1
EXHIBIT 10.11(a)
CREDIT AGREEMENT
dated as of May 6, 1994
among
MANCHESTER PLASTICS, LTD.,
VARIOUS FINANCIAL INSTITUTIONS
and
CONTINENTAL BANK N.A.,
individually and as Agent
2
|| TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; BORROWING AND CONVERSION PROCEDURES . . . . . . . . . . . . . . 18
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Various Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.4 Conversion Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6 Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.8 Commitments Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3 NOTES EVIDENCING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Setting and Notice of Eurodollar Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.1 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.2 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Application of Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Changes in Law Rendering Eurodollar Loans
3
Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Right of Banks to Fund through Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Discretion of Banks as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Mitigation of Circumstances; Replacement of Affected Bank . . . . . . . . . . . . . . . . . . . . . . . . 29
8.8 Conclusiveness of Statements; Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.6 Litigation and Suretyship Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 Ownership of Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12 Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.14 Solvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.16 Contracts; Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.17 Environmental and Safety and Health Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.19 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.20 Places of Business and Location of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 10 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Reports, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.1 Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.2 Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.3 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.4 Reports to SEC and to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.5 Notice of Default, Litigation and Pension and Welfare Plan Matters . . . . . . . . . . . . . . . . 37
10.1.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.7 Management Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.8 Projections, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.9 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Compliance with Laws; Maintenance of Property;
Payment of Taxes and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.1 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.2 Accounts Payable to Inventory Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ii
4
10.6.3 Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.4 Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.7 Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.9 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.11 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.12 Mergers, Consolidations, Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.16.1 Environmental Response Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.16.2 Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.16.3 Environmental Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.17 Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.18 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.19 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.20 Limitations on Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.21 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1 Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.2 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.3 Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.4 Incumbency and Signature Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.5 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.6 Opinions of Counsel for the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.8 Debt to be Repaid, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.9 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1.10 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 Loans and Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2.1 No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2.2 Confirmatory Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.1 Non-Payment of the Loans, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.2 Non-Payment of Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.3 Other Material Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.4 Bankruptcy, Insolvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.5 Non-Compliance with Provisions of This Agreement . . . . . . . . . . . . . . . . . . . . . . 50
12.1.6 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.7 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.8 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.9 Invalidity of Collateral Documents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.10 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
iii
5
SECTION 13 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.3 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.4 Credit Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.5 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.6 Action on Instructions of the Required Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.7 Funding Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.8 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.9 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.2 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.4 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.5 Regulations G, T, U, and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.6 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.7 Subsidiary References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.9 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.9.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.9.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.13 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.15 Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.17 Currency Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
iv
6
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate
(Section 10.1.3)
EXHIBIT C Form of General Security Agreement
(Section 11.1.5)
EXHIBIT D Form of Debenture (Section 11.1.5)
EXHIBIT E Form of Debenture Pledge Agreement
(Section 11.1.5)
EXHIBIT F Form of Opinions of Counsel for the
Company
(Section 11.1.6)
EXHIBIT G Form of Assignment Agreement
(Section 14.9)
SCHEDULE I Commitment Limits and Percentages
SCHEDULE 9.6 Litigation and Suretyship Liabilities
(Section 9.6)
SCHEDULE 9.8 Subsidiaries (Section 9.8)
SCHEDULE 9.9 Pension and Welfare Plan (Section 9.9)
SCHEDULE 9.15 Insurance (Section 9.15)
SCHEDULE 9.16 Contracts; Labor Matters (Section 9.16)
SCHEDULE 9.17 Environmental Matters (Section 9.17)
SCHEDULE 9.18 Real Property (Section 9.18)
SCHEDULE 9.20 Places of Business, Location of Assets,
and Account Debtors (Section 9.20)
SCHEDULE 10.7 Debt (Section 10.7)
SCHEDULE 10.8 Liens (Section 10.8)
SCHEDULE 10.11 Investments (Section 10.11)
SCHEDULE 10.14 Transactions with Affiliates (Section 10.14)
||
v
7
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 6, 1994 (as amended, supplemented
or otherwise modified from time to time, this "Agreement"), is entered into
among MANCHESTER PLASTICS, LTD., an Ontario corporation (the "Company"), the
undersigned financial institutions (together with their respective successors
and assigns, collectively the "Banks" and individually each a "Bank") and
CONTINENTAL BANK N.A. (in its individual capacity, "Continental"), as agent for
the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS. When used herein the following terms shall have
the following meaning (such definitions to be applicable to both the singular
and plural forms of such terms):
Accounts Payable to Inventory Ratio means, as of the end of any Fiscal
Quarter, the ratio of (a) the accounts payable of the Company to (b) the
Inventory of the Company.
Affected Bank means any Bank that has given notice to the Company (which
has not been rescinded) of (i) any obligation by the Company to pay any amount
pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstances of
the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
Agent means Continental in its capacity as agent for the Banks hereunder
and any successor thereto in such capacity.
Agreement - see the Preamble.
Alternate Reference Rate means at any time the greater of (a) the Federal
Funds Rate plus 1/2 of 1% and (b) the rate per annum then most recently
announced by Continental as its reference rate at Chicago, Illinois.
Asset Sale means (a) any sale, lease, transfer or other disposition
(including by way of amalgamation, merger or consolidation) by the Company or
any Subsidiary of any asset (including the sale of capital stock of any
Subsidiary) outside
8
the ordinary course of business, or (b) any sale or
assignment with or without recourse of accounts receivable of the Company or
any Subsidiary other than (i) sales, transfers or other dispositions by the
Company to Larizza provided (x) the net cash proceeds thereof do not exceed
$500,000 in the aggregate in any Fiscal Year it being agreed that sales between
the Company and Larizza shall be netted in determining said $500,000 and (y) if
such net cash proceeds exceed $200,000 in the aggregate in any Fiscal Year,
such assets have been identified to the Agent 30 days after such sale, transfer
or other disposition exceeding $200,000 and the Company has taken all necessary
steps to ensure that the Liens of the Agent under this Agreement or under the
Credit Agreement of even date herewith between the Agent and Larizza, as
applicable, will be first priority perfected Liens (it being agreed that in
connection with Asset Sales by the Company permitted under this clause (i), the
Lien of the Agent under the Collateral Documents shall be released with respect
to such assets), and (ii) the transfer of Manchester/Williamston/Homer from
the Company to Larizza on or before the Effective Date.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
Bank - see the Preamble.
Bank Party - see Section 14.13.
Business Day means any day on which commercial banks are open for
commercial banking business in Chicago and, in the case of a Business Day which
relates to a Eurodollar Loan, on which dealings are carried on in the interbank
eurodollar market.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property, property
by such Person which, in conformity with generally accepted accounting
principles, is accounted for as a capital lease on the balance sheet of such
Person.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year after
such time, issued, insured or guaranteed by the United States Government
or the Government of Canada;
(b) commercial paper, maturing not more than one year from the
date of issue, which is issued by
(i) a corporation (except an Affiliate) organized under the
laws of any State of the United States of
2
9
America or of the District of Columbia or under the laws of
Canada or any Province of Canada and rated at least A-1 by Standard
& Poor's Corporation or P-1 by Moody's Investors Service, Inc. (or,
in the case of Canadian corporations, the equivalent rating by the
Canadian Bond Rating Service, the Dominion Bond Rating Service or
Dunn & Bradstreet), at the time of investment, or
(ii) any Bank (or its holding company);
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the date
of issue, which is issued by either
(i) a financial institution that is a member of the Federal
Reserve System and has a combined capital and surplus and undivided
profits of not less than $250,000,000, or
(ii) any Bank; or
(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) any Bank, or
(B) any other commercial banking institution of the
stature referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any obligation
of the type described in any of clauses (a) through (c), and
(iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase
obligation of such Bank (or other commercial banking institution)
thereunder;
(e) investments in money market funds that invest substantially
all of their assets in Cash Equivalent Investments described in clauses
(a) through (d); or
(f) investments in short-term asset management accounts offered by
any Bank, Bank One Cleveland or The Toronto-Dominion Bank for the purpose
of investing in loans to any corporation (other than an Affiliate)
organized under the laws of any State of the United States or of the
3
10
District of Columbia or under the laws of Canada or any Province of
Canada and rated at least A-1 by Standard & Poor's corporation or P-1 by
Moody's Investor Services, Inc. (or, in the case of Canadian
corporations, the equivalent rating by the Canadian Bond Rating Service,
the Dominion Bond Rating Service or Dunn & Bradstreet).
Change in Control means the occurrence of any of the following: (a) a
failure by Larizza at all times to own directly, free and clear of Liens
(except the Lien of the Agent), 100% of the issued and outstanding capital
stock of the Company for any reason, (b) any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable) other than Ronald T. Larizza is or becomes the "beneficial
owner", directly or indirectly, of more than 25% (38% if Ronald T. Larizza
controls more voting power than such "person" or "group") of the total voting
power in the aggregate of all classes of capital stock of Larizza then
outstanding normally entitled to vote in elections of directors, or (c) during
any period of 12 consecutive months after the Effective Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of Larizza (together with any new directors whose election or appointment was
approved by such Board or whose nomination for election by the shareholders of
Larizza was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election, appointment or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of the
Company then in office.
Code means the Income Tax Act (Canada), as amended.
Collateral means, collectively, all of the property and assets that are
from time to time subject to the Collateral Documents.
Collateral Documents means the Debenture, the Debenture Pledge Agreement
and the Security Agreement and each Mortgage.
Commitment means (a) as to any Bank, such Bank's commitment to make Loans
pursuant to Section 2.1 and (b) in the case of all Banks, the aggregate
Commitments of the Banks to make Loans pursuant to Section 2.1. The amounts of
the initial Commitments of each Bank are set forth on Schedule I.
Company - see the Preamble.
Computation Period means a Fiscal Quarter.
4
11
Consolidated Capital Expenditures means all expenditures which, in
accordance with generally accepted accounting principles, would be required to
be capitalized and shown on the consolidated balance sheet of the Company and
its Subsidiaries, but excluding (a) expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed from
insurance proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being replaced or restored or with awards of
compensation arising from the taking by eminent domain or expropriation or
condemnation of the assets being replaced and (b) prepaid expenses, inventory
and tooling expenditures which would otherwise be treated as Capital
Expenditures.
Consolidated EBITDA means, for any Computation Period, the sum, without
duplication, of
(a) Consolidated Net Income for such Computation Period,
plus
(b) the Consolidated Interest Expense for such Computation Period,
plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company and its Subsidiaries
deducted in determining Consolidated Net Income for such Computation
Period,
plus
(d) all federal, provincial, local and foreign income taxes
(whether paid or deferred) of the Company and its Subsidiaries deducted
in determining Consolidated Net Income for such Computation Period.
Consolidated Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of
(a) the sum, without duplication, of
(i) Consolidated EBITDA for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period,
5
12
minus
(iii) Consolidated Capital Expenditures for such Computation
Period,
minus
(iv) dividends paid by the Company during such Computation Period
to
(b) the sum, without duplication, of
(i) Consolidated Interest Expense for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period.
Consolidated Interest Expense means for any period the consolidated
interest expense of the Company and its Subsidiaries for such period
(including, without limitation, all imputed interest expense on Capital
Leases).
Consolidated Lease Expense means for any period the aggregate payments by
the Company and its Subsidiaries as lessee under Operating Leases.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period.
Continental - see the Preamble.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee
under Capital Leases which have been recorded as liabilities on a balance sheet
of such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than prepaid interest and trade accounts
payable and accrued liabilities in the ordinary course of business), (d) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person (it being understood
that if such Person has not assumed or otherwise become personally liable for
any such indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such
6
13
indebtedness or the fair market value of all property of such Person securing
such indebtedness), (e) all obligations, contingent or otherwise, with respect
to the face amount of all letters of credit (whether or not drawn) and banker's
acceptances issued for the account of such Person, (f) net liabilities of such
Person under all Hedging Agreements, and (g) all Suretyship Liabilities of such
Person.
Debenture - see Section 11.1.5.
Debenture Pledge Agreement - see Section 11.1.5.
Debt to be Repaid means all Debt listed on Schedule 10.7 under the
heading "Debt to be Repaid".
Dollar and the sign "$" mean lawful money of the United States of America.
Effective Date - see Section 11.1.
Environmental Laws means the Environmental Protection Act (Canada), the
Transportation of Dangerous Goods Act (Canada), the Hazardous Products Act
(Canada), the Environmental Protection Act (Ontario), the Water Resources Act
(Ontario), the Gasoline Handling Act (Ontario), and any other applicable
federal, provincial or local statute, law, ordinance, code, rule, regulation,
order, decree, policy or guidelines relating to clean up of contaminated real
property, or other requirement regulating, relating to, or imposing liability
or standards of conduct (including, but not limited to, permit requirements and
emission or effluent restrictions) concerning any Hazardous Materials, as now
or at any time hereafter in effect.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to
the daily average during such Interest Period of the percentage in effect on
each day of such Interest Period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor), for determining the aggregate
maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant
to Regulation D or any other then applicable regulation of such Board of
Governors which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate determined
by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Bank the office or offices of
such Bank which shall be making or maintaining the
7
14
Eurodollar Loans of such Bank hereunder or such other office or offices through
which such Bank determines its Eurodollar Rate. A Eurodollar Office of any
Bank may be, at the option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of Continental two
Business Days prior to the beginning of such Interest Period by major banks in
the interbank eurodollar market as at or about 10:00 a.m. Chicago time of such
Eurodollar Office, for delivery on the first day of such Interest Period, for
the number of days comprised therein and in an amount equal or comparable to
the amount of the Eurodollar Loan of Continental for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) -------------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Exchange Act means the Securities Exchange Act of 1934 (United States),
as amended.
Excluded Taxes means, in the case of each Bank and the Agent, taxes
imposed on or measured by its gross or net income or receipts (other than
Withholding Taxes) or capital, and franchise taxes imposed on it by the
jurisdiction under which such Bank or the Agent is organized or any political
subdivision thereof.
Federal Funds Rate means, for any day, the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m., New York City time, on such day by each of three leading
brokers of Federal funds transactions in New York City, selected by the Agent.
The rate for any day which is not a Business Day shall be the rate for the
immediately preceding Business Day.
8
15
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1993") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Floating Rate Loan means any Loan which bears interest at or by reference
to the Alternate Reference Rate.
Group - see Section 2.2.
Hazardous Material means any hazardous, toxic or dangerous substance or
material in fact or defined as such in (or for purposes of) any Environmental
Laws or any other Federal, provincial or local statute, law, ordinance, code,
regulation or order, or any other requirement of any governmental authority
regulating, relating to, or imposing liability for, or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material as
now or any time hereafter in effect and applicable to any real property owned
by or leased to the Company or any Subsidiary or on which the Company or any
Subsidiary carries on any of its operations (provided that no such province or
local statute, law, ordinance, code, regulation, order or other requirement
shall be deemed to have extraterritorial application).
Hedging Agreements means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity prices.
Interest Act means the Interest Act (Canada), R.S.C. 1985, c. I-15, as
amended.
Interest Period - see Section 4.3.
Inventory means any and all of the goods of the Company (including,
without limitation, goods in transit) wheresoever located, which are or may at
any time be held for sale, furnished under any contract of service, or held as
raw materials, work in process, finished goods or supplies or materials used or
consumed in business of the Company, or which are held for use in connection
with the manufacture, packing, shipping, advertising, selling or finishing of
such goods.
9
16
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any other Person
(excluding (i) commission, travel and similar advances to officers and
employees made in the ordinary course of business and (ii) advances to,
and deposits with, contractors and suppliers in the ordinary course of
business, but solely to the extent consistent with the past practice of
the Company and its Subsidiaries); and
(b) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
Larizza means Larizza Industries, Inc., an Ohio corporation.
Lien means, when used with respect to any Person, any interest granted by
such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, title
retention document, charge, hypothecation or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial process or
otherwise.
Loans - see Section 2.1.
Loan Documents means this Agreement, the Notes and the Collateral
Documents.
Manchester/Williamston/Homer means the facilities and related assets in
Manchester, Williamston and Homer, Michigan owned by the Company as of March
31, 1994.
Margin means (a) initially, 1.75% in the case of any Floating Rate Loan,
and 3.50% in the case of any Eurodollar Loan, and (b) on and after any date
specified below on which the Margin is to be adjusted, the rate per annum set
forth in the table below for the applicable type of Loan opposite the
applicable Level:
10
17
Margin for Euro- Margin for Floating
Net Worth dollar Loans Rate Loans
--------- --------------- -------------------
<$10MM 3.50% 1.75%
$10 - $25MM 2.50% .75%
>$25MM 1.50% .00%
If any Compliance Certificate delivered by the Company pursuant to Section
10.1.3 shall give rise to any adjustment in the Margin, such adjustment shall
be effective for all Loans (including any then-outstanding Loans) on the Margin
Determination Date.
Notwithstanding the foregoing, if the Company fails to deliver a
Compliance Certificate on or before such Margin Determination Date, "Margin"
shall mean the Margin currently in effect until the date on which the Company
delivers such Compliance Certificate, at which time (i) if such Compliance
Certificate results in a smaller Margin, such smaller Margin shall become
effective on the date on which the Company delivers such Compliance
Certificate, and (ii) if such report results in a larger Margin, such larger
Margin shall become effective as of the Margin Determination Date on or before
which such Compliance Certificate should have been delivered, and the Company
shall pay to the Agent for the pro rata accounts of the Banks the amount
determined to be owing by the Company to the Banks as a result of the
retroactive application of such larger Margin (such payment to be made (x) in
the case of any Eurodollar Loan on which interest has not been paid since the
most recent Margin Determination Date, on the next date on which interest is
payable on such Eurodollar Loan pursuant to Section 4.2, and (y) in the case of
any Eurodollar Loan which was outstanding on the Margin Determination Date and
(A) which is no longer outstanding on the date on which such Compliance
Certificate is delivered or (B) on which interest has been paid since the most
recent Margin Determination Date, immediately).
Margin Determination Date means the first day of the next succeeding
Fiscal Quarter after the date as of which the applicable Compliance Certificate
is prepared (i.e., if Compliance Certificate is prepared for 12/31/94, Margin
Determination Date is April 1, 1995).
Margin Stock means any "margin stock" as defined in any of Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System.
Material Adverse Effect means, relative to any event or occurrence of
whatever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental proceeding), a material adverse
effect on (a) the
11
18
financial condition, operations, business, revenues, assets or properties or
prospects of the Company and its Subsidiaries taken as a whole or (b) the
ability of the Company to timely and fully perform any of its payment or other
material obligations under this Agreement or any other Loan Document to which
it is a party.
Mortgage means a mortgage, charge/mortgage, debenture, leasehold
mortgage, assignment of lease by way of mortgage, deed of trust or similar
document granting a Lien on real property or interest therein in appropriate
form for filing or recording in the applicable jurisdiction and otherwise
reasonably satisfactory to the Agent.
Net Worth means the stockholder's equity of the Company.
Non-Indemnifiable Taxes means, in the case of each Bank and the Agent,
any Taxes imposed by Canada or any political subdivision thereof by reason
solely of any connection between any Bank or the Agent, as the case may be, and
Canada, other than the mere making of Loans hereunder or the entering into of
and the transactions contemplated by the Loan Documents, including such Bank or
the Agent having been engaged in a trade or business in Canada or having had a
permanent establishment in Canada.
Note - see Section 3.1.
Occupational Safety and Health Law means the Occupational Health and
Safety Act (Ontario) and any other federal, provincial or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to on
imposing liability or standards of conduct concerning employee health and/or
safety.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary,
as lessee, other than a Capital Lease.
OSC means the Ontario Securities Commission.
Participant - see Section 14.9
Pension Plan means a "pension plan", as such term is defined in the
Pension Benefits Act (Ontario) or under other applicable pension laws, and to
which the Company or any Subsidiary or any trade or business of any of them may
have any actual, contingent or potential liability at any time during the
preceding five years.
Percentage means as to any Bank the percentage which (a) the amount of
such Bank's Commitment is of (b) the aggregate amount of Commitments of all
Banks; provided that after the Commitments have been terminated, "Percentage"
shall mean as to any Bank the
12
19
percentage which the aggregate principal amount of such Bank's Loans is of the
aggregate principal amount of all Loans. The initial Percentage for each Bank
is set forth opposite such Bank's name on Schedule I.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, unincorporated association or any
other entity, whether acting in an individual, fiduciary or other capacity.
Required Banks means Banks having an aggregate Percentage of 51% or
more.
SEC means the Securities and Exchange Commission.
Security Agreement - see Section 11.1.5.
Stated Maturity Date means May 7, 1999.
Subsidiary means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company.
Suretyship Liability means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to or otherwise to
invest in a debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts payable) of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's obligation under
any Suretyship Liability shall (subject to any limitation set forth therein) be
deemed to be the principal amount of the debt, obligation or other liability
guaranteed thereby.
Tax or Taxes means any foreign, Canadian federal, provincial,
municipal or local tax, duty, fee, royalty, levy, impost, assessment,
deduction, charge or withholding, and all liabilities with respect thereto
including any liability to make installments in respect thereto, and including
without limitation, any penalty and interest payable with respect thereto, and
shall include, without limitation, all stamp, documentary, property, ad
valorem, severance, gross income, gross receipt, gross profits, occupation,
excise, sales, goods and
13
20
services, withholding, payroll, employment, custom, land transfer, franchise,
income, business, capital and other taxes and assessments of any kind
whatsoever imposed on or assessed with respect to or charged against or
attributable to any person.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Welfare Plan means any employee benefit plan or arrangement in respect
of which or in connection with which a Lien may arise pertaining to any
contribution obligation or other obligation thereunder as a matter of statute
or by operation of law, other than a Pension Plan, to which the Company or any
Subsidiary or any trade or business of any of them may have any actual,
contingent or potential liability at any time during the preceding five years.
Wholly-Owned Subsidiary means a Subsidiary of which the Company and/or
its Subsidiaries own, directly or indirectly, all of the outstanding shares of
capital stock (other than directors' qualifying shares).
Withholding Taxes - see Section 7.6.
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make a
term loan (each a "Loan" and collectively the "Loans") to the Company on the
Effective Date in such Bank's Percentage of such amount as the Company may
request from all Banks under the Commitment; provided that the aggregate
principal amount of all Loans which all Banks shall be committed to make shall
not exceed $15,000,000. The Commitment shall expire on the Effective Date
concurrently with the making of such Loans.
2.2 Various Types of Loans. Each Loan shall be either a Floating
Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall
specify in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4. Eurodollar Loans having the same Interest Period are sometimes
called a "Group" or collectively "Groups". Floating Rate Loans and Eurodollar
Loans may be outstanding at the same time, provided that (a) not more than five
different Groups of Loans shall be outstanding at any
14
21
one time and (b) the aggregate principal amount of each Group of Eurodollar
Loans shall at all times be at least $1,000,000 and an integral multiple of
$100,000.
2.3 Borrowing Procedures. The Company shall give written or
telephonic notice to the Agent of the proposed borrowing not later than (a) in
the case of a Floating Rate borrowing, 10:00 A.M., Chicago time, on the
proposed date of such borrowing, and (b) in the case of a Eurodollar borrowing,
11:00 A.M., Chicago time, at least three Business Days prior to the proposed
date of such borrowing. Such notice shall be effective upon receipt by the
Agent and shall specify the date (which shall be a Business Day), amount and
type of borrowing and, in the case of a Eurodollar borrowing, the initial
Interest Period therefor. Promptly upon receipt of such notice, the Agent
shall advise each Bank thereof. Not later than 1:00 p.m., Chicago time, on the
date of the borrowing, each Bank shall provide the Agent at the principal
office of the Agent in Chicago with immediately available funds covering such
Bank's Percentage of such borrowing and, subject to the satisfaction of the
conditions precedent set forth in Section 11 with respect to such borrowing,
the Agent shall pay over the requested amount to the Company on the requested
borrowing date.
2.4 Conversion Procedures. Subject to the provisions of Section 2.2,
the Company may convert all or any part of any outstanding Loan into a Loan of
a different type by giving written or telephonic notice to the Agent not later
than (a) in the case of conversion into a Floating Rate Loan, 10:00 A.M.,
Chicago time, on the proposed date of such conversion, and (b) in the case of a
conversion into a Eurodollar Loan, 11:00 A.M., Chicago time, at least three
Business Days prior to the proposed date of such conversion. Each such notice
shall be effective upon receipt by the Agent and shall specify the date and
amount of such conversion, the Loan to be so converted, the type of Loan to be
converted into and, in the case of a conversion into a Eurodollar Loan, the
initial Interest Period therefor. Promptly upon receipt of such notice, the
Agent shall advise each Bank thereof. Subject to Sections 2.6 and 2.7, such
Loan shall be so converted on the requested date of conversion. Each
conversion shall be on a Business Day and, after giving effect to any
conversion, the aggregate principal amount of each Group of Eurodollar Loans
shall be at least $1,000,000 and an integral multiple of $100,000.
2.5 Pro Rata Treatment. All borrowings, conversions and repayments
shall be effected so that after giving effect thereto each Bank will have a pro
rata share (according to its Percentage) of all types and Groups of Loans.
15
22
2.6 Warranty. Each notice of borrowing or conversion pursuant to
Section 2.3 or 2.4 shall automatically constitute a warranty by the Company to
the Agent and each Bank to the effect that on the date of such requested
borrowing or conversion (other than any conversion from a Eurodollar Loan to a
Floating Rate Loan required by Section 8.3) (a) the warranties of the Company
contained in Section 9 (excluding Sections 9.4, 9.6, 9.8 9.15 through 9.18 and
except to the extent changes in facts or conditions are expressly permitted or
required hereunder) of this Agreement shall be true and correct as of such
requested date as though made on the date thereof and (b) no Event of Default
or Unmatured Event of Default shall have then occurred and be continuing or
will result therefrom.
2.7 Conditions. Notwithstanding any other provision of this
Agreement, (a) no Bank shall be obligated to make any Loan and (b) no Bank
shall be obligated to convert into or permit the continuation at the end of the
applicable Interest Period of any Eurodollar Loan if, in any such case, an
Event of Default or Unmatured Event of Default exists or would result
therefrom.
2.8 Commitments Several. The failure of any Bank to make a requested
Loan on the Effective Date shall not relieve any other Bank of its obligation
to make a Loan on such date, but no Bank shall be responsible for the failure
of any other Bank to make any Loan to be made by such other Bank.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
note (as amended, supplemented, replaced or otherwise modified from time to
time, individually each a "Note" and collectively for all Banks the "Notes")
substantially in the form of Exhibit A, with appropriate insertions, dated the
Effective Date (or such earlier date as shall be satisfactory to the Agent),
payable to the order of such Bank in an amount equal to such Bank's Percentage
of the Commitment (or, if less, in the aggregate unpaid principal amount of
such Bank's Loans).
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Bank, each repayment or conversion thereof and, in the case of
each Eurodollar Loan, the dates on which each Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall
be rebuttable presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under any Note to repay the principal
amount of the
16
23
Loans evidenced by such Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at
a rate per annum equal to the sum of the Alternate Reference Rate from
time to time in effect plus the applicable Margin; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
applicable Margin;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate
Loan shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of each Eurodollar
Loan with an Interest Period in excess of three months, on each three-month
anniversary of such Loan) and at maturity. After maturity, accrued interest on
all Loans shall be payable on demand.
4.3 Interest Periods. Each Interest Period for a Eurodollar Loan
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is one, two,
three or six months thereafter, as the Company may specify:
(a) in the case of an Interest Period which commences on the
date a Eurodollar Loan is made or converted from a Floating Rate Loan,
in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4, or
(b) in the case of a succeeding Interest Period with respect
to any Eurodollar Loan, by written or telephonic notice to the Agent
not later than 11:00 A.M., Chicago time, at least three Business Days
prior to the first day of such
17
24
succeeding Interest Period, it being understood that (i) each such
notice shall be effective upon receipt by the Agent and (ii) if the
Company fails to give such notice, such Loan shall automatically
become a Floating Rate Loan at the end of its then-current Interest
Period.
Each Interest Period for a Eurodollar Loan which would otherwise end on a day
which is not a Business Day shall end on the immediately succeeding Business
Day (unless such immediately succeeding Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day). The Company may not select any Interest
Period which would (a) end after the Stated Maturity Date or (b) if, after
giving effect to such selection, the Company would have to prepay a Eurodollar
Loan in order to make any scheduled prepayment pursuant to Section 6.1.1.
4.4 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing the
computations used by the Agent in determining any applicable Eurodollar Rate
hereunder.
4.5 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Floating Rate Loan shall change
simultaneously with each change in the Alternate Reference Rate. Whenever
interest is calculated in any of the Loan Documents on the basis of a year of
360 days, then, for the purposes of the Interest Act, the annual rate of
interest to which any such rate of interest is equivalent, is such rate
multiplied by the number of days in the calendar year in which the same is to
be ascertained and divided by 360. The parties further agree that for the
purposes of the Interest Act, (i) the principle of deemed reinvestment of
interest shall not apply to any interest calculation under this Agreement, and
(ii) the rates of interest stipulated in this Agreement are intended to be
nominal rates and not effective rates or yields.
SECTION 5 INTENTIONALLY OMITTED.
SECTION 6 PREPAYMENTS.
6.1 Prepayments.
18
25
6.1.1 Mandatory Prepayments. On each of June 30, 1994, September 30,
1994, December 31, 1994 and March 31, 1995, the Company shall make a prepayment
of the Loans in the amount of $937,500.
6.1.2 Voluntary Prepayments. The Company may from time to time
prepay the Loans in whole or in part, provided that (a) the Company shall give
the Agent (which shall promptly advise each Bank) not less than one Business
Day's prior written notice thereof, specifying the date and amount of
prepayment, (b) any prepayment of a Eurodollar Loan prior to the end of an
Interest Period therefor shall be subject to Section 8.4, (c) each partial
prepayment shall be in a principal amount of at least $500,000 and an integral
multiple of $100,000, (d) any prepayment of a Eurodollar Loan shall include
accrued interest to the date of prepayment on the principal amount being repaid
and (e) all Loans shall be prepaid on a pro rata basis.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on
the Notes shall be made by the Company to the Agent in immediately available
Dollars at its office in Chicago not later than 1:00 P.M., Chicago time, on the
date due; and funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The Company hereby
authorizes the Agent to charge the Company's demand deposit account no.
75-06848 maintained with Continental for the amount of any such payment on the
due date therefor, but the Agent's failure to so charge such account shall in
no way affect the obligation of the Company to make any such payment. The
Agent shall promptly remit to each Bank or other holder of a Note its share of
all such payments received in collected funds by the Agent for the account of
such Bank or holder.
All payments under Sections 8.1 and 8.4 shall be made by the Company
directly to the Bank or Banks entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall
be applied to such Loans as the Company shall direct by notice to be received
by the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion; provided, however, that
each mandatory prepayment referred to in Section 6.1.1 shall be deemed to be a
prepayment of all Loans on a pro rata basis. Concurrently with each remittance
to any Bank of its share of any such payment, the Agent shall advise such Bank
as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes falls due on a day
19
26
which is not a Business Day, then such due date shall be extended to the next
following Business Day (unless, in the case of a Eurodollar Loan and with
respect to any payment other than the payment of principal due on the Stated
Maturity Date, such next following Business Day is the first Business Day of a
calendar month, in which case such due date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Agent, each Bank and each
other holder of a Note have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, the Company agrees that at any time
(a) any payment or other amount owing by the Company under this Agreement is
then due to the Agent, any Bank or any such holder or (b) any Event of Default
exists, the Agent, each Bank and each such holder may apply to the payment of
such payment or other amount (or, in the case of clause (b), to any obligations
of the Company hereunder, whether or not then due) any and all balances,
credits, deposits, accounts or moneys of the Company then or thereafter with
the Agent, such Bank or such holder.
7.5 Proration of Payments. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Note in excess of its
pro rata share of payments and other recoveries obtained by all Banks on
account of principal of and interest on Notes then held by them (other than in
respect of an Affected Loan or as a result of replacement of a Bank pursuant to
Section 8.7), such Bank shall purchase from the other Banks such participation
in the Notes held by them as shall be necessary to cause such purchasing Bank
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery.
7.6 Taxes. (a) All payments by the Company hereunder and under
the other Loan Documents (including, without limitation, all payments of
principal of and interest on the Loans) and additional amounts payable under
Section 8.1 shall be made free and clear of and without deduction for any
present or future Taxes, but excluding Excluded Taxes (all non-excluded items
being called "Withholding Taxes"). If any deduction or withholding from any
payment to be made by the Company hereunder or under any other Loan Document is
required in respect of any Withholding Taxes then the Company will
20
27
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(iii) pay such additional amounts as may be necessary in
order that the net amount received by the Agent and the Banks after
such deduction or withholding (including any required deduction or
withholding on such additional amounts) shall equal the amount the
Agent and the Banks would have received had no such deduction or
withholding been made.
Moreover, if any Withholding Taxes are directly asserted against the Agent or
any Bank with respect to any payment received by the Agent or such Bank
hereunder, the Agent or such Bank may pay such Withholding Taxes and the
Company will promptly pay such additional amount (including any penalty,
interest and expense) as is necessary in order that the net amount received by
the Agent and the Banks after the payment of such Withholding Taxes (including
any Taxes on such additional amount) shall equal the amount the Agent and the
Banks would have received had such Withholding Taxes not been asserted. For
purposes of this Section 7.6, a distribution hereunder by the Agent or any Bank
to or for the account of any Bank shall be deemed a payment by the Company.
(b) The Company will also indemnify the Agent and each Bank
for the full amount of any Taxes imposed by any jurisdiction on amounts payable
by the Company under this Section 7.6; provided that such indemnification
obligation shall not apply to any Non-Indemnifiable Taxes. This
indemnification shall be made within 30 days from the date the Agent or such
Bank make written demand therefor.
(c) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of the
Company contained in this Section 7.6 shall survive indefinitely the
termination of this Agreement and the payment in full of principal and interest
hereunder and under the Notes.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank (including,
21
28
without limitation, the Bank of Canada) or comparable agency charged with the
interpretation or administration thereof (including, without limitation, the
Superintendent of Financial Institutions for Canada), or compliance by any Bank
(or any Eurodollar Office of such Bank) with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency
(A) shall subject any Bank (or any Eurodollar Office of such
Bank) to any tax (other than any tax referred to in Section 7.6), duty
or other charge with respect to its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans, or shall change the basis of taxation of payments to
any Bank of the principal of or interest on its Eurodollar Loans or
any other amounts due under this Agreement in respect of its
Eurodollar Loans or its obligation to make Eurodollar Loans (except
for changes in the rate of tax on the overall net income of such Bank
or its Eurodollar Office imposed by the jurisdiction in which such
Bank's principal executive office or Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
4), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by any Bank (or any
Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System,
to impose a cost on) such Bank (or any Eurodollar Office of such Bank) of
making or maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Eurodollar Office) under this
Agreement or under its Note with respect thereto, then within 10 days after
demand by such Bank (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for and a calculation of the amount of
such demand, a copy of which shall be furnished to the Agent), the Company
shall pay directly to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or such reduction; provided that
the Company shall not be liable for any increased cost or reduced amount as to
which such Bank became aware and failed to
22
29
notify the Company promptly if and to the extent that prompt notice could have
avoided or materially decreased the amount of payment by the Company hereunder.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank (including, without
limitation, the Bank of Canada) or comparable agency charged with the
interpretation or administration thereof (including, without limitation, the
Superintendent of Financial Institutions for Canada), or compliance by any Bank
(or its Eurodollar Office) or any Person controlling such Bank 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 Bank's or such
controlling Person's capital as a consequence of such Bank's obligations
hereunder (including, without limitation, such Bank's obligations under the
Commitment) to a level below that which such Bank or such controlling Person
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Bank or such controlling Person
to be material, then from time to time, within 10 days after demand by such
Bank (which demand shall be accompanied by a statement setting forth in
reasonable detail the basis for and a calculation of the amount of such demand,
a copy of which shall be furnished to the Agent), the Company shall pay to such
Bank such additional amount or amounts as will compensate such Bank or such
controlling Person for such reduction; provided that in determining any
reduction in rate of return on capital, each Bank shall act reasonably and in
good faith and will, to the extent any reduction relates to such Bank's loans
and commitments in general and is not specifically attributable to the Loans
and the Commitments hereunder, use averaging and attribution methods which are
reasonable and which cover all loans and commitments made by such Bank which
are similar to the Loans and Commitments whether or not the loan documentation
for such other loans and commitments permits such Bank to receive increased
costs of the type described in this clause (b).
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the relevant market for such Interest Period, or the
Agent otherwise reasonably determines (which determination shall be binding and
conclusive on the Company) that by reason of circumstances affecting the
interbank
23
30
eurodollar market adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate; or
(b) Banks having an aggregate Percentage of 30% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of maintaining or
funding such Loans for such Interest Period (taking into account any amount to
which such Banks may be entitled under Section 8.1), or that the making or
funding of Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such Banks
materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make, or convert any Floating Rate Loan into, Eurodollar Loans and (ii) on the
last day of the current Interest Period for each Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically convert to a Floating Rate
Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
that any change in (including the adoption of any new) applicable laws, rules,
or regulations, or any change in the interpretation of applicable laws, rules,
or regulations by any governmental or other regulatory body charged with the
administration thereof (including, without limitation, the Superintendent of
Financial Institutions for Canada), should make it (or in the good faith
judgment of any Bank cause a substantial question as to whether it is) unlawful
for any Bank to make, maintain or fund Eurodollar Loans, then such Bank shall
promptly notify each of the other parties hereto and, so long as such
circumstances shall continue, (a) such Bank shall have no obligation to make,
or convert any Floating Rate Loan into, Eurodollar Loans (but shall make
Floating Rate Loans concurrently with the making of or conversion into
Eurodollar Loans by the Banks which are not so affected, in each case in an
amount equal to such Bank's Percentage of all Eurodollar Loans which would be
made or converted into at such time in the absence of such circumstances) and
(b) on the last day of the current Interest Period for each Eurodollar Loan of
such Bank (or, in any event, if such Bank so requests, on such earlier date as
may be required by the relevant law, rule, regulation or interpretation), such
Eurodollar Loan shall, unless then repaid in full, automatically convert to a
Floating Rate Loan. Each Floating Rate Loan made by a Bank which, but for the
circumstances described in the foregoing sentence, would be a Eurodollar Loan
(an "Affected Loan") shall, notwithstanding any other provision of this
Agreement, remain outstanding for the same period as the Group of Eurodollar
Loans of which such Affected Loan would be a part absent such circumstances.
24
31
8.4 Funding Losses. The Company hereby agrees that upon demand by
any Bank from time to time (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed, a
copy of which shall be furnished to the Agent) the Company will indemnify such
Bank against any net loss or expense which such Bank may sustain or incur
(including, without limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain any Eurodollar Loan), as reasonably determined by such
Bank, as a result of (a) any payment or prepayment or conversion of any
Eurodollar Loan of such Bank on a date other than the last day of an Interest
Period for such Loan (including, without limitation, any conversion pursuant to
Section 8.3) or (b) any failure of the Company to borrow or convert any Loans
on a date specified therefor in a notice of borrowing or conversion pursuant to
this Agreement. For this purpose, all notices to the Agent pursuant to this
Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch of such Bank to make such Loan, provided that in such event for
the purposes of this Agreement such Loan shall be deemed to have been made by
such Bank and the obligation of the Company to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if such Bank had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a)
Each Bank shall promptly notify the Company and the Agent of any event of which
it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence
of any circumstances of the nature described in Section 8.2 or 8.3 (and, if any
Bank has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Bank shall
25
32
promptly so notify the Company and the Agent). Without limiting the foregoing,
each Bank will designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described in clause (i)
or (ii) of the preceding sentence and such designation will not, in such Bank's
sole judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Company may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have Commitments in such amounts as shall be
reasonably satisfactory to the Agent (and upon notice from the Company such
Affected Bank shall assign pursuant to an Assignment Agreement, and without
recourse or warranty, its Commitments, its Loans, its Note, and all of its
other rights and obligations hereunder to such replacement bank(s) or other
financial institution(s) for a purchase price equal to the sum of the principal
amount of the Loans so assigned, all accrued and unpaid interest thereon, any
amounts payable under Section 8.4 as a result of such Bank receiving payment of
any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections
8.1 and 8.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes, and any termination of this Agreement.
SECTION 9 REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans hereunder, the Company represents and warrants
to the Agent and the Banks, upon each of which representations and warranties
the Agent and the Banks specifically rely, that:
9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Province of
Ontario; each Subsidiary is a corporation duly organized, validly existing and
in good standing under the jurisdiction of its incorporation; the Company and
each Subsidiary is duly authorized and licensed to own its properties and to do
business in each jurisdiction where the nature of its business or property
makes such authorization and licensing necessary, except where the failure to
be so authorized and licensed would not have a Material Adverse Effect; and the
26
33
Company and each Subsidiary has full corporate power and authority to own its
property and conduct its business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party
and the borrowings hereunder and the performance by each of the Company of its
obligations under each Loan Document to which it is a party are within the
corporate powers of the Company, have been duly authorized by all necessary
corporate action on the part of the Company (including any necessary
shareholder action), have received all necessary governmental approvals,
licenses, and permits (if any shall be required), and do not and will not (a)
violate any provision of law, rule or regulation or any order, decree or
judgment of any court or other government agency which is binding on the
Company, (b) contravene or conflict with, or result in a breach of, any
provision of the Certificate or Articles of Incorporation, By-Laws or other
organizational documents of the Company or of any material agreement,
indenture, instrument or other document, or any material judgment, order or
decree, which is binding on the Company or any Subsidiary or (c) result in, or
require, the creation or imposition of any Lien on any property of the Company
or any Subsidiary (other than Liens arising under the Loan Documents).
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which the Company is
a party will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
9.4 Financial Information. The audited consolidated financial
statements of the Company and its Subsidiaries at December 31, 1993, copies of
which have been delivered to each Bank, have been prepared in accordance with
generally accepted accounting principles and present fairly the consolidated
financial condition of the Company and its Subsidiaries taken as a whole as at
such date and the results of their operations for the Fiscal Year then ended.
9.5 No Material Adverse Change. Since the date of the audited
consolidated financial statements described in Section 9.4, no event or events
have occurred which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
27
34
9.6 Litigation and Suretyship Liabilities. No actions, suits or
other proceedings (including, without limitation, derivative actions),
arbitration proceeding or governmental proceeding is pending or, to the
Company's knowledge, threatened against the Company or any Subsidiary at law or
in equity which is reasonably likely to have a Material Adverse Effect except
as set forth in Schedule 9.6. Other than any liability incident to such
litigation or proceedings, neither the Company nor any Subsidiary has any
material contingent liabilities not provided for or disclosed in the financial
statements referred to in Section 9.4 or listed in Schedule 9.6.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary has good and marketable title to, or a valid leasehold interest in,
all of its properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including, without limitation, patents, trademarks,
trade names, service marks, copyrights, industrial designs, technology and
other intellectual property), free and clear of all Liens, charges and claims
(including infringement claims with respect to patents, trademarks, copyrights
and the like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Company has no Subsidiaries except those
listed in Schedule 9.8.
9.9 Pension and Welfare Plans. Except as disclosed to the Banks in
writing prior to the date of this Agreement, during the twelve-
consecutive-month period prior to the date of the execution and delivery of
this Agreement or the making of any Loan hereunder, (a) no steps have been
taken to terminate or amend, in whole or in part, any Pension Plan or Welfare
Plan which would be reasonably likely to result in the Company being required
to make a contribution to such Pension Plan or Welfare Plan, or incurring a
liability or obligation to such Pension Plan or Welfare Plan, in excess of
$250,000, and (b) no contribution failure has occurred with respect to any
Pension Plan or Welfare Plan sufficient to give rise to a Lien under applicable
laws. Except to the extent the following would not have a Material Adverse
Effect, all obligations (including fiduciary obligations) regarding the Pension
Plans and the Welfare Plans have been satisfied and there are no outstanding
defaults or violations by any party thereto, and no penalties, taxes or fines
are owing or exigible under the Pension Plans and the Welfare Plans. Each
Pension Plan and each Welfare Plan is registered where required by and is in
good standing under applicable laws and no event has occurred which would
jeopardize such status. Except to the extent the following would not have a
Material Adverse Effect, none of the Pension Plans or Welfare Plans is subject
to any pending investigation, examination or other proceeding, action or claim
initiated by any governmental agency or instrumentality and
28
35
there exists no state of facts which after notice or lapse of time or both
could reasonably be expected to give rise to any such investigation,
examination or other proceeding, action or claim or to affect the registration
of any of the Pension or Welfare Plans. Except as set forth on Schedule 9.9,
the Company has no actual or contingent liability with respect to any
post-retirement benefit under a Welfare Plan.
9.10 Investment Company Act. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
9.12 Regulations G, T, U and X. Neither the Company nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
9.13 Taxes. Each of the Company and each Subsidiary has filed all
tax returns and reports required by law to have been filed by it (except for
such tax returns and reports with respect to which the failure to file on a
timely basis would not have a Material Adverse Effect) and has paid all taxes
and governmental charges shown to be owing on such returns or reports, or any
assessments received by the Company or Subsidiary, except for (a) as disclosed
on Schedule 9.6 and (b) for charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall have been set
aside on its books.
9.14 Solvency, etc. On the Effective Date and immediately prior to
and after giving effect to each borrowing hereunder and the use of the proceeds
thereof, (a) the Company's assets will exceed its liabilities and (b) the
Company will be solvent, will be able to pay its debts as they mature and will
have capital sufficient to carry on its business as then constituted.
9.15 Insurance. Set forth on Schedule 9.15 is a complete and
accurate summary of the property, casualty and business interruption insurance
program carried by the Company and its Subsidiaries on the date of this
Agreement, including the insurer's(s') name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s),
endorsed exclusions, deductibles and self-insured
29
36
retention and a description in reasonable detail of (a) any retrospective
rating plan, fronting arrangement or other self-insurance or risk assumption
agreed to by the Company or any Subsidiary or imposed upon the Company or any
Subsidiary by any such insurer and (b) any self-insurance program that is in
effect.
9.16 Contracts; Labor Matters. Except as disclosed on Schedule 9.16:
(a) neither the Company nor any Subsidiary is a party to any contract or
agreement, or is subject to any charge, corporate restriction, judgment, decree
or order, which materially and adversely affects its business, property,
assets, operations or condition, financial or otherwise; (b) no labor contract
to which the Company or any Subsidiary is a party or is otherwise subject is
scheduled to expire prior to the Stated Maturity Date; (c) neither the Company
nor any Subsidiary has, within the two-year period preceding the date of this
Agreement, taken any action which would have constituted or resulted in a
discontinuance of all or part of a business or "mass termination" within the
meaning of the Employment Standards Act (Ontario) or any similar applicable
federal, provincial or local law, and the Company has no reasonable expectation
that any such action is or will be required at any time prior to the Stated
Maturity Date; and (d) on the date of this Agreement there are no strikes or
walkouts relating to any labor contracts to which the Company or any Subsidiary
is a party or is otherwise subject.
9.17 Environmental and Safety and Health Matters. Except as
disclosed on Schedule 9.17 and except to the extent any of the following is not
reasonably expected to have a Material Adverse Effect, the Company and each of
its Subsidiaries and each property, operation and facility that the Company or
any Subsidiary may own, operate or control (i) complies in all material
respects with (A) all applicable Environmental Laws and (B) all applicable
Occupational Safety and Health Laws; (ii) is not subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law; (iii) has not received any notice (A) that
it may be in violation of any Environmental Law or Occupational Safety and
Health Law, or (B) threatening the commencement of any proceeding relating to
allegedly unlawful, unsafe or unhealthy conditions or (C) alleging that it is
or may be responsible for any response, cleanup, or corrective action,
including, but not limited to, any remedial investigation/feasibility study,
under any Environmental Law or Occupational Safety and Health Law; (iv) has not
received any notice that it is the subject of federal or provincial
investigation evaluating whether any investigation, remedial action or other
response is needed to respond to (A) a spillage, disposal or release or
threatened release into the environment of any Hazardous Material, or (B) any
alleged violation of any Occupational Safety and Health Law; (v) has not filed
any notice
30
37
under or relating to any Environmental Law or Occupational Safety and Health
Law indicating or reporting (A) any past or present spillage, disposal or
release into the environment of, or treatment, storage or disposal of, any
Hazardous Material in excess of quantities requiring notification under any
Environmental Law, or (B) any violation of any Occupational Safety and Health
Law and (vi) has no material contingent liability in connection with (A) any
actual or potential spillage, disposal or release into the environment of, or
otherwise with respect to, any Hazardous Material, whether on any premises
owned or occupied by the Company or any Subsidiary or on any other premises or
(B) any unsafe or unhealthful condition. Except as disclosed on Schedule 9.17,
there are no Hazardous Materials on, in or under any property or facilities,
owned, operated or controlled by the Company or any Subsidiary (except
Hazardous Materials used in the ordinary course of the business of the Company
and its Subsidiaries and used, stored, handled, treated and disposed of in all
material respects in accordance with all applicable Environmental Laws and
Occupational Safety and Health Laws) that, under applicable Environmental Laws
or Occupational Safety and Health Laws (A) impose or could reasonably be
expected to impose a liability for removal, remediation, or other cleanup or
damage to natural resources, in an amount equal to or greater than $500,000;
(B) could reasonably be expected to have a Material Adverse Effect; or (C)
could reasonably be expected to result in the imposition of a Lien securing
more than $500,000 of liability on the property or other assets of the Company
or its Subsidiaries.
9.18 Real Property. Set forth on Schedule 9.18 is a complete and
accurate list, as of the date of this Agreement, of the address and legal
description of any real property owned or leased by the Company or any
Subsidiary, together with, in the case of leased property, the name and mailing
address of the lessor of such property.
9.19 Information. All written information taken as a whole
heretofore or contemporaneously herewith furnished by or on behalf of the
Company or any Subsidiary to the Agent or any Bank for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all written information taken as a whole hereafter furnished by or on behalf of
the Company or any Subsidiary to the Agent or any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading.
9.20 Places of Business and Location of Assets. The chief executive
office and principal place of business of the Company
31
38
and any Subsidiary are located at the addresses set out in Schedule 9.20 and
all other places of business of the Company and any Subsidiary are as set out
in Schedule 9.20; the Company or any Subsidiary does not have a permanent
business establishment or employ full or part-time employees outside of the
provinces set out in Schedule 9.20; the assets of the Company and any
Subsidiary (other than inventory in transit) are located in the provinces and
at the locations set forth in Schedule 9.20; all of the account debtors of the
Company or any Subsidiary are located in the provinces set out in Schedule 9.20
or in the United States.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full, the Company agrees that, unless at any time the
Required Banks shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each
Bank:
10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year, (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year, which audit
report shall be without qualification as to going concern or scope and shall be
prepared by KMPG Peat Marwick or other independent auditors who are a firm of
chartered accountants of recognized national standing in Canada selected by the
Company and reasonably acceptable to the Required Banks, together with a
written statement from such auditors to the effect that in making the audit
necessary for the signing of such audit report by such accountants, they have
not become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if they have become aware of any such event,
describing it in reasonable detail; and (b) consolidating balance sheets of the
Company and its Subsidiaries as of the end of such Fiscal Year and
consolidating statements of earnings for the Company and its Subsidiaries for
such Fiscal Year, together with a certificate of the Chief Executive Officer,
the Chief Financial Officer or the Treasurer of the Company certifying that
such financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated.
32
39
10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter,
consolidated and consolidating statements of earnings for such Fiscal Quarter
consolidated and consolidating statements of earnings and consolidated
statements of cash flow and for the period beginning with the first day of such
Fiscal Year and ending on the last day of such Fiscal Quarter, together with a
certificate of the Chief Executive Officer, the Chief Financial Officer or the
Treasurer of the Company, certifying that such financial statements fairly
present the financial condition and results of operations of the Company and
its Subsidiaries as of the dates and periods indicated, subject to changes
resulting from audit and normal year-end adjustments.
10.1.3 Compliance Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report pursuant to Section 10.1.1 and
of each set of quarterly statements pursuant to Section 10.1.2, a duly
completed certificate in the form of Exhibit B, with appropriate insertions,
dated the date of such annual report or such quarterly statements and signed by
the Chief Executive Officer, the Chief Financial Officer or the Treasurer of
the Company, containing a computation of each of the financial ratios and
restrictions set forth in Sections 10.6, 10.7, 10.9 and 10.11 and to the effect
that such officer has not become aware of any Event of Default or Unmatured
Event of Default that has occurred and is continuing or, if there is any such
event, describing it and the steps, if any, being taken to cure it.
10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing
or sending thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed with the SEC or
any securities exchange, including, without limitation, the OSC, and any
report, proxy statement or other communication to the Company's shareholders
generally.
10.1.5 Notice of Default, Litigation and Pension and Welfare Plan
Matters. Promptly (and in any event within one Business Day in the case of
clause (a) and within ten days in the case of clauses (b) through (h)) upon an
executive officer of the Company (which shall include, without limitation, the
Chief Executive Officer, the Chief Financial Officer, the President and the
Treasurer of the Company) becoming aware of any of the following, written
notice describing the same and the steps being taken by the Company or the
Subsidiary affected thereby with respect thereto: (a) the occurrence of an
Event of Default or an Unmatured Event of Default; (b) any actions, suits or
33
40
proceedings, arbitration or governmental investigation or proceeding not
previously disclosed by the Company to the Banks which has been instituted or,
to the knowledge of the Company, is threatened against the Company or any
Subsidiary or to which any of the properties of any thereof is subject which
has had or is reasonably likely to have a Material Adverse Effect; (c) any
material adverse development which occurs in any actions, suits or proceedings,
arbitration or governmental investigation or proceeding previously disclosed
pursuant to clause (b); (d) the institution of any steps by the Company, any of
its Subsidiaries or any other Person to terminate or amend, in whole or in
part, any Pension Plan or Welfare Plan, or the failure to make a required
contribution to any Pension Plan or Welfare Plan or the occurrence of any event
with respect to any Pension Plan or Welfare Plan which could result in the
incurrence by the Company of any material liability, fine or penalty, or any
material increase in the contingent liability of the Company with respect to
any post-retirement Welfare Plan benefit (e) any lapse, cancellation or
termination of, or other material change in, any pollution liability insurance
policy maintained by the Company; (f) the establishment of a place of business
in a jurisdiction not set out in Schedule 9.20 or changing the province or
territory in which the chief executive office or principal place of business of
the Company or any Subsidiary is located; (g) any change in the name of the
Company or any Subsidiary; and (h) the occurrence of any other event or
circumstance which has had or is reasonably likely to have a Material Adverse
Effect.
10.1.6 Subsidiaries. Promptly upon the occurrences thereof, a
written report of any change in the list of its Subsidiaries.
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
10.1.8 Projections, etc. As soon as practicable, and in any event
within 90 days after the commencement of each Fiscal Year, a five-year budget
and projected cash flow, including J.D. Powers Auto Production forecasts.
10.1.9 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary
to keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
generally accepted
34
41
accounting principles; permit, and cause each Subsidiary to permit, on
reasonable notice and at reasonable times and intervals (or at any time without
notice during the existence of an Event of Default) any Bank or the Agent or
any representative thereof to inspect the properties and operations of the
Company and of such Subsidiary; and permit, and cause each Subsidiary to
permit, on reasonable notice and at reasonable times and intervals (or at any
time without notice during the existence of an Event of Default) any Bank or
the Agent or any representative thereof to visit any or all of its offices, to
discuss its financial matters with its officers and its independent auditors
(and the Company hereby authorizes such independent auditors to discuss such
financial matters with any Bank or the Agent or any representative thereof),
and to examine (and, at the expense of the Company or the applicable
Subsidiary, photocopy extracts from) any of its books or other corporate
records. The Company agrees to pay the fees of its auditors incurred in
connection with any reasonable exercise of the rights of the Agent and the
Banks pursuant to this Section.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain,
with reputable, financially sound insurance companies (rated at least B+ by A.
M. Best & Co.), insurance to such extent and against such hazards and
liabilities as is customarily maintained by companies similarly situated (and,
in any event, such insurance as may be required by any law or governmental
regulation or any court order or decree); and, upon request of the Agent or any
Bank, furnish to the Agent or such Bank a certificate setting forth in
reasonable detail the nature and extent of all insurance maintained by the
Company and its Subsidiaries.
10.4 Compliance with Laws; Maintenance of Property; Payment of Taxes
and Liabilities. (a) Comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations and orders the
noncompliance with which would be reasonably likely to have a Material Adverse
Effect; (b) maintain or cause to be maintained, and cause each Subsidiary to
maintain or cause to be maintained, in good repair, working order and condition
all material properties used in its business, and make, and cause each
Subsidiary to make, all appropriate repairs, renewals and replacements of such
properties; (c) pay, and cause each Subsidiary to pay, prior to delinquency,
all taxes and other governmental charges against it or any of its property;
provided, however, that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside
on its books adequate reserves with respect thereto; and (d) not, and not
permit any Subsidiary to, file or consent to the filing of any consolidated
income tax
35
42
return with any Person other than the Company and its Subsidiaries.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.12) cause each Subsidiary to maintain and preserve, (a)
its corporate existence and good standing in the jurisdiction of its
incorporation and (b) its qualification and good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing would not (i) if cured, foreclose access to the
courts of such jurisdiction in respect of events occurring prior to such cure
or (ii) in any event, be reasonably likely to result in a Material Adverse
Effect).
10.6 Financial Covenants.
10.6.1 Minimum Net Worth. Not permit Net Worth excluding foreign
currency translation adjustments at any time to be less than (a) $9,400,000
plus the excess (or minus the deficiency) of the selling price of
Manchester/Williamston/Homer over the net book value of
Manchester/Williamston/Homer plus (b) 50% of Consolidated Net Income for the
period beginning with the first full Fiscal Quarter occurring after the
Effective Date and ending on the last day of the most recently ended Fiscal
Quarter (excluding any loss for any Fiscal Quarter in such period).
10.6.2 Accounts Payable to Inventory Ratio. Not permit the Accounts
Payable to Inventory Ratio at the end of any Fiscal Quarter to be less than 1.3
to 1.0.
10.6.3 Consolidated Fixed Charge Coverage Ratio. Not permit the
Consolidated Fixed Charge Coverage Ratio to be less than 5.0 to 1.0.
10.6.4 Operating Leases. Not permit Consolidated Lease Expense to
exceed $2,000,000 in any Fiscal Year.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except (a) obligations
arising under the Loan Documents; (b) current accounts payable and accrued
liabilities arising in the ordinary course of business; (c) Debt in respect of
Capital Leases to the extent permitted by Section 10.9; (d) Debt of
Subsidiaries to the Company or to other Subsidiaries; (e) unsecured Debt of the
Company to Larizza not exceeding $500,000; (f) Hedging Agreements entered into
by the Company or any Subsidiary; (g) Suretyship Liabilities in respect of any
obligation of the Company or any Subsidiary permitted under this Agreement; (h)
Debt in respect of taxes, assessments or governmental charges to the extent
that payment thereof shall not
36
43
at the time be required to be made in accordance with Section 10.4; (i) Debt in
respect of judgments or awards not constituting an Event of Default under
Section 12.1.8; and (j) Debt to be Repaid, other Debt outstanding on the date
hereof and listed in Schedule 10.7 under the heading "Continuing Debt": and
other Debt hereafter incurred in connection with Liens permitted by Sections
10.8(d) and (e), and extensions, renewals and refinancings of any Debt (other
than Debt to be Repaid) described in this clause (j); so long as the principal
amount thereof is not increased.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit
to exist any Lien on any of its real or personal properties, assets or rights
of whatsoever nature (whether now owned or hereafter acquired), except (a)
Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves; (b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics, materialmen, repair, storage and
other similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety and
appeal bonds, bids, performance bonds, utility deposits and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any advances or borrowed money or the
deferred purchase price of property or services, and, in each case, for which
it maintains adequate reserves (other than those described in subclauses (i)
and (ii) of this clause (b)); (c) Liens identified on Schedule 10.8; (d) Liens
in connection with Capital Leases (to the extent permitted by Section 10.9);
(e) any Lien arising in connection with the acquisition, construction or
improvement of property after the date hereof, and attaching only to the
property being acquired, constructed or improved, if the Debt secured thereby
does not exceed 90% of the fair market value of the property acquired at the
time of acquisition thereof or 90% of the cost of such construction or
improvement, as the case may be, nor $1,000,000 in the aggregate for all such
Debt of the Company and all Subsidiaries at any one time outstanding; (f)
attachments, executions, judgments and other similar Liens, for sums not
exceeding $500,000 arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and claims
secured thereby are being actively contested in good faith and by appropriate
proceedings; (g) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries taken as a whole; (h) Liens in favor of the Agent arising under
the Loan Documents; (i) leases or subleases granted by the Company or any
Subsidiary in
37
44
the ordinary course of its business; (j) the interest or title of the lessor of
any lease with respect to which the Company or a Subsidiary is lessee; and (k)
extensions, renewals or replacements of any Lien permitted by the foregoing
provisions of this Section 10.8, but only if the principal amount of the Debt
secured thereby immediately prior to such extension, renewal or replacement is
not increased and such Lien is not extended to any other property.
10.9 Capital Expenditures. Not, and not permit any Subsidiary to,
make or commit to make any Consolidated Capital Expenditure in any Fiscal Year
unless, after giving effect to such Capital Expenditure, the aggregate amount
of all Consolidated Capital Expenditures made by the Company and its
Subsidiaries during such Fiscal Year shall not exceed $7,500,000.
10.10 Restricted Payments. Not, and not permit any Subsidiary to,
(a) declare or pay any dividends on any of the issued and outstanding shares in
the capital of the Company or Subsidiary, as the case may be (other than stock
dividends and declaration or payment or both by a Subsidiary to the Company or
to any other Wholly-Owned Subsidiary), (b) purchase or redeem any such shares
or any warrants, options or other rights in respect of such shares, (c) make
any other distribution to shareholders (other than the issuance of shares, or
options in respect thereof, to directors, officers and employees), (d) prepay,
purchase or redeem any subordinated Debt or (e) set aside funds for any of the
foregoing.
10.11 Investments. The Company will not, nor will it permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person, except:
(a) Investments existing on the Effective Date and identified
in Schedule 10.11;
(b) Cash Equivalent Investments provided the total
Investments in Cash Equivalent Investments of any one issuer permitted
under clauses (b) and (e) of the definition of Cash Equivalent
Investments cannot exceed 10% of total Cash Equivalent Investments at
any time;
(c) Investments by the Company in its Subsidiaries or by any
Subsidiary in any other Subsidiary, in the form of contributions to
capital or loans or advances not exceeding $100,000 in the aggregate;
provided that, immediately before and after giving effect to such
Investment, no Unmatured Event of Default or Event of Default shall
have occurred and be continuing;
38
45
(d) Investments by the Company or any Subsidiary in any
Subsidiary, in the form of capital contributions existing on the date
hereof;
(e) loans or advances made by (i) any Subsidiary to the
Company and (ii) the Company to Larizza not to exceed $9,500,000
provided such loans and advances are reasonably expected to be repaid
within one year;
(f) loans or advances to officers and employees of the
Company or of any Subsidiary for travel or other ordinary business
expenses not in excess of $150,000 in the aggregate at any time;
(g) extensions of credit in the nature of Accounts Receivable
or notes receivable arising from the sale of goods and services in the
ordinary course of business or from Asset Sales permitted by this
Agreement; and
(h) shares of stock, obligations or other securities received
in settlement of claims arising in the ordinary course of business.
10.12 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, (a) be a party to any reconstruction, reorganization,
amalgamation, merger or consolidation, (b) purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or (c) be a party
to any Asset Sale, except for (i) any such reconstruction, reorganization,
amalgamation, merger or consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into the Company or into, with
or to any other Wholly-Owned Subsidiary, (ii) Investments permitted by Section
10.11 or (iii) Asset Sales (other than sales or assignments of accounts
receivable or sales of all or substantially all the assets of the Company or
any Subsidiary or sales of stock of any Subsidiary) provided that (x) no Event
of Default or Unmatured Event of Default has occurred and is continuing or
would result therefrom, and (y) the gross proceeds of such Asset Sales do not
exceed $500,000 in the aggregate in any Fiscal Year.
10.13 Use of Proceeds. Use the proceeds of the Loans solely (i) to
repay Debt to be Repaid and (ii) for working capital purposes; and not use or
permit any proceeds of any Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying" any Margin Stock.
39
46
10.14 Transactions with Affiliates. Except as set forth on Schedule
10.14, not, and not permit any Subsidiary to, enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract with any of its other
Affiliates (other than the Company and its Subsidiaries) which is on terms
which are less favorable than are obtainable from any Person which is not one
of its Affiliates. Without limiting the foregoing, except as set forth on
Schedule 10.14, the Company will not, and will not permit any Subsidiary to,
pay any management, consulting or similar fee (other than board fees and
reasonable expense reimbursements) to any Affiliate (other than to the Company
or a Subsidiary).
10.15 Employee Benefit Plans. Maintain, administer and invest, and
cause each Subsidiary to maintain, administer and invest, each Welfare Plan and
each Pension Plan in accordance with all applicable laws, regulations, orders
or other legislative, administrative or judicial promulgations.
10.16 Environmental Covenants.
10.16.1 Environmental Response Obligation. (a) Comply, and cause
each Subsidiary to comply, with any Federal or provincial judicial or
administrative order requiring the performance at any real property owned,
operated or leased by the Company or any Subsidiary of activities in response
to the release or threatened release of a Hazardous Material, except for the
period of time that the Company or such Subsidiary is diligently in good faith
contesting such order; (b) notify the Agent within ten days of the receipt of
any written claim, demand, proceeding, action or notice of liability by any
Person arising out of or relating to the release or threatened release of a
Hazardous Material at any such property; and (c) notify the Agent within ten
days of any release, threat of release, or disposal of Hazardous Material by
the Company or any Subsidiary reported to any governmental or regulatory
authority at any real property owned, operated, or leased by the Company or any
Subsidiary.
10.16.2 Environmental Liabilities. (a) Comply, and cause each
Subsidiary to comply, in all material respects with all material Environmental
Laws; (b) without limiting clause (a), not commence disposal of any Hazardous
Material into or onto any real property owned, operated or leased by the
Company or any Subsidiary; and (c) without limiting clause (a), not allow any
Lien imposed pursuant to any law, regulation or order relating to Hazardous
Materials or the disposal thereof to remain on any real property owned,
operated or leased by the Company or any Subsidiary, except to the extent that
the Company or such Subsidiary is contesting such Lien in good faith by
appropriate proceedings and, in each case, for which no action to enforce such
Lien has been commenced.
40
47
10.16.3 Environmental Assessments. Without limiting any other
provision of this Agreement, permit, and cause each Subsidiary to permit, the
Agent to investigate the environmental aspects of the properties, facilities
and operations of the Company or such Subsidiary (including taking samples and
conducting such other activities as the Agent deems appropriate). If the Agent
decides to cause such an environmental assessment of any property to be
conducted because of (a) the Agent's considering taking possession of or title
to such property after the occurrence of an Event of Default or (b) a material
change in the use of the property which, in the opinion of the Required Banks,
materially increases the risk of non-compliance with Environmental Laws or
materially increases the risk of cost or liabilities thereunder, then the
Company shall pay upon demand all reasonable costs and expenses (including
reasonable attorney's fees) connected with such assessment. Nothing in this
Section 10.16.3, and no actions taken by the Agent or any Bank pursuant hereto,
shall give, or be construed as giving, to the Agent or any Bank the right or
obligation to direct or control the conduct or action or inaction of the
Company or any Subsidiary with respect to any environmental matters, including
but not limited to those pertaining to compliance with any Environmental Law.
10.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any material contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
10.18 Inconsistent Agreements. Not, and not permit any Subsidiary
to, enter into any material agreement containing any provision which would be
violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of any of its obligations
hereunder or under any other Loan Document.
10.19 Further Assurances. Take such actions as the Agent may
reasonably request from time to time (including, without limitation, the
execution and delivery of guaranties, security agreements, pledge agreements,
mortgages, charge/mortgages, debentures, stock powers, financing statements and
other documents, the filing or recording of any of the foregoing, and the
delivery of share certificates and other collateral with respect to which
perfection is obtained by possession) to ensure that the obligations of the
Company hereunder and under the other Loan Documents are secured by
substantially all assets of the Company subject to such exceptions as the Agent
or the Required Banks from time to time may permit.
41
48
10.20 Limitations on Sale and Leaseback Transactions. Not, and not
permit any Subsidiary to, enter into any arrangement with any Person providing
for the leasing by the Company or any Subsidiary of any real or tangible
personal property, which property has been or is to be sold or transferred by
the Company or such Subsidiary to such Person in contemplation of such leasing.
10.21 Business. The Company will not, and will not permit any
Subsidiary to, enter into any business which differs in any material respect
from the business in which the Company, or any Subsidiary of the Company, is
engaged on the date of this Agreement.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Bank to make its Loans is subject to the
following conditions precedent:
11.1 Loan. The obligation of each Bank to make its Loan, is, in
addition to the conditions precedent specified in Section 11.2, subject to the
conditions precedent (and the date on which all such conditions precedent have
been satisfied or waived in writing by the Banks is called the "Effective
Date") that the Agent shall have received all of the following, each duly
executed and dated the Effective Date (or such earlier date as shall be
satisfactory to the Agent), in form and substance satisfactory to the Agent,
and each (except for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Agreement, the Notes and the other Loan
Documents to which the Company is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance of the Loan Documents by
the Company.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company certifying the names of the
officer or officers of such entity authorized to sign the Loan Documents to
which such entity is a party, together with a sample of the true signature of
each such officer (it being understood that the Agent and each Bank
42
49
may conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Collateral Documents. The Company shall have executed the
Collateral Documents and other documentation set out below and such Collateral
Documents shall have been filed or registered in all offices in which, in the
opinion of the Agent, filing or registration is necessary or of advantage to
perfect or preserve the priority of the Liens intended to be created thereby,
and duplicate copies of such registered security instruments or financing
statements bearing or accompanied by appropriate endorsements, file stamps or
certificates of registration shall have been delivered to the Agent, together
with evidence, satisfactory to the Agent, that substantially all registrations
or filings referred to in this Section 11.1.5 have been duly made and are in
full force and effect (subject to such exceptions as the Agent may approve):
(a) Security Agreement. A general security agreement,
substantially in the form of Exhibit C, issued by the Company (as amended,
supplemented or otherwise modified from time to time, the "Security
Agreement");
(b) Debenture. A $20,000,000 demand debenture, substantially
in the form of Exhibit D, issued by the Company (as amended, supplemented or
otherwise modified from time to time, the "Debenture") containing a fixed
charge on certain property and assets of the Company designated by the Agent
and a floating charge on the undertaking and remaining property and assets of
the Company;
(c) Debenture Pledge Agreement. A debenture pledge
agreement, substantially in the form of Exhibit E, issued by the Company (as
amended, supplemented or otherwise modified from time to time, the "Debenture
Pledge Agreement"), pursuant to which the Debenture will be pledged to the
Agent and the Banks;
(d) Real Estate Documentation. With respect to each parcel
of real property owned or leased by the Company or any Subsidiary (other than
any parcel designated with an asterisk on Schedule 9.18), (a) a duly executed
Mortgage; (b) an opinion of Canadian counsel in respect of such Mortgage
satisfactory to the Agent; (c) if such real property is owned, a survey
acceptable to the Agent; and (d) if such real property is leased (i) a
landlord's consent in form and substance satisfactory to the Agent, (ii) a
certified copy of the lease subject to such Mortgage, and (iii) evidence
satisfactory to the Agent that the lease subject to such Mortgage is either
prior to any mortgages on the underlying fee parcel or such fee mortgagee has
entered into a satisfactory non-disturbance agreement with the applicable
Mortgagor.
43
50
11.1.6 Opinions of Counsel for the Company. The opinions of Wilson,
Walker, Hochberg, Slopen substantially in the form of Exhibit F.
11.1.7 Insurance. Copies of insurance binders or Certificates of
insurance as required pursuant to Section 10.3 and the Loan Documents
satisfactory to the Agent along with evidence that the Agent and Banks are
named as loss payee and additional insured.
11.1.8 Debt to be Repaid, etc. The Agent shall have
received evidence, reasonably satisfactory to the Agent, that (a) all Debt to
be Repaid has been, or concurrently with the making of such Loan will be, paid
in full; and (b) all commitments under the agreements relating to such Debt,
and all Liens securing such Debt, have been or concurrently with the making of
such Loan will be, terminated.
11.1.9 Fees. The Company shall have paid (or shall have made
arrangements to pay with the proceeds of the initial Loan) all fees and
expenses then due and payable to the Agents or any Bank (including, to the
extent then billed, all amounts payable pursuant to Section 14.6).
11.1.10 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 Loans and Conversions. The obligation of each Bank to make its
Loan and to convert such Loan is subject to the following further conditions
precedent that:
11.2.1 No Default, etc. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the making of
such Loan and (b) the warranties of the Company contained in Section 9
(excluding, in the case of conversions of Loans pursuant to Section 2.4,
Sections 9.4, 9.6, 9.8 and 9.15 through 9.18) are true and correct in all
material respects as of the date of such requested Loan or conversion with the
same effect as though made on such date.
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank, the Agent shall have received (in sufficient counterparts to provide one
to each Bank) a certificate dated the date of such requested Loan or conversion
and signed by a duly authorized representative of the Company as to the matters
set out in Section 11.2.1 (it being understood that each request by the Company
for the making of a Loan or conversion shall be deemed to constitute a warranty
by the Company that the conditions precedent set forth in Section 11.2.1 will
be satisfied at the time of the making or conversion of such Loan),
44
51
together with such other documents as the Agent or any Bank may reasonably
request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of the principal of any Loan; or default, and continuance thereof for five
days, in the payment when due of any interest, fees, or other amounts payable
by the Company hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of Larizza, the Company or any Subsidiary in an
aggregate amount (for all Debt so affected) exceeding $500,000 and such default
shall (a) consist of the failure to pay such Debt when due (subject to any
applicable grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof,
or any trustee or agent for such holder or holders, to cause such Debt to
become due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due
of more than $500,000 in the aggregate, or in the performance or observance of,
any material obligation of, or condition agreed to by, the Company or any
Subsidiary with respect to any material purchase or lease of goods or services
(except only to the extent that the existence of any such default is being
contested by the Company or such Subsidiary in good faith and by appropriate
proceedings and appropriate reserves have been made in respect of such
default).
12.1.4 Bankruptcy, Insolvency, etc. Larizza, the Company or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing
its inability or refusal to pay, debts as they become due, or a proceeding is
instituted for seeking an order adjudging Larizza, the Company or any
Subsidiary insolvent; or Larizza, the Company or any Subsidiary applies for,
consents to, or acquiesces in the appointment of a trustee, receiver,
liquidator or other custodian for Larizza, the Company or such Subsidiary or
any property thereof, or makes an assignment for the benefit of creditors; or,
in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for Larizza, the Company or any
Subsidiary or for a substantial part of the property of any thereof and is not
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
composition or other case, proceeding, petition or similar relief under any
bankruptcy or insolvency law
45
52
(including, without limitation, the Companies' Creditors Arrangement Act
(Canada), or any dissolution, liquidation or winding-up proceeding (except the
voluntary dissolution, not under any bankruptcy or insolvency law, of a
Subsidiary), is commenced, in respect of Larizza, the Company or any
Subsidiary, and if such case, proceeding or petition is not commenced or filed
by Larizza, the Company or such Subsidiary, it is consented to or acquiesced
in, by Larizza, the Company or such Subsidiary, or remains for 60 days
undismissed; Larizza, the Company or any Subsidiary takes any action pursuant
to the Bankruptcy Code or the Winding-Up Act (Canada); or Larizza, the Company
or any Subsidiary voluntarily suspends transaction of its usual business or
takes any corporate action to authorize, or in furtherance of, any of the
foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any covenant set forth in Sections
10.6 through 10.14 or Section 10.19; or failure by the Company to comply with
or to perform any other provision of this Agreement (and not constituting an
Event of Default under any of the other provisions of this Section 12) and
continuance of such failure for 30 days (or, in the case of Section 10.15, five
Business Days) after notice thereof to the Company from the Agent, any Bank or
the holder of any Note.
12.1.6 Representations and Warranties. Any representation or
warranty made by the Company herein or in any Loan Document is breached or is
false or misleading in any material respect, or any schedule, certificate,
financial statement, report, notice or other writing furnished by the Company
to the Agent or any Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified.
12.1.7 Pension and Welfare Plans. (i) Institution of any steps by
the Company or any other Person to terminate or amend a Pension Plan or a
Welfare Plan, in whole or in part, if as a result of such termination or
amendment the Company could be required to make a contribution to such Pension
Plan or Welfare Plan, or could incur a liability or obligation to such Pension
Plan or Welfare Plan, in excess of $500,000, or (ii) a contribution failure
occurs with respect to any Pension Plan or Welfare Plan sufficient to give rise
to a Lien under the Pension Benefits Act (Ontario) or other applicable law.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$500,000 shall be rendered against the Company, or any Subsidiary and shall not
have been discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.
46
53
12.1.9 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the
Company, the Company shall fail to comply with or to perform any material
applicable provision of any Collateral Document and such failure shall continue
for 30 days after notice thereof from the Agent, any Bank or any holder of any
Note, or the Company (or any Person by, through or on behalf of the Company)
shall contest in any manner the validity, binding nature or enforceability of
any Collateral Document.
12.1.10 Change in Control. A Change in Control shall occur.
12.2 Effect of Event of Default. If any Event of Default described
in Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable, all without notice or
demand of any kind, and the Company and any Subsidiaries expressly waive
presentation, protest or other notice of any kind; and, in the case of any
other Event of Default, the Agent may (and upon written request of the Required
Banks shall) declare the Commitments (if they have not theretofore terminated)
to be terminated and/or declare all Notes and all other obligations hereunder
to be due and payable, whereupon the Commitments (if they have not theretofore
terminated) shall immediately terminate and/or all Notes and all other
obligations hereunder shall become immediately due and payable, all without
notice or demand, of any kind, and the Company and any Subsidiaries expressly
waive presentation, protest or notice of any kind. The Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks,
and the effect as an Event of Default of any other event described in this
Section 12 may be waived by the written concurrence of the Required Banks.
12.3 Legal Proceedings. If an Event of Default has occurred and is
continuing, the Agent shall, if so directed by the Required Banks, commence
such legal action or other proceedings as it deems expedient to realize upon
the collateral charged by the Liens constituted by the Collateral Documents or
any part thereof, all without any additional notice, presentation, demand or
protest, all of which the Company or any Subsidiary hereby expressly waive.
47
54
SECTION 13 THE AGENT.
13.1 Authorization. Each Bank and the holder of each Note authorizes
the Agent to act on behalf of such Bank or holder to the extent provided herein
or in any other Loan Document or any other document or instrument delivered
hereunder or in connection herewith, and to take such other action as may be
reasonably incidental thereto.
13.2 Indemnification. Each Bank and the holder of each Note agrees
to reimburse and indemnify the Agent for, and hold the Agent harmless against,
a share (determined in accordance with its respective Percentage) of any loss,
damages, penalty, action, judgment, obligation, cost, disbursement, liability
or expense (including attorneys' and solicitors' fees on a solicitor and his
own client basis) incurred without gross negligence or willful misconduct on
the part of the Agent arising out of or in connection with the performance of
its obligations or the exercise of its powers hereunder or under any other Loan
Document or any other document or instrument delivered hereunder or in
connection herewith, as well as the costs and expenses of defending against any
claim against the Agent arising hereunder or thereunder.
13.3 Exculpation. The Agent shall be entitled to rely upon advice of
counsel concerning legal matters, and upon this Agreement, any other Loan
Document and any schedule, certificate, statement, report, notice or other
writing which it believes to be genuine or to have been presented by a proper
person. Neither the Agent nor any of its directors, officers, employees or
agents shall (i) be responsible for any recitals, representations or warranties
contained in, or for the execution, validity, legality, genuineness,
effectiveness or enforceability of, this Agreement, any other Loan Document or
any other instrument or document delivered hereunder or in connection herewith,
(ii) be responsible for the legality, validity, genuineness, perfection,
effectiveness, enforceability, existence, value or enforcement of any
collateral security, (iii) be under any duty to inquire into or pass upon any
of the foregoing matters, or to make any inquiry concerning the performance by
the Company or any other obligor of its obligations, or (iv) in any event, be
liable as such for any action taken or omitted by it or them, except for its or
their own gross negligence or willful misconduct. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, the Agent in its individual capacity.
13.4 Credit Investigation. Each Bank acknowledges that it has made
such inquiries and taken such care on its own behalf as would have been the
case had such Bank's Commitments been granted and such Bank's Loans been made
directly by such Bank to the
48
55
Company without the intervention of the Agent or any other Bank. Each Bank
agrees and acknowledges that the Agent makes no representations or warranties
about the creditworthiness of the Company or any other party to this Agreement
or any other Loan Document or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any other Loan Document or
the value of any security therefor.
13.5 Agent and Affiliates. The Agent in its individual capacity
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent,
and the Agent and its Affiliates may accept deposits from and generally engage
in any kind of business with the Company or any Affiliate thereof as if the
Agent were not the Agent hereunder.
13.6 Action on Instructions of the Required Banks. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement of any Loan Document or collection of the Loans), the Agent shall
not be required to exercise any discretion or take any action, but the Agent
shall in all cases be fully protected in acting or refraining from acting upon
the written instructions from (i) the Required Banks, except for instructions
which under the express provisions hereof must be received by the Agent from
all Banks, and (ii) in the case of such instructions, from all Banks. In no
event will the Agent be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Loan
Document or applicable law. The relationship between the Agent and the Banks
is and shall be that of agent and principal only and nothing herein contained
shall be construed to constitute the Agent a trustee for any holder of a Note
or of a participation therein nor to impose on the Agent duties and obligations
other than those expressly provided for herein.
13.7 Funding Reliance. (a) Unless the Agent receives notice from a
Bank by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such
Bank will not make available to the Agent the amount which would constitute its
Percentage of such borrowing in accordance with Section 2.3, the Agent may
assume that such Bank has made such amount available to the Agent and, in
reliance upon such assumption, make a corresponding amount available to the
Company. If and to the extent such Bank has not made any such amount available
to the Agent, such Bank agrees to pay such amount to the Agent forthwith,
together with interest thereon at the interest rate applicable to Loans
comprising such borrowing. Nothing set forth in this clause (a) shall relieve
any Bank of any obligation it may have to make any Loan hereunder.
49
56
(b) Unless the Agent receives notice from the Company prior to the
due date for any payment hereunder that the Company does not intend to make
such payment, the Agent may assume that the Company has made such payment and,
in reliance upon such assumption, make available to each Bank its share of such
payment. If and to the extent that the Company has not made any such payment
to the Agent, each Bank which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Alternate Reference Rate. Nothing set
forth in this clause (b) shall relieve the Company of any obligation it may
have to make any payment hereunder.
13.8 Collateral Matters. The Banks irrevocably authorize the Agent,
at its option and in its discretion, to release any Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments and any
Hedging Agreements with any Bank and payment in full of all Loans and all other
obligations of the Company under this Agreement and under any other Loan
Document and any Hedging Agreements with any Bank; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company or any Subsidiary owned no interest at the time the Lien was granted or
at any time thereafter; (iv) constituting property leased to the Company or any
Subsidiary under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been,
and is not intended by the Company or such Subsidiary to be, renewed or
extended; or (v) subject to the penultimate sentence of Section 14.1, if
approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
Section 13.8.
13.9 Resignation. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Company and the Banks. In the event of any
such resignation, the Required Banks shall as promptly as practicable appoint a
successor Agent. If no successor shall have been so appointed, and shall have
accepted such appointment, within 30 days after the giving of notice of such
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America having a combined capital, surplus and undivided
profits of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations under this Agreement. After any resignation pursuant to
this
50
57
Section 13.9, the provisions of this Section 13 shall inure to the benefit of
the retiring Agent as to any actions taken or omitted to be taken by it while
it was Agent hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of any Agent or any
Bank in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by the Company and by Banks having an aggregate Percentage of not
less than the aggregate Percentage expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement or the Notes, by the Required Banks, and then any such amendment,
modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (a) shall amend, modify or waive any condition
precedent to any Loan without the consent of Banks holding 100% of the
Commitments or (b) shall (i) extend or increase the amount of any Commitment,
(ii) extend the date for payment of any principal of or interest on the Loans
or any fees payable hereunder, (iii) reduce the principal amount of any Loan,
the rate of interest thereon or any fees payable hereunder, (iv) release any
substantial part of the Collateral granted under the Collateral Documents
except Collateral having a fair market value of less than $5,000,000 in the
aggregate or as otherwise permitted under this Agreement or the Collateral
Documents or (v) change the aggregate Percentage required to effect an
amendment, modification, waiver or consent or amend this Section 14.1 without,
in each case, the consent of all Banks. No provisions of Section 13 shall be
amended, modified or waived without the consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such
Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and
4.3, all notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and shall be sent to the applicable party at its
address shown below its signature hereto or at such other address as such party
may, by written notice received by the other party, have
51
58
designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given three Business Days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery shall be deemed to have been given when received. For purposes of
Sections 2.3, 2.4 and 4.3, the Agent shall be entitled to rely on telephonic
instructions from any person that the Agent in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Agent and each Bank harmless from any loss, cost or expense resulting from any
such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Company's audited
financial statements for the 1993 Fiscal Year.
14.5 Regulations G, T, U, And X. Each Bank represents that it in
good faith is not relying, either directly or indirectly, upon any Margin Stock
as collateral security for the extension or maintenance by it of any credit
provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent (including the
fees and charges (on a solicitor and his own client basis) of counsel for the
Agent and of local counsel, if any, who may be retained by said counsel) in
connection with the preparation, execution, delivery and administration of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including,
without limitation, any amendments, supplements or waivers to any Loan
Documents), and all reasonable out-of-pocket costs and expenses (including
reasonable attorneys' and solicitors' fees on a solicitor and his own client
basis, court costs and other legal expenses) incurred by the Agent and each
Bank after an Event of Default in connection with the enforcement of this
Agreement, the other Loan Documents or any such other documents. Each Bank
agrees to reimburse the Agent for such Bank's pro rata share (based on its
respective Percentage) of any such costs and expenses of the Agent not paid by
the Company. In addition, the Company agrees to pay, and to save the Agent and
the Banks harmless from all liability for, any stamp or other taxes (excluding
income taxes but including Withholding Taxes) which may be payable in
connection with the execution and delivery of this Agreement, the
52
59
borrowings hereunder, the issuance of the Notes or the execution and delivery
of any other Loan Document or any other document provided for herein or
delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this Section 14.6 shall survive repayment of the
Loans, cancellation of the Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Company has
one or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Company and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitments (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and
Commitments) in a minimum aggregate amount equal to the lesser of (i) the
assigning Bank's remaining aggregate Commitments and (ii) $5,000,000; provided,
however, that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be obligated to
pay any greater amount under Section 7.6 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Bank under such Sections and
(b) the Company and the Agent shall be entitled to continue to deal solely and
directly with such Bank in connection with the interests so assigned and
delegated to an Assignee until the date when all of the following conditions
shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect
to such Assignee, shall have been given to the Company and the Agent
by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents
53
60
required to be delivered thereunder, which Assignment Agreement shall
have been accepted by the Agent, and
(z) the assigning Bank or the Assignee shall have paid the
Agent a processing fee of $3,000.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have
the rights and obligations of a Bank hereunder, and (y) the assigning Bank, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of
any assignment and delegation, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note
in the principal amount of the Assignee's Commitment and, if the assigning Bank
has retained a Commitment hereunder, a replacement Note in the principal amount
of the Commitment retained by the assigning Bank (such Note to be in exchange
for, but not in payment of, the predecessor Note held by such assigning Bank).
Each such Note shall be dated the effective date of such assignment. The
assigning Bank shall mark the predecessor Note "exchanged" and deliver it to
the Company. Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being assigned shall
be paid to the assigning Bank. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in accordance with
this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, (a) any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder) and
(b) no assignment pursuant to this Section 14.9.1 shall require the Company to
file any registration statement with the SEC, OSC or any other securities
exchange or to apply to qualify any interest herein or in any Note under the
"blue sky" or other securities laws of any jurisdiction.
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons, in each case with whom the Company deals at
arm's length within the meaning of the Income Tax Act (Canada), participating
interests in any Loan owing to such Bank, the Note held by such Bank, the
Commitments
54
61
of such Bank or any other interest of such Bank hereunder (any Person
purchasing any such participating interest being herein called a
"Participant"), provided that such participating interest entitles the
Participant to a pro rata share of principal and interest payments on the Loan.
In the event of a sale by a Bank of a participating interest to a Participant,
(x) such Bank shall remain the holder of its Note for all purposes of this
Agreement, (y) the Company and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Company shall be determined as if
such Bank had not sold such participation and shall be paid directly to such
Bank. No Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events described in the penultimate sentence
of Section 14.1. Each Bank agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Bank enters
into with any Participant. The Company agrees that if amounts outstanding
under this Agreement and the Notes are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of setoff in respect of its participating interest in amounts owing under this
Agreement, any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or such Note;
provided that such right of setoff shall be subject to the obligation of each
Participant to share with the Banks, and the Banks agree to share with each
Participant, as provided in Section 7.5. The Company also agrees that each
Participant shall be entitled to the benefits of Section 7.6 and Section 8 as
if it were a Bank (provided that no Participant shall receive any greater
compensation pursuant to Section 7.6 or Section 8 than would have been paid to
the participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a
contract made under and governed by the internal laws of the State of Illinois.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. All obligations of the Company and rights of the
Agent, the Banks and any other holder of a Note expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed
55
62
to be an original, but all such counterparts shall together constitute but one
and the same Agreement. When counterparts executed by all of the parties
hereto shall have been lodged with the Agent (or, in the case of any Bank as to
which an executed counterpart shall not have been so lodged, the Agent shall
have received confirmation from such Bank of execution of a counterpart hereof
by such Bank), this Agreement shall become effective as of the date hereof, and
at such time the Agent shall notify the Company and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and the permitted successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and hold the
Agent, each Bank and each of the officers, directors, employees and agents of
the Agent and each Bank (collectively the "Bank Parties" and individually each
a "Bank Party") free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including, without
limitation, reasonable attorneys' and solicitors' fees and charges (on a
solicitor and his own client basis) (collectively therein called the
"Indemnified Liabilities"), incurred by the Bank Parties or any of them as a
result of, or arising out of, or relating to (i) any tender offer, merger,
purchase of stock, purchase of assets or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans or (ii) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Bank
Parties, except for (a) any such Indemnified Liabilities arising on account of
any such Bank Party's bad faith, gross negligence or willful misconduct and (b)
any taxes for which the Company is not liable pursuant to the provisions of
Section 7.6. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Nothing set forth above
shall be construed to relieve any Bank Party from any obligation it may have
under this Agreement.
(b) Without limiting the provisions of clause (a) above, the Company
agrees to reimburse each Bank Party against any and all losses, claims,
damages, penalties, judgments, liabilities
56
63
and expenses (including reasonable attorneys' and solicitors' fees (on a
solicitor and his own client basis) and consultant's fees) which any Bank Party
may pay, incur or become subject to arising out of or relating to the use,
handling, release, presence, emission, discharge, transportation, storage,
treatment or disposal of any Hazardous Material at any real property owned or
leased by the Company or any Subsidiary or used by the Company or any
Subsidiary in its business or operations, except to the extent caused by the
acts or omissions of any Bank Party.
(c) All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
14.14 Confidentiality. The Agent and the Banks shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and, in any event, may make
disclosure on the same confidential basis as provided for herein that is
reasonably required by any actual or bona fide potential transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that, unless
specifically prohibited by applicable law or court order, each of the Agent and
each Bank shall notify the Company of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of the Agent or such Bank by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; and further provided that in no event shall the
Agent or any Bank be obligated or required to return any materials furnished by
Company.
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH OF THE COMPANY, THE AGENT AND EACH BANK
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH OF THE COMPANY, THE
57
64
AGENT AND EACH BANK FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. THE COMPANY, THE AGENT AND EACH BANK HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE
COMPANY,THE AGENT OR ANY BANK HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY, THE AGENT AND
EACH BANK HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
14.17 Currency Indemnity. If, for the purposes of obtaining judgment
in any court in any jurisdiction with respect to any Loan Document, it becomes
necessary to convert into the currency of such jurisdiction (the "Judgment
Currency") any amount due under any Loan Document in any currency other than
the Judgment Currency (the "Currency Due"), then conversion shall be made at
the rate of exchange prevailing on the Business Day before the day on which
judgment is given. For this purpose, "rate of exchange" means the rate at
which the Agent is able, on the relevant date, to purchase the Currency Due
with the Judgment Currency in accordance with its normal practice at its main
branch in Chicago, Illinois. In the event that there is a change in the rate
of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, the Company or any
Subsidiary will, on the date of payment, pay such additional amount, if any, or
be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount paid on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under any Loan Document in the
Currency Due. If the amount of the Currency Due which the Agent is so able to
purchase is less than the amount of the Currency Due originally due to it, the
Company or any Subsidiary shall indemnify and save the Agent
58
65
harmless from and against loss or damage arising as a result of such
deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in any Loan Document, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Agent from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under any Loan Document or under any
judgment or order.
59
66
Delivered at Chicago, Illinois, as of the day and year first above written.
MANCHESTER PLASTICS, LTD.
By /s/ Terence C. Seikel
Title Chief Financial Officer
900 Queen Street
Gananoque, Ontario, Canada K7G 2W7
Attention: President
Facsimile: (810) 524-4996
60
67
CONTINENTAL BANK N.A., individually
and as Agent
By /s/ Steven Ahrenholz
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Steven K. Ahrenholz
Facsimile: (312) 987-5500
61
68
SCHEDULE I
COMMITMENT LIMITS AND PERCENTAGES
Amount of
Name of Bank Commitment Percentage
- ------------ ---------- ----------
Continental Bank $15,000,000 100%
N.A.
----------- -----
TOTAL $15,000,000 100%