obligate the Agents or any Lender to return any materials
furnished by the Borrowers or any member of the Consolidated Shorewood Group.
(b) In the event that any Lender or all of them are requested or required
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or otherwise) to disclose any Information
under clause (ii) of the second sentence of subsection (a) hereof, such Lender
shall provide the Borrowers with prompt notice of such request(s), to the extent
it may do so, so that the Borrowers may seek an appropriate protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, the Lender which has received such request may furnish
that portion (and only that portion) of the Information which, in the opinion of
its counsel, it is legally compelled to disclose.
11.18 Definition of Knowledge.
Whenever used in this Agreement, the words "knowledge", "best knowledge",
"known to", "becoming aware of", "are aware" or other words of similar meaning
or effect, as they pertain to the Borrowers or the other members of the
Consolidated Shorewood Group, mean the actual present knowledge of those
officers of the U.S. Borrower identified by it from time to time
92
98
as "Executive Officers" in its filings with the Securities and Exchange
Commission, as described in Section 7.1(e) of this Agreement.
93
99
Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
BORROWERS:
SHOREWOOD PACKAGING CORPORATION
By:____________________________
Name:
Title:
SHOREWOOD CORPORATION OF CANADA
LIMITED
By:____________________________
Name:
Title:
100
LENDERS:
NATIONSBANK, N.A., in its capacity as
Administrative Agent and as a Lender
By:____________________________
Name:
Title:
101
THE BANK OF NOVA SCOTIA, in its
capacity as Canadian Administrative
Agent and as a Lender
By:____________________________
Name:
Title:
102
CRESTAR BANK
By:____________________________
Name:
Title:
103
THE CHASE MANHATTAN BANK
By:____________________________
Name:
Title:
104
BANQUE PARIBAS
By:____________________________
Name:
Title:
105
FLEET BANK N.A.
By:____________________________
Name:
Title:
106
THE SUMITOMO BANK, LIMITED
By:____________________________
Name:
Title:
107
THE BANK OF NEW YORK
By:____________________________
Name:
Title:
108
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:____________________________
Name:
Title:
109
UNITED STATES NATIONAL BANK OF
OREGON
By:____________________________
Name:
Title:
110
SCHEDULE 1.1(a)
SCHEDULE OF LENDERS AND COMMITMENTS
CANADIAN
U.S. REVOLVING U.S. TERM LOAN CANADIAN REVOLVING LOAN
U.S. REVOLVING LOAN COMMITMENT U.S. TERM LOAN COMMITMENT REVOLVING LOAN COMMITMENT
LENDER LOAN COMMITMENT PERCENTAGE COMMITMENT PERCENTAGE COMMITMENT PERCENTAGE
------ --------------- --------------- -------------- -------------- -------------- --------------
NationsBank, N.A. $ 18,584,070.80 18.58407080% $12,915,929.20 17.22123894%
The Bank of Nova Scotia $ 5,500,000.00 7.33333333% $25,000,000.00 100.00000%
The Chase Manhattan Bank $ 15,929,203.54 15.92929354% $11,070,796.46 14.76106195%
The Bank of New York $ 14,749,262.54 14.74926254% $10,250,737.46 13.66764995%
First Union National Bank $ 11,799,410.03 11.79941003% $ 8,200,589.97 10.93411996%
of North Carolina
Banque Paribas $ 11,799,410.03 11.79941003% $ 8,200,589,97 10.93411996%
Fleet Bank National Association $ 7,079,646.02 7.07964602% $ 4,920,353.98 6.56047198%
The Sumitomo Bank, Limited $ 7,079,646.02 7.07964602% $ 4,920,353.98 6.56047198%
US National Bank of Oregon $ 7,079,646.02 7.07964602% $ 4,920,353.98 6.56047198%
Crestar Bank $ 5,899,705.01 5.89970501% $ 4,100,294.99 5.46705998%
--------------- ------------ -------------- ------------ -------------- ---------
$100,000,000.00 100.00000000% $75,000,000.00 100.00000000% $25,000,000.00 100.00000%
111
Exhibit 2.1 to
Amended and Restated
Credit Agreement
ADVANCE REQUEST
TO: NationsBank, N.A., as Administrative Agent
100 North Tryon Street
Charlotte, North Carolina 28255
_____ NationsBank, N.A., as Lender
100 North Tryon Street
Charlotte, North Carolina 28255
_____ The Bank of Nova Scotia, as Canadian
Administrative Agent
1 Liberty Plaza
New York, New York 10006
RE: Amended and Restated Credit Agreement dated as of ____________, 1997
among Shorewood Packaging Corporation (the "U. S. Borrower"),
Shorewood Corporation of Canada Limited (the "Canadian Borrower"),
NationsBank, N.A., as Administrative Agent, The Bank of Nova Scotia,
as Canadian Administrative Agent and the Lenders party thereto (as
amended or modified from time to time, the "Agreement").
DATE: _____________, 199__
- ------------------------------------------------------------------------------
1. This Advance Request is made pursuant to the terms of the Agreement. All
capitalized terms used herein unless otherwise defined shall have the
meanings set forth in the Agreement.
2. _______ Please be advised that the U.S. Borrower is requesting:
(a) ______ a U.S. Revolving Loan in the amount of $__________ be funded on
____________, 199__ to accrue interest at the interest rate set forth in
paragraph 4 below. Subsequent to the funding of the requested U.S.
Revolving Loan, the aggregate amount of outstanding U.S. Revolving Loans
will be $___________; or
112
(b) ______ a Canadian Revolving Loan in the amount of $___________ be
funded on ___________ 199__ to accrue interest at the interest rate set
forth in paragraph 5 below. Subsequent to the funding of the requested
Canadian Revolving Loan, the aggregate amount of outstanding Canadian
Revolving Loans will be $___________; or
(c) ______ a Swing Line Loan in the amount of $___________ be funded on
____________ 199__ to accrue interest at the U.S. Base Rate. Subsequent to
the funding of the requested Swing Line Loan, the aggregate amount of
outstanding Swing Line Loans will be $___________.
3. _______ Please be advised that the Canadian Borrower is requesting:
(a)_____ a Canadian Revolving Loan in the amount of $___________ be funded
on ____________ 199__ to accrue interest at the Canadian Prime Rate.
Subsequent to the funding of the requested Canadian Revolving Loan, the
aggregate amount of outstanding Canadian Revolving Loans will be
$___________; or
(b)_____ the Canadian Lenders to create Bankers' Acceptances in the
aggregate amount of $___________ on ____________, 199__ for the following
period:
________ 30 days
________ 60 days
________ 90 days
________ 180 days
4. The interest rate option applicable to the requested U.S. Revolving Loan
set forth in paragraph 2(a) above shall be:
a. ________ the U.S. Base Rate; or
b. ________ the Adjusted Eurodollar Rate for an Interest Period of:
________ one month
________ two months
________ three months
________ six months
113
5. The interest rate option applicable to the requested Canadian Revolving
Loan by the U.S. Borrower as set forth in paragraph 2(b) above shall be:
a. ________ BNS U.S. Prime Rate; or
b. ________ the Adjusted Eurodollar Rate for an Interest Period of:
________ one month
________ two months
________ three months
________ six months
6. The representations and warranties made in the Agreement are true and
correct in all material respects at and as if made on the date hereof.
7. As of the date hereof, no Default or Event of Default has occurred and is
continuing or would be caused by the requested Revolving Loan, Swing Line
Loan or Bankers' Acceptances.
8. No Material Adverse Effect has occurred since the Closing Date.
9. Immediately after giving effect to the making of the requested Revolving
Loan or Swing Line Loan, or the creation of the requested Bankers'
Acceptance, as the case may be, (a) the sum of U.S. Revolving Loans
outstanding plus Canadian Revolving Loans outstanding plus LOC Obligations
outstanding plus BA Revolving Obligations outstanding plus Swing Line
Loans outstanding will not exceed $125 million; (b) the sum of U.S.
Revolving Loans outstanding plus LOC Obligations outstanding plus Swing
Line Loans outstanding will not exceed the U.S. Revolving Loan Commitment;
(c) the sum of Canadian Revolving Loans outstanding plus BA Revolving
Obligations outstanding will not exceed the Canadian Revolving Loan
Commitment; and (d) the Swing Line Loans outstanding will not exceed the
Swing Line Loan Commitment.
_____________________________
By:__________________________
Name:________________________
Title:_______________________
114
Exhibit 2.3 to
Amended and Restated
Credit Agreement
AMENDED AND RESTATED
SWING LINE LOAN NOTE
$2,000,000 __________, 1997
FOR VALUE RECEIVED, SHOREWOOD PACKAGING CORPORATION, a Delaware
corporation (the "U.S. Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A. (the "Lender") at the office of the Lender (or at such other
place or places as the holder of this Swing Line Loan Note may designate) as set
forth in that certain Amended and Restated Credit Agreement dated as of the date
hereof (as the same may be amended, modified, extended or restated from time to
time, the "Agreement") among the U.S. Borrower, Shorewood Corporation of Canada
Limited, NationsBank, N.A., as Administrative Agent, The Bank of Nova Scotia, as
Canadian Administrative Agent and the Lenders party thereto (including the
Lender), $2,000,000 or such lesser amount as shall equal the aggregate principal
amount of all Swing Line Loans made by the Lender (and not otherwise repaid),
pursuant to Section 2.3 of the Agreement, in lawful money and in immediately
available funds, on the dates and in the principal amounts provided in the
Agreement, and to pay interest on the unpaid principal amount of each Swing Line
Loan made by the Lender, at such office, in like money and funds, for the period
commencing on the date of each Swing Line Loan until each Swing Line Loan shall
be paid in full, at the rates per annum and on the dates provided in the
Agreement.
This Note is the Swing Line Loan Note referred to in the Agreement and
evidences Swing Line Loans made by the Lender thereunder. The Lender shall be
entitled to the benefits of the Agreement. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Agreement and
the terms and conditions of the Agreement are expressly incorporated herein and
made a part hereof.
The Agreement provides for the acceleration of the maturity of the Swing
Line Loans evidenced by this Swing Line Loan Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Swing Line Loans upon the terms and conditions specified therein.
In the event this Swing Line Loan Note is not paid when due at any stated or
accelerated maturity, the U.S. Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable attorney
fees.
The date, amount and interest rate of each Swing Line Loan made by the
Lender to the U.S. Borrower, and each payment made on account of the principal
thereof, shall be recorded by
115
the Administrative Agent on its books; provided that the failure of the
Administrative Agent to make any such recordation shall not affect the
obligations of the U.S. Borrower to make a payment when due of any amount owing
hereunder or under this Swing Line Loan Note in respect of the Swing Line Loans
to be evidenced by this Swing Line Loan Note, and each such recordation shall be
prima facie evidence of the obligations owing under this Swing Line Loan Note
absent manifest error.
THIS SWING LINE LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the U.S. Borrower has caused this Note to be executed
by its duly authorized officer as of the date first above written.
SHOREWOOD PACKAGING CORPORATION
By:_________________________
Name:_______________________
Title:______________________
116
Exhibit 2.9 to
Amended and Restated
Credit Agreement
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$__________ _______________, 1997
FOR VALUE RECEIVED, ______________________, a _____________ corporation
(the "[U.S.][Canadian] Borrower"), hereby promises to pay to the order of
___________________________________ (the "Lender"), at the office of
________________________________ (the "Agent") (or at such other place or places
as the holder of this Revolving Credit Note may designate), as set forth in that
certain Amended and Restated Credit Agreement dated as of the date hereof among
Shorewood Packaging Corporation, Shorewood Corporation of Canada Limited,
NationsBank, N.A., as Administrative Agent, The Bank of Nova Scotia, as Canadian
Administrative Agent and the Lenders party thereto (as the same may be amended,
modified, extended or restated from time to time, the "Agreement"), the
aggregate principal amount of all advances made by the Lender (in the respective
currencies made) as Revolving Loans (and not otherwise repaid), in lawful money
(in the currency in which the Revolving Loan was provided) and in immediately
available funds, on the dates and in the principal amounts provided in the
Agreement, and to pay interest on the unpaid principal amount of each Revolving
Loan made by the Lender, at such office, in like money and funds, for the period
commencing on the date of each Revolving Loan until each Revolving Loan shall be
paid in full, at the rates per annum and on the dates provided in the Agreement.
This Note is one of the Revolving Credit Notes referred to in the
Agreement and evidences Revolving Loans made by the Lender thereunder. The
Lender shall be entitled to the benefits of the Agreement. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto
in the Agreement, and the terms, conditions and covenants of the Agreement are
expressly incorporated herein and made a part hereof.
The Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Credit Note upon the occurrence of
certain events (and for payment of collection costs in connection therewith) and
for prepayments of Revolving Loans upon the terms and conditions specified
therein. In the event this Revolving Credit Note is not paid when due at any
stated or accelerated maturity, the [U.S.][Canadian] Borrower agrees to pay in
addition to the principal and interest, all costs of collection, including
reasonable attorney fees.
Except as permitted by Section 11.3(b) of the Agreement, this Revolving
Credit Note may not be assigned by the Lender to any other Person.
117
The date, amount, type, currency, interest rate and duration of Interest
Period (if applicable) of each Revolving Loan made by the Lender to the
[U.S.][Canadian] Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Agent on its books; provided that the failure
of the Agent to make any such recordation shall not affect the obligations of
the [U.S.][Canadian] Borrower to make a payment when due of any amount owing
hereunder or under this Revolving Credit Note in respect of the Revolving Loans
to be evidenced by this Revolving Credit Note, and each such recordation shall
be prima facie evidence of the obligations owing under this Revolving Credit
Note.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the [U.S.][Canadian] Borrower has caused this Note to
be executed by its duly authorized officer as of the date first above written.
ATTEST: _______________________________
By____________________ By:____________________________
Name:__________________________
_______ Secretary Title:_________________________
(Corporate Seal)
118
Exhibit 3.5 to
Amended and Restated
Credit Agreement
AMENDED AND RESTATED
TERM NOTE
$__________ _______________, 1997
FOR VALUE RECEIVED, SHOREWOOD PACKAGING CORPORATION, a Delaware
corporation (the "U.S Borrower"), hereby promises to pay to the order of
____________________________ (the "Lender"), at the office of NATIONSBANK, N.A.
(the "Agent") (or at such other place or places as the holder of this Term Note
may designate), as set forth in that certain Amended and Restated Credit
Agreement dated as of the date hereof among Shorewood Packaging Corporation,
Shorewood Corporation of Canada Limited, NationsBank, N.A., as Administrative
Agent, The Bank of Nova Scotia, as Canadian Administrative Agent and the Lenders
party thereto (as the same may be amended, modified, extended or restated from
time to time, the "Agreement"), the aggregate principal amount of the Term Loan
evidenced by this Note, in lawful money (in the currency in which the Term Loan
was provided) and in immediately available funds, on the dates and in the
principal amounts provided in the Agreement, and to pay interest on the unpaid
principal amount of such Term Loan made by the Lender, at such office, in like
money and funds, for the period commencing on the date of such Term Loan until
such Term Loan shall be paid in full, at the rates per annum and on the dates
provided in the Agreement.
This Note is one of the Term Notes referred to in the Agreement and
evidences a Term Loan made by the Lender thereunder. The Lender shall be
entitled to the benefits of the Agreement. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Agreement, and
the terms, conditions and covenants of the Agreement are expressly incorporated
herein and made a part hereof.
The Agreement provides for the acceleration of the maturity of the Term
Loan evidenced by this Term Note upon the occurrence of certain events (and for
payment of collection costs in connection therewith) and for prepayment of the
Term Loan upon the terms and conditions specified therein. In the event this
Term Note is not paid when due at any stated or accelerated maturity, the U.S.
Borrower agrees to pay in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Except as permitted by Section 11.3(b) of the Agreement, this Term Note
may not be assigned by the Lender to any other Person.
119
The date, amount, type, currency, interest rate and duration of Interest
Period (if applicable) of each Term Loan made by the Lender to the U.S.
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Agent on its books; provided that the failure of the Agent to
make any such recordation shall not affect the obligations of the U.S. Borrower
to make a payment when due of any amount owing hereunder or under this Term Note
in respect of the Term Loan to be evidenced by this Term Note, and each such
recordation shall be prima facie evidence of the obligations owing under this
Term Note.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the U.S. Borrower has caused this Note to be executed
by its duly authorized officer as of the date first above written.
ATTEST: SHOREWOOD PACKAGING CORPORATION
By____________________ By:______________________
Name:____________________
_______ Secretary Title:___________________
(Corporate Seal)
120
Exhibit 4.1 to
Amended and Restated
Credit Agreement
NOTICE OF CONTINUATION/CONVERSION
TO: NATIONSBANK, N.A., as Agent
100 North Tryon Street
Charlotte, North Carolina 28255
RE: Amended and Restated Credit Agreement entered into as of ________,
1997 among Shorewood Packaging Corporation (the "U.S. Borrower"),
Shorewood Corporation of Canada Limited (the "Canadian Borrower"),
NationsBank, N.A., as Administrative Agent, The Bank of Nova Scotia,
as Canadian Administrative Agent and the Lenders party thereto (as
the same may be amended, modified, extended or restated from time to
time, the "Agreement")
DATE: _____________, 19___
- -----------------------------------------------------------------------------
1. This Notice of Continuation/Conversion is made pursuant to the terms of
the Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Agreement.
2. ______ Please be advised that the U.S. Borrower is requesting:
(a) ______ that a portion of the current outstanding U.S. Revolving Loans
in the amount of $______________ that is currently accruing interest at
the ____________ be continued or converted at the interest rate option set
forth in paragraph 4 below;
(b) ______ that a portion of the current outstanding U.S. Term Loans in
the amount of $______________ that is currently accruing interest at the
____________ be continued or converted at the interest rate option set
forth in paragraph 4 below; or
(c) ______ that a portion of the current outstanding Canadian Revolving
Loans in the amount of $______________ that is currently accruing interest
at the ____________ be continued or converted at the interest rate option
set forth in paragraph 5 below.
121
3. ______ Please be advised that the Canadian Borrower is requesting:
(a) ______ that a portion of the current outstanding Canadian Revolving
Loans in the amount of $______________ that is currently accruing interest
at the ____________ be continued or converted at the interest rate option
set forth in paragraph 6 below;
(b) ______ that a portion of the current outstanding Canadian Base Rate
Revolving Loans in the amount of $______________ that is currently
accruing interest at the Canadian Prime Rate be converted into a Bankers'
Acceptance for the period set forth in paragraph 7 below; or
(c) ______ that Bankers' Acceptances in the amount of $______________
maturing on ____________, 199__ be converted on the maturity date into a
Canadian Base Rate Revolving Loan accruing interest at the Canadian Prime
Rate.
4. The interest rate option applicable to the continuation or conversion of
all or part of the existing U.S. Revolving Loans or U.S. Term Loans, as
set forth in paragraphs 2(a) or (b) above, shall be equal to:
(a) ________ the Base Rate
(b) ________ the Adjusted Eurocurrency Rate for an
Interest Period of:
________ one month
________ two months
________ three months
________ six months
5. The interest rate option applicable to the continuation or conversion of
all or part of the existing Canadian Revolving Loans, as set forth in
paragraph 2(c) above, shall be equal to:
(a) ________ the BNS U.S. Prime Rate
(b) ________ the Adjusted Eurocurrency Rate for an Interest Period of:
________ one month
________ two months
________ three months
________ six months
122
6. The interest rate option applicable to the continuation or conversion of
all or part of the existing Canadian Revolving Loans, as set forth in
paragraph 3(a) above, shall be equal to:
(a) ________ the Canadian Prime Rate
(b) ________ the Adjusted Eurocurrency Rate for an Interest Period
of:
________ one month
________ two months
________ three months
________ six months
7. The period of the Bankers' Acceptance requested by the Canadian Borrower
pursuant to paragraph 3(b) above shall be:
________ 30 days
________ 60 days
________ 90 days
________ 180 days
8. Subsequent to the continuation or conversion of all or part of the
existing Revolving Loans, Term Loans or Bankers' Acceptances (a) the sum
of U.S. Revolving Loans outstanding plus Canadian Revolving Loans
outstanding plus LOC Obligations outstanding plus BA Revolving Obligations
outstanding plus Swing Line Loans outstanding will not exceed $125
million; (b) the sum of U.S. Revolving Loans outstanding plus LOC
Obligations outstanding plus Swing Line Loans outstanding will not exceed
the U.S. Revolving Loan Commitment; and (c) the sum of Canadian Revolving
Loans outstanding plus BA Revolving Obligations outstanding will not
exceed the Canadian Revolving Loan Commitment.
9. No Default or Event of Default has occurred or is continuing or would be
caused by this Notice of Continuation/ Conversion.
_______________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
123
Exhibit 7.1(c) to
Amended and Restated
Credit Agreement
OFFICER'S CERTIFICATE
TO: NATIONSBANK, N.A., as Administrative Agent
100 North Tryon Street
Charlotte, North Carolina 28255
RE: Amended and Restated Credit Agreement entered into as of
______________, 1997 among Shorewood Packaging Corporation (the
"U.S. Borrower"), Shorewood Corporation of Canada Limited (the
"Canadian Borrower"), NationsBank, N.A. as Administrative Agent, The
Bank of Nova Scotia as Canadian Administrative Agent and the Lenders
party thereto (as the same may be amended, modified, extended or
restated from time to time, the "Credit Agreement")
DATE: _____________, 199__
- ---------------------------------------------------------------------------
Pursuant to the terms of the Credit Agreement, I, ______________, Chief
Financial Officer of Shorewood Packaging Corporation hereby certify that, as of
the fiscal quarter ending ________, 199__, the statements below are accurate and
complete in all respects (all capitalized terms used below shall have the
meanings set forth in the Credit Agreement):
a. Attached hereto as Schedule 1 are calculations (calculated as of
the date of the financial statements referred to in paragraph c. below)
demonstrating compliance by the Borrowers with the financial covenants
contained in Section 7.13 of the Credit Agreement.
b. No Default or Event of Default has occurred under the Credit
Agreement (except as indicated on a separate page attached hereto,
together with an explanation of the action taken or proposed to be taken
by the Borrowers with respect thereto).
124
c. The Consolidated Shorewood Group's quarterly/annual financial
statements for the fiscal quarter/year ended __________ which accompany
this certificate fairly present in all material respects the financial
condition of the Consolidated Shorewood Group and have been prepared in
accordance with GAAP, subject to changes resulting from normal year-end
audit adjustments.
SHOREWOOD PACKAGING CORPORATION
______________________________
Chief Financial Officer
125
SCHEDULE 1 TO OFFICER'S CERTIFICATE
I. A. Compliance with Section 7.13(a):
Current Ratio
1. Current Assets $___________
2. Current Liabilities $___________
3. Current Ratio (Line 1 ) Line 2) _____:_____
Minimum Allowed: 1.10 : 1.0
B. Compliance with Section 7.13(b):
Fixed Charge Ratio
1. EBITDA (see Exhibit A) $___________
2. Capital Expenditures $___________
3. Line 1 - Line 2 $___________
4. Cash Interest Expense $___________
5. Cash Dividends paid by
the U.S. Borrower $___________
6. Scheduled principal payments on
long term Funded Debt of the
Consolidated Shorewood Group $___________
7. Line 4 + Line 5 + Line 6 $___________
8. Fixed Charge Ratio
(Line 3 ) Line 7) _____:_____
Minimum Required:
a. As of the end of the fiscal quarter ending closest to April
30, 1997 and as of the end of each fiscal quarter thereafter
through and including the fiscal quarter ending closest to
April 30, 1999, greater than or equal to 1.25 to 1.0
126
b. As of the end of the fiscal quarter ending closest to July
31, 1999 and as of the end of each fiscal quarter thereafter,
greater than or equal to 1.50 to 1.0
C. The consolidated Net Worth of the Consolidated Shorewood Group is
$____________, which is greater than or equal to the sum of (1)
$75,000,000 plus (2) an amount, determined at the end of each fiscal
quarter, commencing with the quarterly fiscal period ending closest to
April 30, 1997, equal to 50% of Net Income earned by the Consolidated
Shorewood Group (with no reduction for any losses incurred during any
fiscal quarter).
D. Compliance with Section 7.13(d):
Debt Coverage Ratio
1. Funded Debt $___________
2. EBITDA (see Exhibit A) $___________
3. Debt Coverage Ratio
(Line 1 ) Line 2) _____:_____
Maximum Allowed:
a. As of the end of the fiscal quarter ending closest to April
30, 1997 and as of the end of each fiscal quarter thereafter through
and including the fiscal quarter ending closest to April 30, 1999,
less than or equal to 3.0 to 1.0
b. As of the end of the fiscal quarter ending closest to July
31, 1999 and as of the end of each fiscal quarter thereafter,
less than or equal to 2.5 to 1.0
127
Exhibit A
to Schedule 1
to Exhibit 7.1(c)
Calculation Schedule to Officer's Certificate
As of __________________
Twelve
1. EBITDA: Months Quarter Quarter Quarter Quarter
Ended Ended Ended Ended Ended
_______ _______ ________ ________ _________
Net Income _______ _______ _______ _______ _______
- - Extraordinary Gains/
Losses _______ _______ _______ _______ _______
- - Non-cash Cumulative
Effect Adjustment _______ _______ _______ _______ _______
+ Interest Expense _______ _______ _______ _______ _______
+ Taxes _______ _______ _______ _______ _______
+ Depreciation _______ _______ _______ _______ _______
+ Amortization _______ _______ _______ _______ _______
= EBITDA _______ _______ _______ _______ _______
128
Exhibit 7.1(i) to
Amended and Restated
Credit Agreement
Information Certificate
I, ________________________, the Chief Financial Officer of Shorewood
Packaging Corporation hereby certify to NationsBank, N.A., as Administrative
Agent, in connection with that certain Amended and Restated Credit Agreement
(the "Agreement"), dated as of ____________, 1997, among Shorewood Packaging
Corporation (the "U.S. Borrower"), Shorewood Corporation of Canada Limited (the
"Canadian Borrower"), NationsBank, N.A., as Administrative Agent, The Bank of
Nova Scotia, as Canadian Administrative Agent, and the Lenders party thereto
that, during the fiscal quarter ending ________________, 199__, the following is
true and correct (capitalized terms used herein shall have the meaning ascribed
thereto in the Credit Agreement):
1. Acquisitions (as referred under Section 7.1(i)), determined in
accordance with the terms of the Agreement, equal
$___________________.
2. The amount of Investments made by the Consolidated Shorewood Group
(a) in joint ventures in non-wholly owned Subsidiaries of a member
of the Consolidated Shorewood Group equals $____________________ and
(b) that are not Permitted Investments equals $____________________.
3. The amount of Restricted Payments made by the U.S. Borrower equals
$___________________.
4. The amount of Capital Expenditures made by the Consolidated
Shorewood Group in (a) the purchase of ink blending systems pursuant
to that certain Requirements & Cooperation Agreement, dated as of
___________, between the U.S. Borrower and Sun Chemical Corporation,
equals $___________________ and (b) China equals
$___________________.
Executed as of ______________, 199__.
SHOREWOOD PACKAGING CORPORATION
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
129
Exhibit 11.3(b) to
Amended and Restated
Credit Agreement
ASSIGNMENT AGREEMENT
Reference is made to that certain Amended and Restated Credit Agreement
entered into as of ______________, 1997 (as the same may be amended, modified,
extended or restated from time to time, the "Agreement") among Shorewood
Packaging Corporation, Shorewood Corporation of Canada Limited (collectively,
the "Borrowers"), NationsBank, N.A., as Administrative Agent (the
"Administrative Agent"), The Bank of Nova Scotia, as Canadian Administrative
Agent and the Lenders party thereto. All capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Agreement.
1. The Assignor (as defined below) hereby sells and assigns, without
recourse, to the Assignee (as defined below), and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective as of the effective
date of the assignment as designated below (the "Effective Date"), the following
interests set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Agreement: [(a) the interests set forth below in the U.S.
Revolving Loan Commitment Percentage of the Assignor on the Effective Date, (b)
the interests set forth below in the Canadian Revolving Loan Commitment
Percentage, (c) the interests set forth below in the U.S. Term Loan Commitment
Percentage, (d) the interests set forth below in the Canadian Term Loan
Commitment Percentage, (e) the Loans owing to the Assignor in connection with
the Assigned Interest which are outstanding on the Effective Date, and (f) the
Assignor's Participation Interests in all Letters of Credit as of the Effective
Date and the rights and obligations appurtenant thereto under the LOC
Documents.] The purchase of the Assigned Interest shall be at par and periodic
payments made with respect to the Assigned Interest which (i) accrued prior to
the Effective Date shall be remitted to the Assignor and (ii) accrue from and
after the Effective Date shall be remitted to the Assignee. From and after the
Effective Date, the Assignee, if it is not already a Lender under the Agreement,
shall become a "Lender" for all purposes of the Agreement and the other Loan
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations under the Agreement.
2. The Assignor represents and warrants to the Assignee that it is the
holder of the Assigned Interest and the Loans and Participation Interests
related thereto, and it has not previously transferred or encumbered such
Assigned Interest, Loans or Participation Interests.
3. The Assignee represents and warrants to the Assignor that it is an
Eligible Assignee.
4. This Assignment shall be effective only upon (a) the consent of the
Borrower to the extent required under Section 11.3 of the Agreement and (b)
delivery to the Administrative Agent of this Assignment Agreement together with
the transfer fees, if applicable, set forth in Section 11.3(b) of the Agreement.
130
5. The Assignor and the Assignee confirm to and agree with each other and
the other parties to the Agreement as to the terms set forth in paragraph 2 of
Section 11.3(b) of the Agreement.
6. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA.
7. Terms of Assignment
(a) Date of Assignment ___________
(b) Legal Name of Assignor ___________
(c) Legal Name of Assignee ___________
(d) Effective Date of Assignment ___________
(e) U.S. Revolving Loan Commitment
Percentage assigned __________%
(f) U.S. Revolving Loan Commitment
Percentage of Assignor
after assignment __________%
(g) Total U.S. Revolving Loans
outstanding as of Effective
Date $___________
(h) U.S. Revolving Loans assigned
on Effective Date (the amount
set forth in (g) multiplied
by the percentage set forth
in (e)) $___________
(i) U.S. Revolving Loan Commitment $___________
(j) Principal amount of U.S.
Revolving Loan Commitment
assigned on the Effective
Date (the amount set forth in
(i) multiplied by the
percentage set forth in (e)) $___________
131
(k) U.S. Revolving Loan Commitment
of Assignor after Effective
Date $___________
(l) U.S. Revolving Loan Commitment
of Assignee after Effective
Date $___________
(m) U.S. Term Loan Commitment
Percentage assigned __________%
(n) U.S. Term Loan Commitment
Percentage of Assignor
after assignment __________%
(o) U.S. Term Loan outstanding
as of Effective Date $___________
(p) U.S. Term Loan assigned
on Effective Date (the amount
set forth in (o) multiplied by
the percentage set forth in(m)) $___________
(q) U.S. Term Loan Commitment $___________
(r) Principal amount of U.S.
Term Loan Commitment assigned
on the Effective Date (the
amount set forth in (q)
multiplied by the percentage
set forth in (m)) $___________
(s) U.S. Term Loan Commitment of
Assignor after Effective Date $___________
(t) U.S. Term Loan Commitment of
Assignee after Effective Date $___________
(u) Canadian Revolving Loan
Commitment Percentage assigned __________%
(v) Canadian Revolving Loan
Commitment Percentage of
Assignor after assignment __________%
132
(w) Total U.S. dollar equivalent
of Canadian Revolving Loans
outstanding as of Effective
Date $___________
(x) U.S. dollar equivalent of
Canadian Revolving Loans assigned
on Effective Date (the amount
set forth in (w) multiplied by
the percentage set forth in (u)) $___________
(y) Canadian Revolving Loan
Commitment $___________
(z) U.S. dollar equivalent of
principal amount of Canadian
Revolving Loan Commitment
assigned on the Effective
Date (the amount set forth in
(y) multiplied by the
percentage set forth in (u)) $___________
(aa) Canadian Revolving Loan
Commitment of Assignor after
Effective Date $___________
(bb) Canadian Revolving Loan
Commitment of Assignee after
Effective Date $___________
133
The terms set forth above are hereby agreed to:
_______________________, as Assignor
By: _______________________________
Name: _____________________________
Title: ____________________________
____________________, as Assignee
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED TO (if applicable):
SHOREWOOD PACKAGING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
SHOREWOOD CORPORATION OF CANADA
LIMITED
By: _______________________________
Name: _____________________________
Title: ____________________________
134
SCHEDULE 1.1(b)
EXISTING LETTERS OF CREDIT
U.S. LETTERS OF CREDIT:
CANADIAN LETTERS OF CREDIT:
135
SCHEDULE 6.9
INDEBTEDNESS
136
SCHEDULE 6.10
LITIGATION
137
SCHEDULE 6.15
SUBSIDIARIES/AFFILIATES
138
SCHEDULE 6.19
HAZARDOUS SUBSTANCES
139
SCHEDULE 6.22
LOCATION OF ASSETS
140
SCHEDULE 7.6
TYPE AND AMOUNT OF INSURANCE
141
SCHEDULE 8.2
LIENS
142
SCHEDULE 11.1
SCHEDULE FOR NOTICES
PARTY ADDRESS FOR NOTICES DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
----- ------------------- ----------------------- -------------------------
Shorewood Packaging Shorewood Packaging Shorewood Packaging Shorewood Packaging
Corporation Corporation Corporation Corporation
277 Park Avenue 277 Park Avenue 277 Park Avenue
30th Floor 30th Floor 30th Floor
New York, NY 10172 New York, NY 10172 New York, NY 10172
Attn: Howard M. Liebman Attn: Howard M. Liebman Attn: Howard M. Liebman
Phone:(212) 508-5676 Phone:(212) 508-5676 Phone:(212) 508-5676
Fax: (212) 508-5677 Fax: (212) 508-5677 Fax: (212) 508-5677
Shorewood Corporation of Shorewood Corporation of
Canada Limited Canada Limited
2220 Midland Avenue
50 Administration Isle
Scarborough, Ontario M1P
3E6
NationsBank, N.A. NationsBank, N.A. NationsBank, N.A. NationsBank, N.A.
101 N. Tryon Street 101 N. Tryon Street 101 N. Tryon Street
Independence Center, 15th NC1-001-15-04 NC1-001-15-04
Floor Charlotte, NC 28255 Charlotte, NC 28255
NC1-001-15-04 Attn: Dana Weir Attn: Dana Weir
Charlotte, NC 28255 Phone:(704) 388-3917 Phone:(704) 388-3917
Attn: Dana Weir Fax: (704) 386-9923 Fax: (704) 386-9923
Phone:(704) 388-3917
Fax: (704) 386-9923
with a copy to:
NationsBank, N.A.
767 Fifth Avenue
NY1-003-01-01
New York, NY 10153
Attn: Patricia McCormick
Phone:(212) 407-5373
Fax: (212) 751-6909
143
PARTY ADDRESS FOR NOTICES DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
----- ------------------- ----------------------- -------------------------
The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia
New York Agency New York Agency New York Agency
One Liberty Plaza One Liberty Plaza One Liberty Plaza
New York, NY 10006 New York, NY .10006 New York, NY 10006
Attn: Dan Foote Attn: Dan Foote Attn: Dan Foote
Phone:(212) 225-5012 Phone:(212) 225-5012 Phone:(212) 225-5012
Fax: (212) 225-5090 Fax: (212) 225-5090 Fax: (212) 225-5090
The Sumitomo Bank, Limited The Sumitomo Bank, Limited The Sumitomo Bank, Limited The Sumitomo Bank, Limited
USCBD New York Grand 233 S. Wacker Drive, 233 S. Wacker Drive,
Central Office Suite 5400 Suite 5400
450 Lexington Avenue, Chicago, IL 60606 Chicago, IL 60606
Suite 1700 Phone:(312) 876-0181 Phone:(312) 876-0181
New York, NY 10017 Fax: (312) 876-1995 Fax: (312) 876-1995
Attn: Ron Gale
Phone:(212) 808-2337
Fax: (212) 818-0865
Crestar Bank Crestar Bank Crestar Bank Crestar Bank
919 East Main Street 919 East Main Street 919 East Main Street
22nd Floor 22nd Floor 22nd Floor
Richmond, VA 23219 Richmond, VA 23219 Richmond, VA 23219
Attn: Julian Holland Attn: Julian Holland Attn: Julian Holland
Phone:(804) 782-7346 Phone:(804) 782-7346 Phone:(804) 782-7346
Fax: (804) 782-5413 Fax: (804) 782-5413 Fax: (804) 782-5413
Banque Paribas Banque Paribas Banque Paribas Banque Paribas
787 7th Avenue, 32nd Floor 787 7th Avenue, 32nd Floor 787 7th Avenue, 32nd Floor
New York, NY 10019 New York, NY 10019 New York, NY 10019
Attn: Duane Helkowski Attn: Duane Helkowski Attn: Duane Helkowski
Phone:(212) 841-2940 Phone:(212) 841-2940 Phone:(212) 841-2940
Fax: (212) 841-2292 Fax: (212) 841-2292 Fax: (212) 841-2292
144
PARTY ADDRESS FOR NOTICES DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
----- ------------------- ----------------------- -------------------------
United States National United States National United States National United States National
Bank of Oregon Bank of Oregon Bank of Oregon Bank of Oregon
555 S.W. Oak Street, 555 S.W. Oak Street, Suite 555 S.W. Oak Street,
Suite 400 400 Suite 400
Portland, OR 97204 Portland, OR 97204 Portland, OR 97204
Attn: Ross Beaton Attn: Ross Beaton Attn: Ross Beaton
Phone:(503) 275-3660 Phone:(503) 275-3660 Phone:(503) 275-3660
Fax: (503) 275-4267 Fax: (503) 275-4267 Fax: (503) 275-4267
Fleet Bank, N.A. Fleet Bank, N.A. Fleet Bank, N.A. Fleet Bank, N.A.
1185 Avenue of Americas 1185 Avenue of Americas 1185 Avenue of Americas
New York, NY 10036 New York, NY 10036 New York, NY 10036
Attn: Beth Frankel Attn: Beth Frankel Attn: Beth Frankel
Phone:(212) 819-5769 Phone:(212) 819-5769 Phone:(212) 819-5769
Fax: (212) 819-4112 Fax: (212) 819-4112 Fax: (212) 819-4112
First Union National Bank First Union National Bank First Union National Bank First Union National Bank
of North Carolina of North Carolina of North Carolina of North Carolina
One First Union Center One First Union Center One First Union Center
Charlotte, NC 28288-0745 Charlotte, NC 28288-0745 Charlotte, NC 28288-0745
Attn: Dennis J. Diczok Attn: Dennis J. Diczok Attn: Dennis J. Diczok
Phone:(704) 383-7630 Phone:(704) 383-7630 Phone:(704) 383-7630
Fax: (704) 383-6670 Fax: (704) 383-6670 Fax: (704) 383-6670
The Bank of New York The Bank of New York The Bank of New York The Bank of New York
530 Fifth Avenue 530 Fifth Avenue 530 Fifth Avenue
New York, NY 10036 New York, NY 10036 New York, NY 10036
Attn: Scott Silverstein Attn: Scott Silverstein Attn: Scott Silverstein
Phone:(212) 852-4044 Phone:(212) 852-4044 Phone:(212) 852-4044
Fax: (212) 852-4262 Fax: (212) 852-4262 Fax: (212) 852-4262
The Chase Manhattan Bank The Chase Manhattan Bank The Chase Manhattan Bank The Chase Manhattan Bank
395 North Service Road, 395 North Service Road, 395 North Service Road,
3rd Floor 3rd Floor 3rd Floor
Melville, NY 11747 Melville, NY 11747 Melville, NY 11747
Attn: Emelia Teige Attn: Emelia Teige Attn: Emelia Teige
Phone:(716) 755-5046 Phone:(716) 755-5046 Phone:(716) 755-5046
Fax: (716) 755-5103 Fax: (716) 755-5103 Fax: (716) 755-5103
145
PARTY ADDRESS FOR NOTICES DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
----- ------------------- ----------------------- -------------------------