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Exhibit (4)(c)
CREDIT AGREEMENT
by and among
SUDBURY, INC.
and
NATIONAL CITY BANK,
STAR BANK, NATIONAL ASSOCIATION
and
NATIONAL CITY BANK, as Agent
May 30, 1995
--
$40,000,000 Revolving Commitment
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Table of Contents
1. CROSS-REFERENCE ..................................................... 1
2A. REVOLVING COMMITMENT .............................................. 1
2A.01 AMOUNT ..................................................... 1
2A.02 TERM ....................................................... 1
2A.03 OPTIONAL AND MANDATORY REDUCTIONS .......................... 1
2A.04 COMMITMENT FEE ............................................. 2
2A.05 EXTENSION OF REVOLVING COMMITMENT .......................... 3
2A.06 MONITORING FEE ............................................. 3
2A.07 ANNUAL FACILITY FEE ........................................ 3
2A.08 TERM OUT OPTION ............................................ 3
2B. REVOLVING LOANS ................................................... 4
2B.01 REVOLVING NOTE ............................................. 5
2B.02 CREDIT REQUESTS ............................................ 5
2B.03 CONDITION: NO DEFAULT ...................................... 5
2B.04 CONDITION: PURPOSE ......................................... 6
2B.05 LOAN MIX ................................................... 6
2B.06 AMOUNTS .................................................... 6
2B.07 LIBOR CONTRACT PERIODS ..................................... 7
2B.08 MATURITIES ................................................. 7
2B.09 ROLLOVER ................................................... 8
2B.10 INTEREST: PR LOANS ......................................... 8
2B.11 INTEREST: LIBOR LOANS ...................................... 8
2B.12 PREPAYMENTS ................................................ 9
2B.13 DISBURSEMENT ............................................... 10
2B.14 BORROWING BASE ............................................. 10
2B.15 BORROWING BASE MAINTENANCE ................................. 11
2B.16 LIBOR LOANS: UNAVAILABILITY ................................ 11
2B.17 LIBOR LOANS: ILLEGALITY .................................... 12
2B.18 SUBJECT LOAN BACK-UP ....................................... 12
2B.19 UNCONDITIONAL OBLIGATION ................................... 12
2C. LETTERS OF CREDIT ................................................. 13
2C.01 RATABLE PARTICIPATION ...................................... 13
2C.02 MAXIMUM .................................................... 13
2C.03 TERM ....................................................... 13
2C.04 CREDIT REQUESTS ............................................ 14
2C.05 FORM ....................................................... 14
2C.06 COMMISSION ................................................. 14
2C.07 REIMBURSEMENT .............................................. 14
3A. INFORMATION ....................................................... 14
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3A.01 FINANCIAL STATEMENTS ...................................... 14
3A.02 NOTICE .................................................... 17
3B. GENERAL FINANCIAL STANDARDS ....................................... 17
3B.01 TANGIBLE NET WORTH ........................................ 18
3B.02 LEVERAGE RATIO ............................................ 18
3B.03 PRETAX INTEREST COVERAGE .................................. 18
3B.04 FIXED CHARGE RATIO ........................................ 18
3C. AFFIRMATIVE COVENANTS ............................................. 19
3C.01 TAXES ..................................................... 19
3C.02 FINANCIAL RECORDS ......................................... 19
3C.03 VISITATION ................................................ 20
3C.04 INSURANCE ................................................. 20
3C.05 CORPORATE EXISTENCE ....................................... 20
3C.06 COMPLIANCE WITH LAW ....................................... 20
3C.07 PROPERTIES ................................................ 21
3C.08 MORTGAGES ON REAL ESTATE .................................. 21
3C.09 INTERCOMPANY LOANS ........................................ 21
3D. NEGATIVE COVENANTS ................................................ 22
3D.01 EQUITY TRANSACTIONS ....................................... 22
3D.02 CREDIT EXTENSIONS ......................................... 23
3D.03 BORROWINGS ................................................ 25
3D.04 LIENS, LEASES ............................................. 25
3D.05 FIXED ASSETS .............................................. 27
3D.06 DIVIDENDS ................................................. 27
3D.07 SUBORDINATED NOTES ........................................ 27
4A. CLOSING ........................................................... 27
4A.01 REVOLVING NOTES ........................................... 27
4A.02 RESOLUTIONS/INCUMBENCY .................................... 27
4A.03 LEGAL OPINION ............................................. 27
4A.04 FINANCIAL STATEMENTS ...................................... 28
4A.05 SECURITY AGREEMENTS ....................................... 28
4A.06 GUARANTY .................................................. 28
4A.07 DOCUMENTATION FEE ......................................... 28
4A.08 LIEN WAIVERS .............................................. 28
4A.09 OTHER DOCUMENTS ........................................... 28
4A.10 EXISTING LOAN PAYOFF ...................................... 29
4A.11 NO MATERIAL ADVERSE CHANGE ................................ 29
4B. REPRESENTATIONS/WARRANTIES ........................................ 29
4B.01 EXISTENCE ................................................. 29
4B.02 GOVERNMENTAL RESTRICTIONS ................................. 29
4B.03 CORPORATE AUTHORITY ....................................... 29
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4B.04 LITIGATION ................................................ 30
4B.05 TAXES ..................................................... 30
4B.06 TITLE ..................................................... 30
4B.07 LAWFUL OPERATIONS ......................................... 30
4B.08 INSURANCE ................................................. 31
4B.09 FINANCIAL STATEMENTS ...................................... 31
4B.10 INDEBTEDNESS .............................................. 31
4B.11 DEFAULTS .................................................. 31
4B.12 FULL DISCLOSURE ........................................... 31
5A. EVENTS OF DEFAULT ................................................. 32
5A.01 PAYMENTS .................................................. 32
5A.02 WARRANTIES ................................................ 32
5A.03 COVENANTS WITHOUT GRACE ................................... 32
5A.04 COVENANTS WITH GRACE ...................................... 32
5A.05 CROSS-DEFAULT ............................................. 32
5A.06 BORROWER'S SOLVENCY ....................................... 33
5A.07 COMPANIES' SOLVENCY ....................................... 33
5A.08 MATERIAL ADVERSE CHANGE ................................... 33
5B. EFFECTS OF DEFAULT ................................................ 33
5B.01 OPTIONAL DEFAULTS ......................................... 33
5B.02 AUTOMATIC DEFAULTS ........................................ 34
5B.03 OFFSETS ................................................... 34
5B.04 SUBJECT LCs ............................................... 34
5B.05 EQUALIZATION .............................................. 35
6A. INDEMNITY: STAMP TAXES ............................................ 35
6B. INDEMNITY: GOVERNMENTAL COSTS/LIBOR-RATE LOANS .................... 35
6C. INDEMNITY: FUNDING COSTS .......................................... 36
6D. CREDIT REQUESTS ................................................... 36
6E. INDEMNITY: UNFRIENDLY TAKEOVERS ................................... 36
6F. INDEMNITY: GOVERNMENTAL COSTS/SUBJECT LCs ......................... 36
6G. INDEMNITY: MISCELLANEOUS COSTS/SUBJECT LCs ........................ 36
6H. INDEMNITY: CAPITAL REQUIREMENTS ................................... 37
6I. INDEMNITY: COLLECTION COSTS ....................................... 37
6J. CERTIFICATE FOR INDEMNIFICATION ................................... 37
7A. BANK'S PURPOSE .................................................... 37
7B. NCB-AGENT ......................................................... 37
7B.01 NATURE OF APPOINTMENT .................................... 38
7B.02 NCB AS A BANK; OTHER TRANSACTIONS ........................ 38
7B.03 INSTRUCTION FROM BANKS ................................... 38
7B.04 BANKS' DILIGENCE ......................................... 38
7B.05 NO IMPLIED REPRESENTATIONS ............................... 38
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7B.06 SUB-AGENTS ............................................... 39
7B.07 NCB-AGENT'S DILIGENCE .................................... 39
7B.08 NOTICE OF DEFAULT ........................................ 39
7B.09 NCB-AGENT'S LIABILITY .................................... 39
7B.10 COMPENSATION ............................................. 39
7B.11 DISBURSEMENTS ............................................ 39
7B.12 NCB-AGENT'S INDEMNITY .................................... 40
7B.13 RESIGNATION .............................................. 40
7C. TRANSFER OF SUBJECT LOANS .................................... 40
7C.01 PRIOR CONSENT ............................................ 41
7C.02 AGREEMENT ................................................ 41
7C.03 NOTE ..................................................... 41
7C.04 PARTIES .................................................. 41
8. INTERPRETATION ................................................ 41
8.01 WAIVERS .................................................. 41
8.02 CUMULATIVE PROVISIONS .................................... 41
8.03 BINDING EFFECT ........................................... 42
8.04 SURVIVAL OF PROVISIONS ................................... 42
8.05 IMMEDIATE U.S. FUNDS ..................................... 42
8.06 CAPTIONS ................................................. 42
8.07 SUBSECTIONS .............................................. 42
8.08 ILLEGALITY ............................................... 42
8.09 OHIO LAW ................................................. 42
8.10 INTEREST/FEE COMPUTATIONS ................................ 42
8.11 NOTICE ................................................... 43
8.12 ACCOUNTING TERMS ......................................... 43
8.13 ENTIRE AGREEMENT ......................................... 43
8.14 WAIVER OF JURY TRIAL ..................................... 43
8.15 LATE CHARGE; APPLICATION OF PAYMENTS ..................... 43
8.16 EXPENSES ................................................. 44
8.17 JURISDICTION AND VENUE ................................... 44
8.18 AMBIGUITIES .............................................. 44
8.19 OTHER WAIVERS AND ACKNOWLEDGMENT ......................... 44
9. DEFINITIONS ................................................... 45
Account Debtor ................................................. 45
Account Officer ................................................ 45
Accumulated Funding Deficiency ................................. 45
Advantage ...................................................... 45
Affiliate ...................................................... 45
Agreement ...................................................... 45
Availability ................................................... 46
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Bank ............................................................ 46
Banking Day ..................................................... 46
Borrower ........................................................ 46
Borrowing Base .................................................. 46
Borrowing Base Report ........................................... 46
Company ......................................................... 46
Conversion Date ................................................. 46
Credit Request .................................................. 46
Debt ............................................................ 46
Default Under ERISA ............................................. 47
Default Under This Agreement .................................... 47
Distribution .................................................... 47
Eligible Inventory .............................................. 47
Eligible Receivables ............................................ 47
Environmental Law ............................................... 50
ERISA ........................................................... 50
Event of Default ................................................ 50
Existing Revolving Facility ..................................... 50
Expiration Date ................................................. 51
Federal Funds Rate .............................................. 51
Fixed Charge Ratio .............................................. 51
Funded Indebtedness ............................................. 51
GAAP ............................................................ 51
Guarantor ....................................................... 51
Initial Funding Date ............................................ 51
Insider ......................................................... 52
Insolvency Action ............................................... 52
Inventory ....................................................... 52
Leverage Ratio .................................................. 52
LIBOR Contract Period ........................................... 52
LIBOR Loan ...................................................... 52
LIBOR Pre-Margin Rate ........................................... 52
Margin .......................................................... 52
Maturity ........................................................ 53
Most Recent 4A.04 Financial Statements .......................... 53
NCB ............................................................. 53
Net Amount of Eligible Receivables .............................. 53
Net Income ...................................................... 53
Noteholders ..................................................... 53
PBGC ............................................................ 53
Pension Plan .................................................... 53
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Person .......................................................... 53
PR Loan ......................................................... 53
Prime Rate ...................................................... 53
Proforma Covenant Compliance .................................... 53
Progress Billings ............................................... 53
Projections ..................................................... 54
Ratable and Ratably ............................................. 54
Receivable ...................................................... 54
Related Writing ................................................. 54
Reportable Event ................................................ 54
Repricing Event ................................................. 54
Revolving Commitment ............................................ 54
Revolving Loan .................................................. 54
Revolving Note .................................................. 54
Sardas Shares ................................................... 54
Series .......................................................... 55
Subject Indebtedness ............................................ 55
Subject LC ...................................................... 55
Subject Loan .................................................... 55
Subordinated .................................................... 55
Subsidiary ...................................................... 55
Supplemental Schedule ........................................... 55
Tangible Net Worth .............................................. 55
Term Out Option ................................................. 55
Term Maturity Date .............................................. 55
Total Liabilities ............................................... 56
plurals .............................................................. 56
10. EXECUTION ........................................................ 56
Signatures and Addresses ............................................. 57
EXHIBIT A: Supplemental Schedule (4B.)
EXHIBIT B: Revolving Note (2B.01; 4A.01)
EXHIBIT C: [Intentionally omitted]
EXHIBIT D: Extension Agreement (2A.06)
EXHIBIT E: Credit Request (2B.02)
EXHIBIT F: List of Subsidiaries (4B.01)
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CREDIT AGREEMENT
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This Credit Agreement (this "Agreement") is made as of May 30, 1995 by and
among SUDBURY, INC. ("Borrower") and the Banks named in subsection 2A.01 below
(the "Banks") and NATIONAL CITY BANK as agent (in that capacity, "NCB-Agent")
of the Banks for the purposes of this Agreement and the Related Writings:
1. CROSS-REFERENCE -- Certain capitalized terms and phrases used but not
otherwise defined in the body hereof are defined in section 9 below.
2A. REVOLVING COMMITMENT -- The basic terms of the Revolving Commitments and
the compensation therefor are as follows:
2A.01 AMOUNT -- The aggregate amount of the Revolving Commitments shall
be Forty Million and 00/100 Dollars ($40,000,000), but said amount may
be Ratably reduced from time to time pursuant to subsection 2A.03 and
the Revolving Commitments may be terminated pursuant to section 5B. The
amount of each Bank's maximum Revolving Commitment (subject to such
reduction or termination), and the proportion (expressed as a
percentage) that it bears to all of the Revolving Commitments, is set
forth opposite the Bank's name below, to-wit:
$20,000,000 50% National City Bank
$20.000.000 50% Star Bank, National Association
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$40,000,000 100% Total
2A.02 TERM -- Each Revolving Commitment shall become effective as of the
date of this Agreement and shall remain in effect on a revolving basis
until May 30, 1998 (the "Expiration Date") EXCEPT that a later
Expiration Date may be established from time to time pursuant to
subsection 2A.05 and EXCEPT that the Revolving Commitments shall end in
any event upon any earlier reduction thereof to zero pursuant to
subsection 2A.03 or any earlier termination pursuant to section 5B.
2A.03 OPTIONAL AND MANDATORY REDUCTIONS -- Borrower shall have the
right, at all times and without the payment of a premium, to permanently
and Ratably reduce the Revolving Commitments in whole or in part by
giving NCB-Agent irrevocable notice (to be given not later than 12:00
noon of the Banking Day next preceding the effective date of the
reduction and either to be given in writing or to be promptly confirmed
in writing) of the aggregate amount by which the Revolving Commitments
are to be reduced and the effective date thereof subject, however, to
the following:
(a) Subject to section 2A.03(c) below, no such reduction shall
reduce any Bank's Revolving Commitment to a lesser amount than the
sum of
(1) the aggregate unpaid principal balance of that Bank's
Revolving Loans outstanding at that time plus
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(2) the aggregate unpaid principal balance of any of that Bank's
LIBOR Loans to be obtained pursuant to any unfulfilled Credit
Request under subsection 2B.02 plus
(3) that Bank's Ratable share of the aggregate undrawn balance of
the Subject LCs and any unreimbursed drawings pursuant to the
Subject LCs plus
(4) that Bank's Ratable share of any Subject LCs to be issued
pursuant to any unfilled Credit Request under subsection 2C.04.
(b) Each such reduction of the Revolving Commitments shall aggregate One
Million and 00/100 Dollars ($1,000,000) or any multiple thereof.
(c) Concurrently with each reduction Borrower shall make a principal
payment on each Bank's Revolving Loans then outstanding in a principal
amount equal to the excess, if any, of (1) the amount of the aggregate
unpaid principal balance of that Bank's Revolving Loans plus that Bank's
Ratable share of the aggregate undrawn balance of the Subject Lcs and
any unreimbursed drawings pursuant to the Subject LCs over (2) that
Bank's Revolving Commitment as so reduced. Subsection 2B.12 and section
6C shall apply to each such prepayment. In addition, Borrower shall pay
to NCB-Agent, for the account of the Banks, on the date of such
reduction, the commitment fees under section 2A.04, on the amount of the
portion of the Revolving Commitments so reduced, accrued through the
date of such reduction.
In addition to the optional reductions in the Revolving Commitments discussed
above, it is acknowledged and agreed that the Revolving Commitments shall be
automatically and permanently reduced on the Conversion Date by the full amount
of the Revolving Loans converted by Borrower upon any exercise by Borrower of
its Term Out Option. Concurrently with any such reduction, Borrower shall make
a principal payment on each Bank's Revolving Loans then outstanding in a
principal amount equal to the excess, if any, of the amount of the aggregate
unpaid balance of that Bank's Revolving Loans over that Bank's Revolving
Commitment as so reduced.
NCB-Agent shall promptly notify each Bank of the amount and type of its
Revolving Commitment being reduced and the effective date thereof.
2A.04 COMMITMENT FEE -- Each Bank shall, so long as its Revolving Commitment
remains in effect, earn a commitment fee
(a) based on the average daily difference between the amount of that
Bank's Revolving Commitment from time to time in effect and the
aggregate unpaid principal balance of that Bank's Revolving Loans plus
its Ratable share of the Subject LCs then outstanding,
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(b) computed at the rate of one-quarter of one percent (1/4%) per annum
and
(c) payable in arrears by Borrower to NCB-Agent for the account of the
Banks on August 31, 1995 and quarter-annually thereafter on the last day
of each quarter and on the Expiration Date.
2A.05 EXTENSION OF REVOLVING COMMITMENT -- Whenever Borrower furnishes its
audited financial statements to Banks pursuant to clause (b) of subsection
3A.01, commencing with the fiscal year ending May 31, 1996, Borrower may
request that the Revolving Commitments be extended one year to the May 30 next
following the Expiration Date then in effect. Each such request shall be
executed and delivered to each Bank in triplicate and shall be in the form of
Exhibit D with all blanks appropriately filled. Banks agree to give
consideration to each such request; but in no event shall any Bank be committed
to extend its Revolving Commitment, nor shall any Bank's Revolving Commitment
be so extended, unless and until every Bank has executed and delivered the form
of assent in Exhibit D.
2A.06 MONITORING FEE -- Borrower agrees to pay to each Bank the actual costs of
any field audits plus other related monitoring costs incurred by such Bank, all
as reasonably determined by such Bank, within five (5) days written notice of
the same.
2A.07 ANNUAL FACILITY FEE -- Each Bank shall, so long as its Revolving
Commitment remains in effect, earn a facility fee
(a) based on the amount of that Bank's Revolving Commitment from time
to time in effect,
(b) computed at the rate of one-tenth of one percent (1/10%) per annum
and
(c) payable by Borrower to NCB-Agent for the account of the Banks on
an annual basis in advance commencing one (1) year from the date
hereof.
2A.08 TERM OUT OPTION -- At any time prior to the Expiration Date and provided
no Default Under This Agreement then exists, Borrower shall have the right and
option (the "Term Out Option") to Ratably convert up to Fifteen Million and
00/100 Dollars ($15,000,000) of the aggregate Revolving Commitments to a Series
of term loans pursuant to the following terms:
(a) If Borrower desires to exercise such option, it shall provide
Banks and NCB- Agent with not less than ten (10) days nor more
than thirty (30) days prior written notice of the same, which
notice must specify the amount of the aggregate Revolving
Commitments which Borrower desires to convert and the date of
conversion (the "Conversion Date").
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(b) From the Conversion Date through the earliest of four (4)
years after the Conversion Date, five (5) years after the
date of this Agreement or the acceleration of the Subject
Indebtedness pursuant to subsection 5B.01 or 5B.02 hereof
(such earliest date being the "Term Maturity Date"), Borrower
shall pay to NCB-Agent for the benefit of the Banks
consecutive monthly installments of principal and interest
commencing on the first (1st) day of the month following the
Conversion Date and continuing on the first (1st) day of each
month thereafter until the Term Maturity Date. The amount of
each installment shall be equal to one-forty-eighth (1/48th)
of the amount of the Revolving Commitments converted plus
accrued interest through the date of such installment. It is
acknowledged and agreed that the term of any such Series of
term loans shall in no event extend past the Term Maturity
Date, at which time the final such installment shall be due
in an amount equal to all remaining unpaid principal together
with all accrued and unpaid interest on such Series of term
loans.
(c) The interest rate applicable to any Series of term loans
shall, prior to the Term Maturity Date, be equal to the
interest rate applicable to the converted Revolving Loans on
the Conversion Date plus one-quarter of one percent (1/4%)
per annum and, after the Term Maturity Date, be equal to the
interest rate applicable to the converted Revolving Loan on
the Conversion Date plus two and one quarter percent (2 1/4%)
per annum. Each change in the Prime Rate shall automatically
and immediately change the rate thereafter applicable to the
term loans; PROVIDED, that in no event shall the rate
applicable to the term loans at any time after the Term
Maturity Date be less than the rate applicable thereto
immediately after the Term Maturity Date regardless of future
reductions in the Prime Rate.
(d) If an amount in excess of Ten Million and 00/100 Dollars
($10,000,000) is desired to be termed out by Borrower, Banks
may require machinery and equipment appraisals reasonably
satisfactory to Banks as a condition to Borrower exercising
its Term Out Option.
(e) Borrower agrees to execute all such further documents,
instruments and agreements requested by Banks or NCB-Agent
in order to more fully document the arrangement contemplated
by the Term Out Option and containing such terms and
provisions consistent herewith as they may require.
2B. REVOLVING LOANS -- Each Bank (for itself only and not for the others)
agrees that so long as its Revolving Commitment remains in effect it will,
subject to the conditions of, and in reliance upon the representations and
warranties set forth in, this Agreement, grant Borrower its Ratable share of
such Revolving Loans as Borrower may from time to time request. In no event
shall any
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Bank be responsible for any failure of any other Bank to make any Subject Loan
required to be made by such other Bank.
2B.01 REVOLVING NOTE -- Each Bank's Revolving Loans shall be evidenced
at all times by a Revolving Note executed and delivered by Borrower,
payable to the order of that Bank in a principal amount equal to the
dollar amount of that Bank's Revolving Commitment as in effect at the
execution and delivery of the Revolving Note and being in the form and
substance of EXHIBIT B with the blanks appropriately filled.
(a) Whenever Borrower shall obtain a Series of Revolving Loans,
each Bank shall endorse an appropriate entry on the Revolving Note
or make an appropriate entry in a loan account in that Bank's
books and records, or both. Each entry, absent manifest error,
shall be prima facie evidence of the data entered; but such
entries (or any Bank's failure to make such entries) shall not be
a condition to or limit or otherwise affect Borrower's or any of
the other Companies' obligation to pay.
(b) No holder of any Revolving Note shall transfer a Revolving
Note, or seek a judgment or file a proof of claim based on a
Revolving Note, without in each case first endorsing the Revolving
Note to reflect the true amount owing thereon.
2B.02 CREDIT REQUESTS -- Whenever Borrower desires to obtain a Series of
Revolving Loans, Borrower shall give NCB-Agent an appropriate notice (a
"Credit Request") which shall be irrevocable and shall be in the form of
EXHIBIT E (or in other form and detail reasonably satisfactory to
NCB-Agent) with the blanks appropriately filled. NCB-Agent shall give
each Bank immediate notice of each Credit Request. Borrower may make its
request by telephone PROVIDED it promptly confirms the request by a
written request as aforesaid. Borrower hereby agrees to assume the risk
of a misunderstanding in the case of any telephone request. Except in
the case of Revolving Loans obtained at the execution and delivery of
this Agreement, the Credit Request is to be given not later than 12:00
noon of the Banking Day on which the loan proceeds are to be disbursed
EXCEPT in the case of LIBOR Loans, in which latter case the Credit
Request shall be given not later than 12:00 noon of the third (3rd)
Banking Day prior to the day the proceeds are to be disbursed. Each
Credit Request shall specify (a) the date of the proposed Revolving Loan
(which shall be a Banking Day), (b) the aggregate amount of the
requested Revolving Loans, (c) whether such request is for PR Loans or
LIBOR Loans, and (d) if such request is for a LIBOR Loan, the initial
LIBOR Contract Period with respect thereto. If no election as to the
type of Revolving Loan is specified in any such Credit Request, then the
request shall be deemed to be for PR Loans. If no LIBOR Contract Period
with respect to a request for LIBOR Loans is specified in any such
Credit Request, then Borrower shall be deemed to have selected a LIBOR
Contract Period of one (1) month's duration.
2B.03 CONDITION: NO DEFAULT -- Borrower shall not be entitled to obtain
any Revolving Loan or Subject LC if
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(a) any Default Under This Agreement shall then exist or would thereupon
begin to exist or
(b) any representation or warranty made in subsections 4B.01 through
4B.08 (both inclusive) or 4B.10 or 4B.12 shall have ceased to be true
and complete in any material respect except for such changes, if any, as
shall have been fully disclosed in the applicable Credit Request and as
may be waived by Banks in the reasonable exercise of their discretion,
or
(c) there shall have occurred any material adverse change in Borrower's
financial condition, properties or business since the date of Borrower's
Most Recent 4A.04 Financial Statements, or
(d) if, immediately before or after giving effect to such Revolving Loan
or issuance of a Subject LC, Availability is less than zero.
Each Credit Request, both when made and when honored, shall of itself
constitute a continuing representation and warranty by Borrower to NCB-Agent
for the benefit of the Banks that Borrower is entitled to make the Credit
Request.
2B.04 CONDITION: PURPOSE -- Borrower shall not use the proceeds of any
Revolving Loan in any manner that would violate or be inconsistent with
Regulation U or X of the Board of Governors of the Federal Reserve System; nor
will it use any such proceeds for the purpose of financing the acquisition of
any corporation or other business entity if the acquisition is publicly opposed
by such corporation's or business entity's management, or if Bank deems that
its participation in the financing would involve it in a conflict of interest.
2B.05 LOAN MIX -- The Revolving Loans at any one time outstanding may consist
of PR Loans or LIBOR Loans or any combination thereof as Borrower may from time
to time duly elect; provided, that any given Series of Revolving Loans shall at
all times consist only of PR Loans or only of LIBOR Loans and, in the case of
LIBOR Loans, shall have identical LIBOR Contract Periods.
2B.06 AMOUNTS -- Each borrowing shall be a Series of Revolving Loans, one by
each Bank, which shall be divided Ratably among the Banks and shall be in such
aggregate principal amount as Borrower may request subject, however, to the
following:
(a) The aggregate principal amount,
in the case of PR Loans, shall be One Hundred Thousand and 00/100
Dollars ($100,000) or any multiple thereof, and
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in the case of LIBOR Loans, shall be Five Hundred Thousand and
00/100 Dollars ($500,000) or any greater amount that is a multiple
of One Hundred Thousand and 00/100 Dollars ($100,000).
(b) In no event shall the unpaid principal amount of the Revolving Loans
owing to any Bank at any time exceed the amount of that Bank's Revolving
Commitment then in effect.
(c) In no event shall the aggregate unpaid principal amount of the
Revolving Loans plus the aggregate undrawn balance of the Subject LCs
and any unreimbursed drawings pursuant to the Subject LCs (to the extent
PR Loans have not been advanced by Banks in respect thereof pursuant to
subsection 2B.18) plus the amount of any Subject LCs to be issued
pursuant to any unfilled Credit Request under subsection 2C.04 at any
time exceed the lesser of the aggregate of the Revolving Commitments or
the Borrowing Base.
2B.07 LIBOR CONTRACT PERIODS -- Each Series of LIBOR Loans shall have
applicable thereto a LIBOR Contract Period to be duly elected by Borrower in
the Credit Request therefor. Each LIBOR Contract Period shall begin on the date
of borrowing of the applicable LIBOR Loans and shall end on such date, not
later than the Expiration Date, as Borrower may select in its relevant Credit
Request therefor subject, however, to the following:
(a) The LIBOR Contract Period for each LIBOR Loan shall end one (1), two
(2), three (3) or six (6) months after the date of borrowing; PROVIDED,
that
(1) if any such LIBOR Contract Period otherwise would end on a day
that is not a Banking Day, it shall end instead on the next
following Banking Day unless that day falls in another calendar
month, in which latter case the LIBOR Contract Period shall end
instead on the last Banking Day of the next preceding calendar
month, and
(2) if the LIBOR Contract Period commences on a day for which
there is no numerical equivalent in the calendar month in which
the LIBOR Contract Period is to end, it shall end on the last
Banking Day of that calendar month, and
(b) Borrower shall never elect a LIBOR Contract Period the term of which
extends beyond the Expiration Date.
2B.08 MATURITIES -- The stated Maturity of each PR Loan shall be the Expiration
Date. The stated Maturity of each LIBOR Loan shall be the last day of the
LIBOR Contract Period applicable thereto. In no event, however, shall the
stated Maturity of any Revolving Loan be later than the Expiration Date.
-7-
15
2B.09 ROLLOVER -- If
(a) prior to the Expiration Date any Series of LIBOR Loans shall not be
paid in full at the stated Maturity thereof and
(b) Borrower shall have failed to duly give NCB-Agent a timely Credit
Request in respect thereof,
Borrower shall be deemed to have duly given NCB-Agent a timely Credit Request
to obtain (and at that Maturity the Banks shall make) a Series of PR Loans in
an aggregate principal amount equal to the aggregate unpaid principal of the
Series of LIBOR Loans then due, the proceeds of which Series of PR Loans shall
be applied to the payment in full of the Series of LIBOR Loans then due;
PROVIDED, that no such Series of PR Loans shall of itself constitute a waiver
of any then-existing Default Under This Agreement.
2B.10 INTEREST: PR LOANS -- The principal of and overdue interest on the PR
Loans shall bear interest payable in arrears on the first (1st) day of each
month, commencing July 1, 1995, and at Maturity and computed (in accordance
with subsection 8.10)
(a) prior to Maturity, at a fluctuating rate equal to the Prime Rate
from time to time in effect, and
(b) after Maturity (whether occurring by lapse of time or by
acceleration), at a fluctuating rate equal to the Prime Rate from time
to time in effect plus two percent (2%) per annum,
with each change in the Prime Rate automatically and immediately changing the
rate thereafter applicable to the PR Loans; PROVIDED, that in no event shall
the rate applicable to the PR Loans at any time after the Maturity thereof be
less than the rate applicable thereto immediately after Maturity regardless of
future reductions in the Prime Rate.
2B.11 INTEREST: LIBOR LOANS -- The principal of and overdue interest on each
LIBOR Loan shall bear interest computed (in accordance with subsection 8.10)
and payable as follows:
(a) Prior to Maturity each LIBOR Loan shall bear interest at a rate
equal to the LIBOR Pre-Margin Rate in effect at the start of the
applicable LIBOR Contract Period selected by Borrower in the applicable
Credit Request plus the applicable "Margin". The applicable "Margin"
shall be dependent on the Borrower and its Subsidiaries' consolidated
Leverage Ratio and Fixed Charge Ratio as of the end of any given fiscal
year and shall be determined in accordance with the following pricing
grid:
-8-
16
Leverage Ratio
>2.25 >2.0 & <_2.25 >1.5 & <_2.0 <_1.5
--------------------------------------------------
--------------------------------------------------------------------------------
Fixed <_1.5 1.50% 1.25% 1.00% .75%
--------------------------------------------------------------------------------
Charge >1.5 & <_2.0 1.25% 1.00% .75% .50%
--------------------------------------------------------------------------------
Ratio >2.00 1.00% .75% .50% .50%
--------------------------------------------------------------------------------
<FN>
* Less than or equal to
It is acknowledged and agreed that for purposes of this section 2B.11
only, Leverage Ratio shall be computed as the ratio of the
consolidated Total Liabilities (other than Subordinated indebtedness,
if any) of Borrower and its Subsidiaries to the sum of the
consolidated Tangible Net Worth (except that for purposes of this
section 2B.11 only, the first Two Million Dollars ($2,000,000) of
intangible assets will be excluded) of Borrower and its Subsidiaries
plus their Subordinated indebtedness, if any.
The interest rate applicable to a LIBOR Loan prior to Maturity shall
initially be equal to the LIBOR Pre-Margin Rate plus one percent
(1%); provided that the applicable Margin shall be adjusted (1)
annually upon the Banks' receipt of the audited financial statements
contemplated in subsection 3A.01 (b) below based on the Borrower and
its Subsidiaries' consolidated Leverage Ratio and Fixed Charge Ratio
as of the end of the respective fiscal year and effective at the
beginning of the first month subsequent to such receipt and (2) upon
the occurrence of a Repricing Event effective at the beginning of the
first month subsequent to such Repricing Event.
(b) After Maturity (whether occurring by lapse of time or by
acceleration), each LIBOR Loan shall bear interest computed and
payable in the same manner as in the case of PR Loans (after
Maturity) as set forth in section 2B.10(b) hereof.
(c) Interest on each LIBOR Loan shall be payable in arrears on the
last day of the LIBOR Contract Period applicable thereto and at
Maturity and, in the case of any Contract Period having a longer term
than three (3) months, shall also be payable every three (3) months
after the first (1st) day of the LIBOR Contract Period.
(d) The applicable LIBOR Pre-Margin Rate for each LIBOR Contract
Period shall be determined by NCB-Agent, and such determination shall
be presumptively correct absent manifest error.
2B.12 PREPAYMENTS -- Borrower may from time to time Ratably prepay the
principal of the PR Loans in whole or in part and may from time to time
Ratably prepay the principal of any given Series of LIBOR Loans in whole or
in part, subject to the following:
(a) Borrower shall give NCB-Agent an appropriate notice not later
than 12:00 noon on the Banking Day of any such prepayment, which
notice, if not originally given in writing, shall be promptly
confirmed in writing. Such notice shall be irrevocable and
-9-
17
shall commit the Borrower to prepay such Revolving Loans by the amount
stated in such notice on the date stated therein. NCB-Agent shall
promptly report the notice to each Bank.
(b) Each prepayment of a Series of PR Loans shall aggregate the
principal amount of One Hundred Thousand and 00/100 Dollars ($100,000)
or any multiple thereof or an amount equal to the then aggregate
principal outstanding and shall be allocated thereto Ratably. Each
prepayment of a Series of LIBOR Loans shall aggregate Five Hundred
Thousand and 00/100 Dollars ($500,000) or any greater amount that is a
multiple of One Hundred Thousand and 00/100 Dollars ($100,000) or an
amount equal to the aggregate unpaid principal balance of that Series of
LIBOR Loans and shall be applied Ratably thereto.
(c) Each prepayment of the PR Loans may be made without penalty or
premium. Any prepayment of any LIBOR Loans (regardless of the reason
for the prepayment) shall be subject to the payment of any indemnity
required by section 6C.
(d) Prior to the Expiration Date, no prepayment shall of itself reduce
any Revolving Commitment.
(e) Concurrently with each prepayment of a Series of LIBOR Loans,
Borrower shall prepay the interest accrued on the prepaid principal.
2B.13 DISBURSEMENT -- Each Bank may disburse the proceeds of each Revolving
Loan made by it from any office selected by that Bank and in each case shall
disburse the same in immediately available funds to Borrower's general checking
account in the absence of written instructions from Borrower to the contrary,
which funds shall be so disbursed on the Banking Day specified in the Credit
Request for a Revolving Loan; PROVIDED, that this subsection shall not apply to
Revolving Loans made pursuant to subsection 2B.09.
2B.14 BORROWING BASE -- The "Borrowing Base" at any given time shall be the
aggregate of
(a) an amount equal to eighty-five percent (85%) of the Net Amount of
Eligible Receivables (or such other percentage of Eligible Receivables
as may, upon notice to Borrower from time to time, be fixed by Banks in
their reasonable discretion based upon the results of field audits or
the dilution of the Companies' Receivables), plus
(b) an amount equal to the lesser of either
(1) fifty percent (50%) of the Eligible Inventory (determined on a
first-in- first-out basis and calculated at the lesser of cost or
market in the aggregate and other than Iowa Mold Tooling Co., Inc.
for which the advance rate on raw materials will be thirty percent
(30%)) applicable to each Company or
-10-
18
(2) Eight Million Seven Hundred Thousand and 00/100 Dollars
($8,700,000), plus
(c) an amount initially equal to Ten Million and 00/100 Dollars
($10,000,000), provided that to the extent Borrower has elected to
exercise the Term Out Option, this amount shall be reduced on a dollar
for dollar basis but no lower than zero Dollars ($0);
all as reasonably determined by Banks either on the basis of the then most
recent Borrowing Base Report furnished by Borrower to Banks pursuant to
subsection 3A.01 or on the basis of the then most recent field audit (if any)
made or other information received by Banks or NCB-Agent.
2B.15 BORROWING BASE MAINTENANCE -- Whenever Borrower shall furnish to Banks a
Borrowing Base report showing that the sum of the aggregate unpaid principal
balance of the Revolving Loans then outstanding exceeds the amount of
Borrower's Borrowing Base as shown in that report, Borrower shall immediately
make a payment to Banks in an amount equal to that excess for application to
the principal of the Revolving Loans.
2B.16 LIBOR LOANS: UNAVAILABILITY -- If at any time
(a) the Banks shall determine that dollar deposits of the relevant
amount for the relevant LIBOR Contract Period are not available in the
London interbank eurodollar market (in the case of LIBOR rates) for the
purpose of funding the LIBOR rates in question, or
(b) NCB-Agent shall reasonably determine that circumstances affecting
that market make it impracticable for NCB-Agent to ascertain LIBOR
rates, or
(c) the Banks shall give NCB-Agent written notice that the costs of
those Banks in funding of any Subject Loans at a LIBOR rate are equal to
or greater than the interest payable by Borrower in respect thereof,
then and in each such case NCB-Agent shall, by written notice to Borrower and
to all the Banks, suspend Borrower's right thereafter to obtain LIBOR Loans,
which suspension shall remain in effect until such time, if any, as NCB-Agent
may give written notice to Borrower and to all of the Banks that the condition
giving rise to the suspension no longer prevails, which notice NCB-Agent agrees
to provide within ten (10) days of the end of the condition giving rise to the
suspension. In the event of any such determination set forth above, any request
by Borrower for a LIBOR Loan shall, until NCB-Agent shall have notified
Borrower that the circumstances causing such suspension no longer exist, be
deemed to be a request
- 11 -
19
for a PR Loan. Each determination by NCB-Agent or any Bank under this section
2B.16 shall be conclusive.
2B.17 LIBOR LOANS: ILLEGALITY -- If any Bank shall give NCB-Agent written
notice (an "illegality notice") that it is, or any governmental authority has
asserted that it is, unlawful for that Bank to fund, make or maintain LIBOR
Loans,
(a) NCB-Agent shall give Borrower and the other Bank prompt written
notice thereof,
(b) Borrower shall promptly pay in full the principal of and interest on
the LIBOR Loan in question and make the reimbursement, if any, required
by section 6C, and
(c) Borrower's right to obtain LIBOR Loans shall be suspended until such
time, if any, as NCB-Agent may give written notice to Borrower and to
all of the Banks that the condition giving rise to the suspension no
longer prevails, which notice NCB-Agent agrees to provide within ten
(10) days of the end of the condition giving rise to the suspension. In
the event of any such illegality notice, any request by Borrower for a
LIBOR Loan shall, until NCB-Agent shall have notified Borrower that the
circumstances causing such suspension no longer exists, be deemed to be
a request for a PR Loan. Each determination by NCB-Agent or any Banks
under this section 2B.17 shall be conclusive.
2B.18 SUBJECT LOAN BACK-UP -- Borrower agrees that in the event Borrower for
any reason fails to make a timely reimbursement (together with interest, if
any, thereon) to NCB-Agent in respect of any draft or other item paid by
NCB-Agent pursuant to subsection 2C.07, NCB-Agent is irrevocably authorized but
not obligated in each case to prepare, to sign Borrower's name to, and to
deliver on Borrower's behalf an appropriate Credit Request requesting a Series
of PR Loans in an aggregate amount equal to the reimbursement amount plus any
interest thereon. The Banks agree that on the specified date, the Banks will
make the requested PR Loans even if any Default Under This Agreement shall then
exist and even if Borrower for any other reason would, but for this provision,
then be not entitled to obtain any Subject Loan. Banks shall disburse all such
loan proceeds directly to NCB-Agent to satisfy Borrower's aforesaid
reimbursement liability.
2B.19 UNCONDITIONAL OBLIGATION -- The obligation of the Banks to make, and of
Borrower to pay, each Series of PR Loans made pursuant to subsection 2B.18
shall be absolute and unconditional and shall be performed under all
circumstances, including (without limitation)
(a) any lack of validity or enforceability of any Subject LC,
(b) the existence of any claim, offset, defense or other right that
Borrower may have against the beneficiary of any Subject LC or any
successor in interest,
- 12 -
20
(c) the existence of any claim, offset, defense or other right
that any Bank may have against Borrower or any of its Subsidiaries
or against the beneficiary of any Subject LC or against any
successor in interest owing thereto,
(d) the existence of any fraud or misrepresentation in the
presentment of any draft or other item drawn and paid under any
Subject LC or
(e) any payment of any draft or other item by NCB-Agent which does
not strictly comply with the terms of any Subject LC provided such
payment by NCB-Agent shall not have constituted gross negligence
or willful misconduct on the part of NCB-Agent.
2C. LEVERS OF CREDIT -- NCB-Agent and the Banks agree that so long as all of
the Revolving Commitments remain in effect NCB-Agent will, in NCB's name but
only as agent for the Banks, issue such standby letters of credit (each, a
"Subject LC") for Borrower's account as Borrower may from time to time request
subject, however, to the conditions of this Agreement.
2C.01 RATABLE PARTICIPATION -- Each issuance of a Subject LC shall, of
itself, confer upon each Bank the benefits and liabilities of a
participation constituting an undivided interest in the Subject LC to
the extent of that Bank's Ratable share. Promptly after the issuance of
each Subject LC, NCB-Agent shall notify each Bank of such issuance.
Upon the request of any Bank, NCB-Agent shall deliver a copy of each
Subject LC issued hereunder to such requesting Bank.
2C.02 MAXIMUM -- In addition to the conditions set forth in section
2B.03 hereof, NCB-Agent shall not issue any Subject LC if, after giving
effect thereto,
(a) the aggregate undrawn balance of all then outstanding Subject
LCs would exceed Five Million and 00/100 Dollars ($5,000,000) or
(b) the aggregate undrawn balance of all Subject LCs and any
unreimbursed drawings in respect thereof (to the extent PR Loans
have not been advanced by Banks in respect thereof pursuant to
subsection 2B.18) plus any Subject LCs to be issued pursuant to
any unfilled Credit Request under subsection 2C.04 plus the
aggregate amount of Revolving Loans outstanding or to be obtained
pursuant to any unfilled Credit Requests would at any time exceed
the lesser of the aggregate of the Revolving Commitments as then
in effect or the Borrowing Base.
2C.03 TERM -- No Subject LC shall permit any draft to be drawn
thereunder on a date (the "last draw date") that is later than the third
(3rd) Banking Day next preceding the Expiration Date in effect at the
date of issuance of such Subject LC.
- 13 -
21
2C.04 CREDIT REQUESTS -- Each request by Borrower for a Subject LC shall
be in writing and shall be given not later than 12:00 noon of the third
(3rd) Banking Day prior to the day it is to be issued.
2C.05 FORM -- Each Subject LC shall
(a) be issued in such form as NCB-Agent may reasonably require,
(b) be a commercial letter of credit used for any valid business
purpose in Borrower's business, and
(c) be denominated in United States dollars.
2C.06 COMMISSION -- Borrower agrees to pay NCB all of its standard fees
and charges, at prevailing rates from time to time established by NCB's
International Department, in regard to any Subject LC, including but not
limited to an issuance fee, an annual maintenance fee, an amendment fee
and a negotiation fee. In addition, Borrower shall pay NCB-Agent, for the
Ratable benefit of the Banks, a non-refundable commission (billed
quarterly in advance) equal to a percentage equal to the applicable
Margin in effect at the time in question multiplied by the face amount of
each Subject LC. NCB shall be entitled to keep each of the aforesaid
standard fees, if any, payable by Borrower in respect of the Subject LC
as well as keeping its Ratable share of the commissions.
2C.07 REIMBURSEMENT -- Borrower agrees to reimburse NCB-Agent for each
draft or other item paid by NCB-Agent pursuant to or otherwise in respect
of any Subject LC.
3A. INFORMATION-- Borrower agrees that so long as the Revolving Commitments
remains in effect and thereafter until the Subject Indebtedness shall have been
paid in full, Borrower will perform and observe each of the following:
3A.01 FINANCIAL STATEMENTS -- Borrower will furnish to each Bank
(a) within forty-five (45) days after the end of each of the first
three quarter-annual periods of each of Borrower's fiscal years,
balance sheets of Borrower and its Subsidiaries as at the end of
the period and their statements of cash flow and income for the
current fiscal year to the end of that period, all prepared (but
unaudited) on a consolidated and consolidating basis, on a
comparative basis with the prior year, in accordance with GAAP
(EXCEPT as disclosed therein) and in form and detail reasonably
satisfactory to Banks,
(b) as soon as available (and in any event within ninety (90) days
after the end of each of Borrower's fiscal years), a complete copy
of an annual audit report (including, without limitation, all
financial statements of Borrower and its Subsidiaries therein and
notes thereto) of Borrower for that year which shall be
- 14 -
22
(1) prepared on a consolidated basis, on a comparative basis with the
prior year, in accordance with GAAP (EXCEPT as disclosed therein) and in
form and detail reasonably satisfactory to Banks,
(2) certified (without qualification as to GAAP) by independent public
accountants selected by Borrower and satisfactory to Banks,
(3) accompanied by a copy of any management report, letter or similar
writing furnished to Borrower by the accountants in respect of Borrower's
systems, operations, financial condition or properties, and
(4) either (A) a written statement of the accountants that in making the
examination necessary for their report or opinion they obtained no
knowledge of the occurrence of any Default Under This Agreement or (B) if
they know of any, their written disclosure of its nature and status,
PROVIDED, that the accountants shall not be liable directly or indirectly
to anyone for any failure to obtain knowledge of any Default Under This
Agreement,
(c) concurrently with the delivery of any financial statement to Banks pursuant
to clause (a) or (b), a certificate by Borrower's chief financial officer or
controller
(1) certifying that to the best of the officer's knowledge and belief,
(A) those financial statements fairly present in all material respects
the financial condition and the results of its operations of Borrower and
its Subsidiaries in accordance with GAAP subject, in the case of interim
financial statements, to routine year-end audit adjustments and (B) no
Default Under This Agreement then exists or if any does, a brief
description of the default and Borrower's intentions in respect thereof,
and
(2) setting forth calculations indicating whether or not Borrower and
its Subsidiaries are in compliance with the general financial standards
of section 3B,
(d) within thirty (30) days after the end of each month (and at such other
times as Borrower may deem advisable or NCB-Agent may reasonably request), a
Borrowing Base Report being in form and detail reasonably satisfactory to
Banks, setting forth the Companies' consolidated and consolidating Borrowing
Base as at the end of that month (and containing reasonably sufficient detail
regarding any interCompany loans or advances) and certified by an appropriate
officer of Borrower to be true and complete to the best of the officer's
knowledge and belief, it being agreed that Borrower at its option may furnish
other such reports at other times,
- 15 -
23
(e) within thirty (30) days after the end of each monthly period of each of
Borrower's fiscal years (other than fiscal quarter and fiscal year ends which
are governed by other subsections hereunder), balance sheets of Borrower and
its Subsidiaries as at the end of the period and their statements of cash flow
and income for the current fiscal year to the end of that period, all
internally prepared (but unaudited) on a consolidated and consolidating basis,
on a comparative basis with the prior year, in accordance with GAAP (except as
disclosed therein) and in form and detail reasonably satisfactory to Banks,
(f) promptly when filed (in final form) or sent, a copy of
(1) each registration statement, Form 10-K annual report, Form 10-Q
quarterly report, Form 8-K current report or similar document filed by
Borrower with the Securities and Exchange Commission (or any similar
federal agency having regulatory jurisdiction over Borrower's
securities),
(2) each proxy statement, annual report, certificate, notice or other
document sent by Borrower to the holders of any of its securities (or
any trustee under any indenture which secures any of its securities or
pursuant to which such securities are issued),
(g) not less than ten (10) days nor more than forty-five (45) days prior to (1)
an acquisition by Borrower of substantially all the assets or equity interests
of another corporation or business enterprise or (2) the repurchase of the
Sardas Options, financial projections (the "Projections"), including a
projected balance sheet and cash flow and income statements, prepared by
Borrower's chief financial officer, controller or another officer reasonably
satisfactory to Banks. In the case of an acquisition, the Projections shall be
prepared on the basis of the historical operations of the Companies (and any
entity to be acquired) after giving effect to the event in question and all
reasonable related assumptions. In the case of a repurchase of the Sardas
Options, the Projections shall be prepared after giving effect to the impact on
the current balance sheet of the repurchase and, to the extent the amount paid
in the aggregate for the Sardas Options exceeds Seven Million Five Hundred
Thousand and 00/100 Dollars ($7,500,000) (net of the tax benefits from the
exercise of the option), outlining the impact on the Fixed Charge Ratio. The
officer preparing such Projections shall certify to Banks and NCB-Agent that,
to the best of his knowledge and belief, such financial information is not
misleading and is accurate in all material respects. Borrower shall promptly
notify Banks of any change in the assumptions upon which the Projections are
based between the date of preparation and the date of the event in question,
(h) accompanying the delivery of Borrower's and its Subsidiaries' annual audit
report (and in any event within ninety (90) days after the end of each of
Borrower's fiscal years), one (1) year projected consolidated and consolidating
financial statements for
- 16 -
24
Borrower and its Subsidiaries, including balance sheets and
statements of cash flow and income, prepared in accordance with
GAAP (EXCEPT as disclosed therein) in form and detail reasonably
satisfactory to Banks,
(i) forthwith upon Bank's written request, such other information
in writing about the financial condition, properties and operations
of the Companies and about their Pension Plans, if any, as Banks
may from time to time reasonably request.
3A.02 NOTICE -- Borrower will cause its chief financial officer or
controller, or in their absence another officer designated by Borrower,
to give each Bank prompt written notice whenever any officer of any
Company
(a) reasonably believes (or receives notice from any governmental
agency alleging) that any Reportable Event has occurred in respect
of any Pension Plan or that a Company has become in non-compliance
with any law or governmental order referred to in subsection 3C.06
if non-compliance therewith may have a material adverse effect on
that Company's financial condition, properties or business,
(b) receives from the Internal Revenue Service or any other
federal, state or local taxing authority any allegation of any
default by a Company m the payment of any tax that is material in
amount or notice of any assessment in respect thereof,
(c) learns there has been brought against a Company before any
court, administrative agency or arbitrator any litigation or
proceeding which, if successful, might have a material adverse
effect such Company,
(d) reasonably believes that any representation or warranty made in
subsections 4B.01 through 4B.08 (both inclusive) or 4B.10 or 4B.12
shall have ceased in any material respect to be true and complete
or that any Default Under This Agreement shall have occurred or
(e) reasonably believes that there has occurred or begun to exist
any other event, condition or thing, including, but not limited to,
any material labor dispute, violation of law or customer dispute,
that likely may have a material adverse effect on the financial
condition, operations or properties of a Company,
(f) reasonably believes (or receives any notice from any third
party) that a Company has defaulted or otherwise breached any
material contract or other agreement to which such Company is a
party, the default or breach of which would likely have a material
adverse effect.
3B. GENERAL FINANCIAL STANDARDS -- Borrower agrees that so long as the
Revolving Commitments remains in effect and thereafter until the Subject
Indebtedness shall have been paid in full, Borrower will perform and observe
each of the following:
- 17 -
25
3B.01 TANGIBLE NET WORTH -- Borrower will not suffer or permit the sum of the
consolidated Tangible Net Worth of Borrower and its Subsidiaries plus their
Insider Subordinated indebtedness, if any, at the end of any fiscal quarter to
be less than the required minimum amount in effect at the time in question. The
required minimum amount shall be Thirty-Five Million and 00/100 Dollars
($35,000,000) on May 31, 1995 and that amount shall be permanently increased
(a) on August 31, 1995 and on each quarter-end thereafter by an amount
equal to sixty percent (60%) of the consolidated Net Income, if any,
after taxes, of Borrower and its Subsidiaries for the fiscal quarter
then ending; provided, however, if there is a loss in any fiscal
quarter, sixty percent (60%) of such loss shall be subtracted from the
required minimum amount, but in no event shall the amount of the
decrease in any fiscal quarter exceed the aggregate amount of the
increases in any given fiscal year and
(b) upon each issuance or other sale by Borrower of any of its capital
stock or Insider Subordinated indebtedness by an amount equal to sixty
percent (60%) of the net proceeds (after costs and expenses) thereof.
3B.02 LEVERAGE RATIO-- Borrower will not suffer or permit the ratio (the
"Leverage Ratio") of the consolidated Total Liabilities (other than
Subordinated indebtedness, if any) of Borrower and its Subsidiaries to the sum
of the consolidated Tangible Net Worth of Borrower and its Subsidiaries plus
their Subordinated indebtedness, if any, at the end of any fiscal quarter to
exceed (a) 3:1 from the date of this Agreement through and including May 31,
1996 or (b) 2.5:1 from and after June 1, 1996.
3B.03 PRETAX INTEREST COVERAGE -- Borrower will not, during any period of four
(4) consecutive fiscal quarters (commencing with the present quarter and
looking back three (3) additional quarters) during the term of this Agreement,
suffer or permit the aggregate of
(a) Borrower's and its Subsidiaries' consolidated Net Income for that
period plus
(b) Borrower's and its Subsidiaries' consolidated interest expense
(excluding amortization of debt discount) for that period plus
(c) Borrower's and its Subsidiaries' consolidated federal, state and
local income taxes for that period
to be less than an amount equal to 4.5 times Borrower's and its Subsidiaries
consolidated interest expense (excluding amortization of debt discount) for
that period.
3B.04 FIXED CHARGE RATIO -- Borrower will not suffer or permit the following
ratio (the "Fixed Charge Ratio") of Borrower and its Subsidiaries on a
consolidated basis to be
- 18 -
26
less than (a) .95:1 from the date of this Agreement through and including
May 31, 1996 (calculated annually) or (b) 1.0:1.0 at any time thereafter
(calculated annually):
EBITDA
--------------------------------------------------------------------------
interest expense (excluding amortization of debt discount) + CAPEX +
Taxes (cash) + CPLTD + dividends
In addition to those terms defined in Section 9 below, the following
terms have the following meanings all as customarily applied in
accordance with GAAP:
EBITDA means earnings before interest, taxes, depreciation and
amortization; CAPEX means the net amount of capital expenditures;
Taxes (cash) means taxes actually paid in cash; and CPLTD means
the current portion of long term debt.
It is acknowledged and agreed that in the event of a repurchase by
Borrower of the Sardas Options, any amounts paid in the aggregate by
Borrower in excess of Seven Million Five Hundred Thousand and 00/100
Dollars ($7,500,000) (net of the tax benefits from the exercise of the
option) shall count toward the denominator of the Fixed Charge Ratio. In
addition, it is acknowledged and agreed that for purposes of computing
the Fixed Charge Ratio, twenty-five percent (25%) of the portion of the
indebtedness to the Noteholders which is characterized as CPLTD shall be
included.
3C. AFFIRMATIVE COVENANTS -- Borrower agrees that so long as the Revolving
Commitments remain in effect and thereafter until the Subject Indebtedness
shall have been paid in full, Borrower will perform and observe, and will cause
each Company to perform and observe, each of the following:
3C.01 TAXES -- Each Company will pay in full
(a) prior in each case to the date when penalties for the
nonpayment thereof would attach, all material taxes, assessments
and governmental charges and levies for which it may be or become
subject and
(b) prior in each case to the date the claim would become
delinquent for nonpayment, all other lawful claims (whatever their
kind or nature) which, if unpaid, would become a lien or charge
upon its property;
PROVIDED, that no item need be paid so long as and to the extent that it
is contested in good faith and by timely and appropriate proceedings
which are effective to stay enforcement thereof and Borrower either posts
a bond or otherwise establishes adequate reserves therefore in accordance
with GAAP.
3C.02 FINANCIAL RECORDS -- Each Company will at all times keep true and
complete financial records in accordance with GAAP and, without limiting
the generality of the
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foregoing, make appropriate accruals to reserves for estimated and contingent
losses and liabilities.
3C.03 VISITATION -- Each Company will permit each Bank at all reasonable times
upon reasonable advance notice except in the case of an emergency
(a) to visit and inspect that Company's properties and examine its
records at that Bank's expense and to make copies of and extracts from
such records, and
(b) to consult with that Company's directors, officers, employees,
accountants, actuaries, trustees and plan administrators in respect of
its financial condition, properties and operations and the financial
condition of its Pension Plans, each of which parties is hereby
authorized to make such information available to each Bank to the same
extent that it would to that Company.
3C.04 INSURANCE -- Each Company will
(a) keep itself and all of its insurable properties insured at all times
to such extent, with such deductibles, by such insurers and against such
hazards and liabilities as is generally and prudently done by like
businesses, EXCEPT that if a more specific standard is provided in any
Related Writing, the more specific standard shall prevail, and
(b) forthwith upon any Bank's written request, furnish to that Bank such
information about Borrower's insurance as that Bank may from time to
time reasonably request, which information shall be prepared in form and
detail reasonably satisfactory to that Bank and certified by an officer
of Borrower.
3C.05 CORPORATE EXISTENCE -- Each Company will at all times maintain its
corporate existence, rights and franchises; provided, that this subsection
shall not prevent any dissolution in liquidation of any Subsidiary or any
merger or consolidation permitted by subsection 3D.01.
3C.06 COMPLIANCE WITH LAW -- Each Company will comply with all laws (whether
federal, state or local and whether statutory, administrative or judicial or
other) and with every lawful governmental order (whether administrative or
judicial) and will, without limiting the generality of the foregoing,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws; keep in full effect each permit,
approval, certification, license or other authorization required by any
Environmental Law for the conduct of any material portion of its
business; and comply in all other material respects with all
Environmental Laws;
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(b) make a full and timely payment of PBGC premiums required by ERISA
and perform and observe all such further and other requirements of
ERISA such that no Default Under ERISA shall occur or begin to exist;
and
(c) comply with all material requirements of all occupational health
and safety laws;
PROVIDED, that this subsection 3C.06 shall not apply to any of the foregoing
(i) if and to the extent that the same shall be contested in good
faith by timely and appropriate proceedings which are effective to
stay enforcement thereof and against which a bond has been posted or
appropriate reserves in accordance with GAAP shall have been
established or
(ii) in any other case if non-compliance therewith would not
materially and adversely affect the financial condition, properties or
business of the Companies taken as a whole.
3C.07 PROPERTIES -- Each Company will maintain all fixed assets necessary to
its continuing operations in good working order and condition, ordinary wear
and tear and damage from casualty or the elements excepted.
3C.08 MORTGAGES ON REAL ESTATE -- Upon the occurrence of any Event of
Default, at the written request of the Banks each Company agrees to execute
and deliver to NCB-Agent, for the benefit of the Banks, as security for the
Subject Indebtedness a mortgage or mortgages being in form and substance to be
negotiated in good faith with counsel for Borrower and reasonably
satisfactory to NCB-Agent and constituting a first mortgage lien on all of
such Company's then-owned real property. In addition, at the time of the
execution and delivery of any such mortgage(s), Borrower shall furnish to
NCB-Agent in respect of each parcel of real property owned by the Companies,
at Borrower's expense (a) a mortgagee's standard A.L.T.A. policy of title
insurance without additional endorsements other than a revolving credit
endorsement and showing the property as being subject to all then existing
easements, reservations, conditions and matters of record and all liens and
encumbrances of record, but not subject to liens for funded indebtedness or
any other mortgage having priority over such first mortgage lien (other than
as set forth on the Supplement Schedule), issued in such amount as NCB-Agent
may reasonably require by an insurer reasonably satisfactory to NCB-Agent,
(b) a professional so called "phase I" environmental assessment, and (c) a
survey by a registered surveyor.
3C.09 INTERCOMPANY LOANS -- In the event any interCompany loans or any loans
from a Company to a Subsidiary of a Company are or become evidenced by any
note or other instrument, Borrower agrees to (or to cause the payee Company
to) (a) promptly notify NCB-Agent and Banks of such fact and, upon
NCB-Agent's request, deliver the same to NCB-Agent, appropriately endorsed
to the order of NCB-Agent for the benefit of the Banks, and, regardless of
the form of such endorsement, Borrower hereby waives presentment,
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demand, notice of dishonor, protest and notice or protest and all other
notices with respect thereto and (b) upon NCB-Agent's request, execute a
note pledge agreement in form and substance reasonably acceptable to
Banks.
3D. NEGATIVE COVENANTS -- Borrower agrees that so long as the Revolving
Commitments remain in effect and thereafter until the Subject Indebtedness
shall have been paid in full, Borrower will perform and observe each of the
following:
3D.01 EQUITY TRANSACTIONS -- No Company will
(a) be a party to any merger or consolidation,
(b) purchase or otherwise acquire all or substantially all of the
assets and business of any corporation or other business
enterprise,
(c) unless Borrower shall give Banks at least fifteen (15) days
prior written notice in sufficient detail and Banks shall fail to
reasonably object to the same within fifteen (15) days after the
receipt of such notice, create, acquire or hold any Subsidiary, or
be or become a party to any joint venture or partnership (to the
extent such investments in joint ventures and partnerships exceed
One Million Dollars ($1,000,000) in the aggregate at any time), or
make or keep any investment in any stocks or other equity
securities of any kind, except that this clause (c) shall not apply
to Borrower's existing investments in the stocks and other equity
securities of Subsidiaries or any other investment fully disclosed
in Borrower's Most Recent 4A.04 Financial Statements or in the
Supplemental Schedule,
(d) lease as lessor, sell, sell-leaseback or otherwise transfer
(whether in one transaction or a series of transactions) all or any
substantial part of its fixed assets EXCEPT chattels that shall
have become obsolete or no longer useful in its present business,
or fixed assets leased, sold, acquired or disposed of in the
ordinary course of such Company's business,
(e) sell or otherwise transfer (in the case of any Company) or
issue (in the case of a Subsidiary) any shares of stock (other than
shares issued or transferred solely for the purpose of qualifying
directors under any applicable law) or other equity securities of
any Subsidiary to anyone other than Borrower, or
(f) repurchase any shares of its stock or other equity securities;
provided, that if no Default Under this Agreement shall then exist and if
none would thereupon begin to exist, this subsection shall not apply to
(i) any future investment by Borrower in stocks and other equity
securities of its existing Subsidiaries, or
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(ii) any merger or consolidation involving only Subsidiaries, or any
merger involving only Borrower and its Subsidiaries in which Borrower is
the surviving corporation, or any transfer of assets between Companies
for fair value, or
(iii) any acquisition by Borrower of substantially all of the assets or
equity interest of another corporation or business enterprise provided
that (A) the total consideration paid (including the amount of any Funded
Indebtedness (i.e., not accounts payable and accrued liabilities) in all
such acquisitions does not exceed Ten Million and 00/100 Dollars
($10,000,000) in any fiscal year, (B) the target entity is in the same,
substantially similar or a complementary line of business, (C) Proforma
Covenant Compliance pertains and Banks do not reasonably object to the
assumptions or other information upon which the relevant Projections were
based and (D) there will be at least Ten Million and 00/100 Dollars
($10,000,000) in excess Availability immediately following the
acquisition, or
(iv) a repurchase of Sardas Options provided that (A) Proforma Covenant
Compliance pertains and Banks do not reasonably object to the assumptions
or other information upon which the relevant Projections were based, (B)
there will be at least Ten Million and 00/100 Dollars ($10,000,000) in
excess Availability immediately following the repurchase and (C) any
amounts paid in the aggregate for the Sardas Options in excess of Seven
Million Five Hundred Thousand and 00/100 Dollars ($7,500,000) (net of the
tax benefits from the exercise of the option) will count toward the Fixed
Charge Ratio for all purposes under this Agreement, or
(v) any disposition of assets otherwise prohibited under this subsection
3D.01 provided that the maximum aggregate amount thereof (for all
Companies collectively) shall not exceed Two Million and 00/100 Dollars
($2,000,000) during the term of this Agreement and provided further that
the net proceeds realized upon such disposition are applied in full to
Ratably reduce the Subject Loans outstanding, if any.
3D.02 CREDIT EXTENSIONS -- No Company will
(a) make or keep any investment in any notes, bonds or other obligations
of any kind for the payment of money or make or have outstanding at any
time any advance or loan to anyone or
(b) be or become a Guarantor of any kind;
PROVIDED, that this subsection shall not apply to
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(i) any existing or future advance made to an officer or employee of any
Company solely for the purpose of paying ordinary and necessary business
expenses of such Company,
(ii) any existing or future investment in direct obligations of the United
States of America or any agency thereof, or in certificates of deposit issued
by any Bank, or in any other money-market investment if it carries the highest
quality rating of any nationally-recognized rating agency, PROVIDED, that no
such investment shall mature more than one (1) year after the date when made,
(iii) any existing investment, advance, loan or Guaranty fully disclosed in
Borrower's Most Recent 4A.04 Financial Statements or in the Supplemental
Schedule,
(iv) any existing or future Guaranty of any direct or contingent obligation
owing to Banks,
(v) any endorsement of a check or other medium of payment for deposit or
collection, or any similar transaction in the normal course of business,
(vi) the repurchase of the Sardas Options in compliance with the other terms
and provisions of this Agreement,
(vii) any Guaranty of any indebtedness permitted in section 3D.03 by any
Company up to a maximum of Two Hundred Fifty Thousand and 00/100 Dollars
($250,000) outstanding in the aggregate at any time,
(viii) loans from a Company to any other Company,
(ix) loans to Subsidiaries which are not Companies up to a maximum of One
Million Dollars ($1,000,000) outstanding in the aggregate (for all Subsidiaries
collectively) at any time, provided that this maximum dollar limit shall not
apply to (A) a loan required pursuant to the items disclosed under the heading
"Environmental -- Additional Disclosures" on Section 4B.04 on the Supplemental
Schedule or (B) the existing indebtedness of Western Capital Corporation to
Borrower in an amount of approximately $31,000,000, or
(x) loans to any Subsidiary acquired or formed after the date of this Agreement
to the extent such Subsidiary executes a Guaranty and a security agreement, in
each case substantially similar to the forms executed by the Companies
concurrently herewith and acceptable to Banks. From and after the date such
documents are executed and delivered to NCB-Agent, such Subsidiary shall be
deemed a Company for purposes of this Agreement.
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3D.03 BORROWINGS -- No Company will create, assume or have outstanding at any
time any indebtedness for borrowed money or any Funded Indebtedness of any
kind; PROVIDED, that this subsection shall not apply to
(i) the Subject Indebtedness,
(ii) any Subordinated indebtedness,
(iii) any existing or future indebtedness secured by a purchase money
security interest permitted by subsection 3D.04 or incurred under a lease
permitted by subsection 3D.04,
(iv) any existing indebtedness fully disclosed in Borrower's Most Recent
4A.04 Financial Statements or in the Supplemental Schedule or any renewal
or extension thereof in whole or in part,
(v) up to a maximum of One Million and 00/100 Dollars ($1,000,000)
outstanding in the aggregate at any time (for all Companies collectively)
of other indebtedness to the extent unsecured or secured by assets other
than the Companies' equipment, Inventory, Receivables, general
intangibles, books and records and real estate,
(vi) any indebtedness permitted pursuant to subsections 3D.02(viii), (ix)
or (x).
3D.04 LIENS, LEASES -- No Company will
(a) lease any property as lessee or acquire or hold any property subject
to any land contract, Inventory consignment or other title retention
contract, other than property leased, sold, acquired, held or disposed
of in the ordinary course of such Company's business,
(b) sell or otherwise transfer any Receivables (other than foreign
Receivables), whether with or without recourse or
(c) suffer or permit any property (whether real or personal or tangible
or intangible) now owned or hereafter acquired by it to be or become
encumbered by any mortgage, security interest, lien or financing
statement;
PROVIDED, that this subsection shall not apply to
(i) any tax lien for taxes not yet due and payable, lien for real
property assessments, or any lien securing workers' compensation or
unemployment insurance obligations, or any mechanic's, carrier's or
landlord's lien, or any lien arising under ERISA, or any security
interest arising under article four (bank deposits and collections) or
five (letters of credit) of the Uniform Commercial Code, or any similar
security interest
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or other lien, EXCEPT that this clause (i) shall apply only
to security interests and other liens arising by operation
of law (whether statutory or common law) and in the ordinary
course of business and shall not apply to any security
interest or other lien that secures any indebtedness for
borrowed money or any Guaranty thereof or any obligation
that is in material default in any manner (other than any
default contested in good faith by timely and appropriate
proceedings effective to stay enforcement of the security
interest or other lien in question and against which a bond
has been posted or appropriate reserves shall have been
established),
(ii) zoning or deed restrictions, conditions and
reservations, public utility easements, other easements and
licenses of record, minor title irregularities and similar
matters in each case having no material adverse effect as a
practical matter on the ownership or use of any of the
property in question,
(iii) any lien securing or given in lieu of surety, stay,
appeal or performance bonds, or securing performance of
contracts or bids (other than contracts for the payment of
money borrowed), or deposits required by law or governmental
regulations or by any court order, decree, judgment or rule
or as a condition to the transaction of business or the
exercise of any right, privilege or license, EXCEPT that
this clause (iii) shall not apply to any lien or deposit
securing an obligation that is in material default in any
manner (other than any default contested in good faith by
timely and appropriate proceedings effective to stay
enforcement of the security interest or other lien in
question and against which a bond has been posted or
appropriate reserves shall have been established),
(iv) any mortgage, security interest or other lien securing
only the Subject Indebtedness,
(v) any mortgage, security interest or other lien (each, a
"purchase money security interest") which is created or
assumed in purchasing, leasing (pursuant to a capitalized
lease), constructing or improving any real property or
equipment or to which any such property is subject when
purchased, PROVIDED, that (A) the purchase money security
interest shall be confined to the aforesaid property, (B)
the indebtedness secured thereby does not exceed the total
cost of the purchase, construction or improvement, (C) any
such indebtedness, if repaid in whole or in part, cannot be
reborrowed and (D) the aggregate amount of all such purchase
money security interest does not exceed Two Million Five
Hundred Thousand and 00/100 Dollars ($2,500,000) in any
fiscal year,
(vi) any lease other than any capitalized lease (it being
agreed that a capitalized lease is a lien rather than a
lease for the purposes of this Agreement) so long as the
aggregate annual rentals of all such leases do not exceed
Seven Million and 00/100 Dollars ($7,000,000),
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(vii) any mortgage, security interest or other lien which
(together with the indebtedness secured thereby) is fully
disclosed in Borrower's Most Recent 4A.04 Financial Statements or
in the Supplemental Schedule or
(viii) any financing statement perfecting a security interest that
would be permissible under this subsection.
3D.05 FIXED ASSETS -- The Companies, viewed on a consolidated basis, will
not invest (net after trade-ins, if any) in fixed assets and leasehold
improvements (in each case, excluding capitalized interest) more than
Twenty Million and 00/100 Dollars ($20,000,000) during the fiscal year
ending May 31, 1996 or more than Fifteen Million and 00/100 Dollars
($15,000,000) during any fiscal year thereafter.
3D.06 DIVIDENDS -- No Company will make or commit itself to make any
Distribution to its shareholders at any time if any Default Under This
Agreement shall then exist or would thereupon occur, provided that
dividends may be paid within ninety (90) days after being declared even
if a Default Under This Agreement exists at the time of payment so long
as no Default Under This Agreement existed at the time of such
declaration and, provided further, that this subsection shall not
prohibit a repurchase of the Sardas Options in compliance with the other
terms and provisions of this Agreement.
3D.07 SUBORDINATED NOTES -- Borrower will not assent to any amendment or
modification of the notes due to the Noteholders or increase the interest
rate applicable thereto or prepay any principal thereon.
4A. CLOSING-- The following conditions shall have been satisfied prior to or
at the execution and delivery of this Agreement (except that with respect to
subsections 4A.10 and 4A.11, the same will be satisfied prior to the Initial
Funding Date):
4A.01 REVOLVING NOTES -- Borrower shall execute and deliver to each Bank
a Revolving Note in accordance with subsection 2B.01.
4A.02 RESOLUTIONS/INCUMBENCY -- Each Company's secretary or assistant
secretary shall have certified to Banks (a) a copy of resolutions duly
adopted by that Company's board of directors in respect of this Agreement
and the transactions contemplated hereby and (b) the names and true
signatures of officers authorized to execute and deliver this Agreement
and Related Writings on behalf of that Company.
4A.03 LEGAL OPINION -- The Companies' counsel shall have rendered to
Banks their written opinion in respect of the matters referred to in
subsections 4B.01, 4B.02, 4B.03 and 4B.04 and in respect of the
perfection of each security interest or other lien referred to in this
section 4A, which opinion shall be in such form and substance (and may be
subject only to such qualifications and exceptions, if any) as shall be
satisfactory to Banks.
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4A.04 FINANCIAL STATEMENTS -- Borrower shall have furnished to Banks at least
one (1) true and complete copy of each of the following: the annual audit
report (including, without limitation, all financial statements therein and
notes thereto and the accompanying accountants' opinion and management report)
of the Borrower and its Subsidiaries prepared as at May 31, 1994 and annual
audit reports for each of the two (2) next preceding fiscal years (each having
been certified by Ernst & Young) and unaudited interim financial statements
prepared as at March 31, 1995.
4A.05 SECURITY AGREEMENTS -- Each Company shall have executed and delivered a
security agreement being in form and substance satisfactory to Banks and
granting NCB- Agent, for the benefit of the Banks, security interests in and to
all of that Company's existing and future equipment (other than motor
vehicles), Inventory, Receivables, general intangibles and books and records as
security for the Subject Indebtedness (and, in the case of each Company of
Borrower, as security for such of that Company's existing and future
indebtedness to Borrower in which NCB-Agent shall have a security interest).
Each Company shall have joined with NCB-Agent in executing and filing such
financing statements and other documents and in making and doing such further
and other acts and things as NCB-Agent may deem necessary for the evidence,
perfection or other protection of Banks' security interests.
4A.06 GUARANTY -- The Companies shall have executed and delivered to NCB-Agent
on behalf of the Banks their joint and several guaranty of payment of the
Subject Indebtedness together with individual security agreements securing the
same granting NCB-Agent security interests in and to all of their existing and
future equipment, Inventory, Receivables, general intangibles and books and
records and appropriately executed financing statements relating thereto.
4A.07 DOCUMENTATION FEE -- Borrower shall have paid NCB-Agent a documentation
fee of Thirty Five Thousand and 00/100 Dollars ($35,000), Ten Thousand and
00/100 Dollars ($10,000) of which will be allocated to cover Star Bank,
National Association's legal costs of reviewing the documentation.
4A.08 LIEN WAIVERS -- Each Company shall provide NCB-Agent with duly executed
written lien waivers in favor of (or otherwise enforceable by) NCB-Agent from
each lessor, bailee, warehouseman, materialman, mortgagee or similarly situated
person or entity who may, with respect to any location at which any of the
collateral for the Subject Indebtedness is to be located or stored, by
operation of law or otherwise, have any lien or like interest in or upon such
collateral.
4A.09 OTHER DOCUMENTS -- Borrower shall execute or deliver to NCB-Agent such
other agreements, instruments and documents, including, without limitation,
those listed below, which NCB-Agent may require to be executed and/or delivered
in connection
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herewith (all of which shall be in form and substance reasonably
acceptable to NCB-Agent and its counsel):
(a) good standing certificates for the Companies issued by the
Secretary of State in their respective jurisdictions of
organization.
4A.10 EXISTING LOAN PAYOFF -- The Existing Revolving Facility shall be
paid off in full.
4A.11 NO MATERIAL ADVERSE CHANGE -- No material adverse change in the
Companies' consolidated financial condition, properties or business since
the date of Borrower's Most Recent 4A.04 Financial Statements has
occurred.
4B. REPRESENTATIONS/WARRANTIES -- Subject only to such additions and
exceptions, if any, as may be set forth in the Supplemental Schedule, in
Borrower's Most Recent 4A.04 Financial Statements or as relates to the Existing
Revolving Facility (from the date hereof through the Initial Funding Date
only), Borrower represents and warrants as follows:
4B.01 EXISTENCE -- Borrower is a duly organized and validly existing
Delaware corporation in good standing. Exhibit F sets forth the name of
each of Borrower's Subsidiaries, the address of its chief executive
office, the location of its books and records, the location of its other
assets, the jurisdiction in which it is incorporated as of the closing
date and its equity ownership. Each Company is duly qualified to transact
business in each state or other jurisdiction in which it owns or leases
any real property or in which the nature of the business conducted makes
such qualification necessary or, if not so qualified, such failure to
qualify will have no material adverse effect upon the Companies'
financial condition on a consolidated basis and the Companies' ability to
transact business. The jurisdiction(s) in which each Company is
qualified are specified in the Supplemental Schedule. Each Subsidiary's
outstanding stock is fully paid and non-assessable and owned by Borrower
(or a Company) free from any security interests, option, equity or other
right of any kind. Except as provided in the Supplemental Schedule, no
Company has, during the past five (5) years, been known by or used any
other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired any of its property outside of the ordinary
course of business.
4B.02 GOVERNMENTAL RESTRICTIONS -- No registration with or approval of
any governmental agency of any kind is required on the part of any
Company for the due execution and delivery or for the enforceability of
this Agreement or any Related Writing other than the filing or recording
of documents with public officials and similar acts and things related to
the perfection of the mortgages, security interests and other liens
referred to in section 4A.
4B.03 CORPORATE AUTHORITY -- Each Company has requisite corporate power
and authority to enter into this Agreement and to obtain and secure the
Subject Indebtedness in
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accordance with this Agreement. The officer executing and delivering
this Agreement on behalf of each Company has been duly authorized to do
so and to execute and deliver the Revolving Note and other Related
Writings in accordance with section 4A. Neither the execution and
delivery of this Agreement or any Related Writing by the Companies nor
their performance and observance of the respective provisions thereof
will violate any existing provision in their articles of incorporation,
regulations or by-laws or any applicable law or violate or otherwise
constitute a default under any contract or other obligation now
existing and binding upon them. Upon the execution and delivery
thereof, this Agreement and the aforesaid Related Writings will each
become a valid and binding obligation enforceable against the Companies
according to their respective terms subject, however, to any applicable
insolvency or bankruptcy law of general applicability and general
principles of equity. Each Subsidiary (a) will derive a direct
pecuniary benefit herefrom, which benefit is a fair equivalent for the
obligation incurred, (b) will be solvent immediately after the
execution and delivery of this Agreement and at all times during the
term of this Agreement, (c) has sufficient capital by any reasonable
standard for all businesses in which it is engaged or will, in the
foreseeable future, be engaged, and (d) believes and intends that the
liabilities which it will incur in the foreseeable future are not
beyond its ability to pay as they mature.
4B.04 LITIGATION -- No litigation or proceeding is pending or
currently threatened against any Company before any court,
administrative agency or arbitrator which would, if successful, have a
material adverse effect on the Companies taken as a whole.
4B.05 TAXES -- Each Company has filed all federal, state and local tax
returns which are required to be filed by it and paid all taxes due as
shown thereon (EXCEPT to the extent, if any, permitted by subsection
3C.01). The Internal Revenue Service has not alleged any material
default by any Company in the payment of any tax material in amount or
threatened to make any assessment in respect thereof which has not been
reflected in Borrower's Most Recent 4A.04 Financial Statements.
4B.06 TITLE -- The Companies have good and marketable title to all
material assets reflected in Borrower's Most Recent 4A.04 Financial
Statements EXCEPT for changes resulting from transactions in the
ordinary course of business. All such assets are free of any mortgage,
security interest or other lien of any kind other than any permitted by
subsection 3D.04, and other than those to be cancelled, released and
terminated in conjunction with the payoff of the Existing Revolving
Facility. The Supplemental Schedule identifies all owned and leased
real property of the Companies.
4B.07 LAWFUL OPERATIONS -- To the knowledge of Borrower, the
Companies' operations have at all relevant times been and continue to
be in material compliance with all requirements imposed by law, whether
federal, state or local, whether statutory, regulatory or other,
including (without limitation) ERISA, all Environmental Laws, and
occupational safety and health laws and, to the knowledge of Borrower,
all applicable zoning ordinances except in each such case where the
failure to comply would not have a material adverse effect on the
Companies taken as a whole. Without limiting the generality of the
foregoing,
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(a) no condition exists at, on or under any facility or other property
now or previously owned by any Company which would give rise to any
material liability for the Companies taken as a whole under any
Environmental Law; and no Company has received any notice from any
governmental agency, court or anyone else that it is a potentially
responsible party for the clean-up of any environmental waste site, is in
violation of any environmental permit or law or has been placed on any
registry of solid or hazardous waste disposal site;
(b) no material Accumulated Funding Deficiency exists in respect of any
of the Companies' Pension Plans; and no Reportable Event has occurred in
respect of any such plan which is continuing and which constitutes
grounds either for termination of the plan by the PBGC or for court
appointment of a trustee for the administration thereof or which may have
a material adverse effect on the Companies' financial condition,
properties or business taken as a whole.
4B.08 INSURANCE -- The Companies' insurance coverage complies with the
standards set forth in subsection 3C.04 and those set forth in the Related
Writings referred to in subsection 4A.05.
4B.09 FINANCIAL STATEMENTS -- Each of the financial statements referred to in
subsection 4A.04 has been prepared in accordance with GAAP applied on a basis
consistent with those used by it during its then next preceding full fiscal
year EXCEPT to the extent, if any, specifically noted therein and fairly
presents in all material respects (subject to routine year-end audit
adjustments in the case of the unaudited financial statements) the consolidated
financial condition of the Companies as of the date thereof (including a full
disclosure of material contingent liabilities, if any) and the consolidated
results of their operations, if any, for the fiscal period then ending. There
has been no material adverse change in the financial condition, properties or
business of the Companies since the date of Borrower's Most Recent 4A.04
Financial Statements nor any change in their accounting policies since the end
of Borrower's latest full fiscal year covered by those statements.
4B.10 INDEBTEDNESS -- No Company has outstanding any material indebtedness for
borrowed money or any Funded Indebtedness of any kind except any permitted by
subsection 3D.03.
4B.11 DEFAULTS -- No Default Under This Agreement (and no default under any
other agreement which is material to the Companies taken as a whole) exists,
nor will any exist immediately after the execution and delivery of this
Agreement.
4B.12 FULL DISCLOSURE -- Neither this Agreement or any Related Writing, nor any
written statement made by Borrower in connection herewith or therewith,
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
There is no fact which Borrower or any
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39
Company has not disclosed to Banks which has or is likely to have a
material adverse effect on the Companies' property, business,
operations, prospects, profitability or condition (financial or
otherwise) taken as a whole or on Borrower's or the Companies' (taken as
a whole) ability to repay the Subject Indebtedness or Bank's (or
NCB-Agent's) lien and security interest in the collateral or the
priority thereof as contemplated hereby and in the Related Writings.
Each of the representations and warranties contained in this section 4B are
true and correct on the date hereof and shall be true and correct as of the
Initial Funding Date, currently contemplated as May 30, 1995. In the event the
Initial Funding Date of the loan proceeds contemplated hereby shall not occur
on or before July 31, 1995, this Agreement shall be deemed null and void and
the parties shall be relieved of any further liability to each other.
5A. EVENTS OF DEFAULT -- Each of the following shall constitute an Event Of
Default hereunder:
5A.01 PAYMENTS -- If any principal included in the Subject Indebtedness
shall not be paid in full promptly when the same becomes payable; or if
any Subject Indebtedness (EXCEPT principal) or any other Debt of the
Companies or any thereof to Banks and NCB- Agent or any thereof (EXCEPT
any payable on demand) shall not be paid in full promptly when the same
becomes payable and shall remain unpaid for ten (10) consecutive days
thereafter; or if such of the Debt of the Companies or any thereof to
Banks and NCB-Agent or any thereof as may be payable on demand shall not
be paid in full within ten (10) days after any actual demand for
payment.
5A.02 WARRANTIES -- If any representation, warranty or statement made
in this Agreement or in any Related Writing referred to in section 4A
shall be false or erroneous in any material respect; or if any
representation, warranty or statement hereafter made by or on behalf of
any Company in any Related Writing not referred to in section 4A shall
be false or erroneous many material respect.
5A.03 COVENANTS WITHOUT GRACE -- If any Company shall fail or omit to
perform or observe any provisions in subsections 3A.02 or 3B.01 through
3B.04, both inclusive.
5A.04 COVENANTS WITH GRACE -- If anyone (other than the Banks and
NCB-Agent and their respective agents) shall fail or omit to perform and
observe any agreement (other than those referred to in subsection 5A.01
or 5A.03 and not including the representations, warranties and
statements referred to in subsection 5A.02) contained in this Agreement
or any Related Writing that is on its part to be complied with, and that
failure or omission shall not have been fully corrected within thirty
(30) days after the giving of written notice to Borrower by any Bank or
NCB-Agent that it is to be remedied.
5A.05 CROSS-DEFAULT -- If any indebtedness of any Company for borrowed
money (regardless of maturity) or any of its Funded Indebtedness shall
be or become "in default"
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40
(as defined below) except any indebtedness if and so long as the
aggregate unpaid principal balance of all such indebtedness in
default for all Companies does not exceed Five Hundred Thousand and
00/100 Dollars ($500,000) at any one time outstanding. In this
subsection, "in default" means that (a) there shall have occurred
(or shall exist) in respect of the indebtedness in question (either
as in effect at the date of this Agreement or as in effect at the
time in question) any event, condition or other thing which
constitutes, or which with the giving of notice or the lapse of any
applicable grace period or both would constitute, a default which
accelerates (or permits any creditor or creditors or representative
or creditors to accelerate) the maturity of any such indebtedness;
or (b) any such indebtedness (other than any payable on demand)
shall not have been paid in full at its stated maturity; or (c) any
such indebtedness payable on demand shall not have been paid in full
within ten (10) Banking Days after any actual demand for payment.
5A.06 BORROWER'S SOLVENCY -- If (a) Borrower shall discontinue
operations, or (b) Borrower shall commence any Insolvency Action of
any kind or admit (by answer, default or otherwise) the material
allegations of, or consent to any relief requested in, any
Insolvency Action of any kind commenced against Borrower by its
creditors or any thereof, or (c) any creditor or creditors shall
commence against Borrower any Insolvency Action of any kind which
shall remain in effect (neither dismissed nor stayed) for sixty (60)
consecutive days.
5A.07 COMPANIES' SOLVENCY -- If (a) any Company shall discontinue
operations, (b) any Company other than Borrower shall commence any
Insolvency Action of any kind or admit (by answer, default or
otherwise) the material allegations of, or consent to any relief
requested in, any Insolvency Action of any kind commenced against
that Company by its creditors or any thereof, or (c) any creditor
or creditors of any Company other than Borrower shall commence
against that Company any Insolvency Action of any kind which shall
remain in effect (neither dismissed nor stayed) for sixty (60)
consecutive days.
5A.08 MATERIAL ADVERSE CHANGE -- If there shall occur any event,
condition or other thing that has a material adverse effect on the
financial condition, properties or business operations of the
Companies taken as a whole or on Banks' or NCB-Agent's ability to
enforce any right arising under or in connection with this
Agreement or any other Related Writing.
5B. EFFECTS OF DEFAULT -- Notwithstanding any contrary provision or
inference in this Agreement or in any Related Writing:
5B.01 OPTIONAL DEFAULTS --If any Event Of Default referred to in
subsections 5A.01 through 5A.05, both inclusive, or 5A.07 or 5A.08
shall occur and be continuing, Banks shall have the right in their
discretion, by giving written notice to Borrower,
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41
(a) to terminate the Revolving Commitments (if not already expired or
reduced to zero pursuant to section 2A or terminated pursuant to this
section) and no Bank shall have any obligation thereafter to grant any
Revolving Loan to Borrower, and
(b) to accelerate the Maturity of all of the Subject Indebtedness and all
other Debt, if any, then owing to the Banks and NCB-Agent or any thereof
(other than Debt, if any, already due and payable), and all such Debt
shall thereupon become and thereafter be immediately due and payable in
full without any presentment or demand and without any further or other
notice of any kind, all of which are hereby waived by Borrower.
5B.02 AUTOMATIC DEFAULTS -- If any Event Of Default referred to in subsection
5A.06 shall occur,
(a) the Revolving Commitments shall automatically and immediately
terminate (if not already expired or reduced to zero pursuant to section
2A or terminated pursuant to this section) and no Bank shall have any
obligation thereafter to grant any Revolving Loan to Borrower, and
(b) all of the Subject Indebtedness and all other Debt, if any, then
owing to the Banks and NCB-Agent or any thereof (other than Debt, if any,
already due and payable) shall thereupon become and thereafter be
immediately due and payable in full, all without any presentment, demand
or notice of any kind, which are hereby waived by Borrower.
5B.03 OFFSETS -- If there shall occur or exist any Default Under This Agreement
then, so long as that Default Under This Agreement exists, each Bank shall have
the right at any time to set off against and to appropriate and apply toward
the payment of the Subject Indebtedness then owing to it (and any participation
purchased or to be purchased pursuant to subsection 5B.05), whether or not the
same shall then have matured, any and all deposit balances then owing by that
Bank to or for the credit or account of the Companies or any thereof, all
without notice to or demand upon Borrower or any Subsidiary or any other
person, all such notices and demands being hereby expressly waived; provided,
however, that any such setoff, appropriation and application shall be subject
to the provisions of section 5B.05 hereof. Each Bank shall promptly notify each
other Bank after any such setoff and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application.
5B.04 SUBJECT LCs -- If the Maturity of the Subject Indebtedness shall be
accelerated pursuant to subsection 5B.01 or 5B.02, Borrower shall immediately
deposit with NCB-Agent, as security for Borrower's obligation to reimburse
NCB-Agent and the Banks for any then outstanding Subject LCs, cash or
acceptable marketable securities having a fair cash value equal to the sum of
the aggregate undrawn balance of any then outstanding Subject LCs. For this
purpose, acceptable marketable securities include only those referred
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42
to in clause (ii) of subsection 3D.02. The Borrower shall have
no control over funds in such cash deposit account.
5B.05 EQUALIZATION -- Each Bank agrees with the other Banks that
if at any time it shall obtain any Advantage over the other
Banks or any thereof in respect of the Subject Indebtedness it
will purchase from such other Bank or Banks, for cash and at
par, such additional participation in the Subject indebtedness
owing to the other or others as shall be necessary to nullify
the Advantage. If any such Advantage resulting in the purchase
of an additional participation as aforesaid shall be recovered
in whole or in part from the Bank receiving the Advantage, each
such purchase shall be rescinded, and the purchase price
restored (with interest and other charges if and to the extent
actually incurred by the Bank receiving the Advantage) Ratably
to the extent of the recovery. During the existence of any Event
of Default, any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or
otherwise) of any indebtedness for borrowed money owing by
Borrower to any Bank shall be applied to the Subject
Indebtedness owing to that Bank until the same shall have been
paid in full before any thereof shall be applied to other
indebtedness for borrowed money owing to that Bank. The Borrower
agrees that any Bank so purchasing a participation from another
Bank pursuant to this section 5B.05 may exercise all of its
rights of payment with respect to such participation as fully as
if such Bank were the direct creditor of the Borrower in the
amount of such participation.
6A. INDEMNITY: STAMP TAXES -- Borrower will pay all stamp taxes and
similar taxes, if any, including interest and penalties, if any,
payable in respect of the issuance of the Subject Indebtedness.
6B. INDEMNITY: GOVERNMENTAL COSTS/LIBOR-RATE LOANS -- If
(a) there shall be introduced or changed any treaty, statute,
regulation or other law, or there shall be made any change in the
interpretation or administration thereof, or there shall be made
any request from any central bank or other lawful governmental
authority, the effect of any of which events shall be to (1)
impose, modify or deem applicable any reserve or special deposit
requirements against assets held by or deposits in or Loans by any
national banking association or other commercial banking
institution (whether or not applicable to any Bank) or any Bank or
(2) subject any Bank to any tax, duty, fee, deduction or
withholding or (3) change the basis of taxation of payments due to
any Bank from Borrower (otherwise than by a change in taxation of
that Bank's overall Net Income), or (4) impose on any Bank any
penalty in respect of any loans bearing interest at a LIBOR rate
and
(b) in that Bank's reasonable opinion any such event (1) increases
(or, if the event were applicable to that Bank, would increase)
the cost of making, funding or maintaining any loans at such rate
or (2) reduces the amount of any payment to be made to that Bank
in respect of the principal or interest on any loans bearing
interest at such rate or other payment under this Agreement,
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43
then, within fifteen (15) business days of such Bank's written demand, Borrower
shall from time to time pay Bank an amount equal to each such cost increase or
reduced payment, as the case may be.
6C. INDEMNITY: FUNDING COSTS -- Borrower agrees to indemnify each Bank against
any loss relating in any way to its funding of any loan bearing interest at a
LIBOR rate paid before its stated Maturity (whether a prepayment or a payment
following any acceleration of Maturity) and to pay that Bank, as liquidated
damages for any such loss, an amount (discounted to the present value in
accordance with standard financial practice at a rate equal to the Treasury
Yield) equal to interest computed on the principal payment from the payment
date to the respective stated maturities thereof at a rate equal to the
difference of the contract rate less the Treasury Yield, all as determined by
that Bank in its reasonable discretion. "Treasury Yield" means the annual yield
on direct obligations of the United States having a principal amount and
Maturity similar to that of the principal being paid.
6D. CREDIT REQUESTS -- Whenever Borrower shall revoke any Credit Request for a
LIBOR loan, or shall for any other reason fail to borrow pursuant thereto or
otherwise comply therewith, or shall fail to honor any prepayment notice, then,
in each case on any Bank's written demand, Borrower shall pay each Bank such
amount as will compensate it for any loss, cost or expense incurred by it by
reason of its liquidation or reemployment of deposits or other funds.
6E. INDEMNITY: UNFRIENDLY TAKEOVERS -- Borrower agrees to indemnify each Bank
and NCB-Agent (each an "Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind (including, without limitation, the reasonable fees and disbursements of
counsel in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitee shall be designated a party thereto)
which may be incurred by each Indemnitee relating to or arising out of any
actual or proposed use of proceeds of the Revolving Loans in connection with
the financing of an acquisition of any corporation or other business entity,
PROVIDED that no Indemnitee shall have the right to be indemnified hereunder
for its own gross negligence or willful misconduct as determined by a court of
competent jurisdiction.
6F. INDEMNITY: GOVERNMENTAL COSTS/SUBJECT LCs -- If any change in any law or
regulation or in the interpretation thereof shall impose, modify, or deem
applicable any reserve, special deposit, or similar requirement which would
impose on NCB-Agent or any Bank any additional cost relating generally to the
issuance or maintenance of letters of credit or specifically to the issuance or
maintenance of any Subject LC, then, on written demand by NCB-Agent or the Bank
in question, Borrower shall pay NCB-Agent or that Bank, as the case may be, the
amount of each such additional cost.
6G. INDEMNITY: MISCELLANEOUS COSTS/SUBJECT LCs -- Borrower agrees to defend
and indemnify NCB-Agent against, and to hold NCB-Agent harmless from, any loss,
liability, damage, claim, cost, or expense relating to NCB-Agent's issuance or
maintenance of any Subject LC or to NCB-Agent's payment of any draft drawn
thereunder, excluding any such loss, liability, damage, claim, cost, or expense
resulting from NCB-Agent's gross negligence or willful misconduct.
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44
6H. INDEMNITY: CAPITAL REQUIREMENTS -- If
(a) at any time any governmental authority shall require any Bank (or
any corporate shareholder of that Bank), whether or not the requirement
has the force of law, to maintain, as support for that Bank's Revolving
Commitment, capital in a specified minimum amount that either is not
required or is greater than that required at the date of this Agreement,
whether the requirement is implemented pursuant to the "risk-based
capital guidelines" (published at 12 CFR 3 in respect of "national
banking associations", 12 CFR 208 in respect of "state member banks" and
12 CFR 225 in respect of "bank holding companies") or otherwise, and
(b) as a result thereof the rate of return on capital of that Bank or
its shareholder or both (taking into account their then policies as to
capital adequacy and assuming full utilization of their capital) shall
be directly or indirectly reduced by reason of any new or added capital
thereby allocable to that Bank's Revolving Commitment,
then and in each such case Borrower shall, on that Bank's demand, pay that Bank
as an additional fee such amounts as will in that Bank's reasonable opinion
reimburse that Bank or its shareholder for any such reduced rate of return.
6I. INDEMNITY: COLLECTION COSTS -- If any Event Of Default shall occur and
shall be continuing, Borrower will pay the Banks and NCB-Agent such further
amounts, to the extent permitted by law, as shall cover their respective costs
and expenses (including, without limitation, the reasonable fees,
interdepartmental charges and disbursements of its counsel) incurred in
collecting the Subject Indebtedness or in otherwise enforcing its rights and
remedies in respect thereof.
6J. CERTIFICATE FOR INDEMNIFICATION -- Each demand by NCB-Agent or a Bank for
payment pursuant to section 6A, 6B, 6C, 6D, 6E, 6F, 6G, 6H or 6I shall be
accompanied by a certificate setting forth the reason for the payment, the
amount to be paid, and the computations and assumptions in determining the
amount, which certificate shall be presumed to be correct in the absence of
manifest error. In determining the amount of any such payment, each Bank may
use reasonable averaging and attribution methods.
7A. BANK'S PURPOSE -- Each Bank represents and warrants to the other Banks and
to Borrower that such Bank is familiar with the Securities Act of 1933 as
amended and the rules and regulations thereunder and is not entering into this
Agreement with any intention of violating that Act or any rule or regulation
thereunder, it being understood, however, that each Bank shall at all times
retain full control of the disposition of its assets.
7B. NCB-AGENT -- Each Bank irrevocably appoints NCB to be its agent with full
authority to take such actions, and to exercise such powers, on behalf of the
Banks in respect of this Agreement and the Related Writings as are therein
respectively delegated to NCB-Agent or as are reasonably incidental to those
delegated powers.
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45
7B.01 NATURE OF APPOINTMENT -- NCB-Agent shall have no fiduciary relationship
with any Bank by reason of this Agreement and the Related Writings, nor shall
NCB-Agent have any duty or responsibility whatever to any Bank EXCEPT those
expressly set forth in this Agreement and the Related Writings. Without
limiting the generality of the foregoing, each Bank acknowledges that NCB-Agent
is acting as such solely as a convenience to the Banks and not as a manager of
the Subject Loans or Subject Indebtedness. This section 7B does not confer any
rights upon Borrower or anyone else (EXCEPT NCB-Agent and the Banks), whether
as a third party beneficiary or otherwise.
7B.02 NCB AS A BANK; OTHER TRANSACTIONS -- NCB's rights under this Agreement
and the Related Writings shall not be affected by its serving as NCB-Agent.
Subject to the terms and provisions of this Agreement, NCB and its affiliates
may generally transact any banking, financial, trust advisory or other business
with Borrower (including, without limitation, the acceptance of deposits, the
extension of credit, forward exchange rate contracts, interest rate caps,
swaps, collars and other like contracts and the acceptance of fiduciary
appointments) without notice to the Banks, without accounting to the Banks, and
without prejudice to NCB's rights as a Bank under this Agreement and the
Related Writings.
7B.03 INSTRUCTION FROM BANKS -- NCB-Agent shall not be required to exercise any
discretion or take any action as to matters not expressly provided for by this
Agreement and the Related Writings (including, without limitation, collection
and enforcement actions in respect of the Subject Indebtedness and any
collateral therefor) EXCEPT that NCB-Agent shall take such action (or omit to
take such action) as may be requested of it in writing by all the Banks unless
NCB-Agent's counsel advises against doing so, which instructions and which
actions and omissions shall be binding upon all the Banks; PROVIDED, that
NCB-Agent shall not be required to act (nor omit any act) if, in its judgment,
any such action or omission might expose NCB-Agent to liability or might be
contrary to this Agreement, any Related Writing or any applicable law.
7B.04 BANKS' DILIGENCE -- Each Bank
(a) represents and warrants that it has made its decision to enter into
this Agreement and the Related Writings and
(b) agrees that it will make its own decision as to taking or not
taking future actions in respect of this Agreement and the Related
Writings
in each case without reliance on NCB-Agent or any other Bank and on the basis
of its independent credit analysis and its independent examination of and
inquiry into such documents and other matters as it deems relevant and
material.
7B.05 NO IMPLIED REPRESENTATIONS -- NCB-Agent shall not be liable for any
representation, warranty, agreement or obligation of any kind of any other
party to this
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46
Agreement or anyone else (except for those made by NCB-Agent), whether made or
implied by Borrower in this Agreement or any Related Writing or by a Bank in
any notice or other communication or by anyone else or otherwise.
7B.06 SUB-AGENTS -- Except as otherwise provided herein, NCB-Agent may employ
agents and shall not be liable (EXCEPT as to money or property received by it
or its agents) for any negligence or misconduct of any such agent selected by
it with reasonable care. NCB-Agent may consult with legal counsel, certified
public accountants and other experts of its choosing (including, without
limitation, NCB's salaried employees, any employed by Borrower or any otherwise
not independent) and shall not be liable for any action or inaction taken or
suffered in good faith by it in accordance with the advice of any such counsel,
accountants or other experts.
7B.07 NCB-AGENT'S DILIGENCE -- NCB-Agent shall not be required (a) to keep
itself informed as to anyone's compliance with any provision of this Agreement
or any Related Writing, (b) to make any inquiry into the properties, financial
condition or operations of Borrower or any other matter relating to this
Agreement or any Related Writing, (c) to report to any Bank any information
(other than which this Agreement or any Related Writing expressly requires to
be so reported) that NCB-Agent or any of its affiliates may have or acquire in
respect of Borrower's properties, business or financial condition or any other
matter relating to this Agreement or any Related Writing or (d) to inquire
into the validity, effectiveness or genuineness of this Agreement or any
Related Writing.
7B.08 NOTICE OF DEFAULT -- NCB-Agent shall not be deemed to have knowledge of
any Event of Default unless and until it shall have received a written notice
describing it and citing the relevant provision of this Agreement or any
Related Writing.
7B.09 NCB-AGENT'S LIABILITY -- Neither NCB-Agent nor any of its directors,
officers, employees, attorneys and other agents shall be liable for any action
or omission on their respective parts EXCEPT for gross negligence or willful
misconduct or any action or failure to act in accordance with instructions from
the Banks in accordance with this Agreement.
7B.10 COMPENSATION -- At the execution and delivery of this Agreement and
annually thereafter so long as any Subject Loans are outstanding, Borrower
shall pay NCB-Agent a fee to be determined by mutual agreement of Borrower and
NCB-Agent. NCB-Agent shall receive no other compensation for its services as
agent of the Banks in respect of this Agreement and the Related Writings, but
Borrower shall reimburse NCB-Agent periodically on its demand for out-of-pocket
expenses, if any, reasonably incurred by it as such.
7B.11 DISBURSEMENTS -- Whenever NCB-Agent shall receive any funds in respect of
the Subject Indebtedness or otherwise in respect of this Agreement or any
Related Writing, whether from Borrower for the account of the Banks or from the
Banks for the account of Borrower, NCB-Agent shall disburse the funds on the
day the funds shall be deemed to have been received. NCB-Agent shall be
entitled (but not obligated) to make a timely disbursement
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47
of loan proceeds to Borrower before actually receiving funds from the
Banks (EXCEPT if and to the extent NCB-Agent shall have received written
instructions to the contrary from any Bank or Banks) and to make a timely
disbursement of payments to the Banks on a Ratable basis before actually
receiving funds from Borrower. If the funds to be disbursed are not
received by NCB-Agent on a timely basis, NCB-Agent at its option may (a)
rescind the disbursement and require the disbursee to return the funds in
question with interest or (b) require the party who failed to furnish the
funds for disbursement on a timely basis to pay NCB-Agent interest thereon
-- the interest in each case to be computed at the Federal Funds Rate and
to be paid on demand.
7B.12 NCB-AGENT'S INDEMNITY -- The Banks shall indemnify NCB-Agent (to the
extent NCB-Agent is not reimbursed by Borrower) from and against any loss
or liability (other than any caused by NCB-Agent's gross negligence or
willful misconduct) incurred by NCB-Agent as such in respect of this
Agreement or any Related Writing and from and against any out-of-pocket
expenses incurred in defending itself or otherwise related to this
Agreement or any Related Writing including, without limitation, reasonable
fees and disbursements of legal counsel of its own selection (including,
without limitation, the reasonable interdepartmental charges of its
salaried attorneys) in the defense of any claim against it or in the
prosecution of its rights and remedies as NCB-Agent (unless it is
determined in such proceeding that NCB- Agent shall have been grossly
negligent or shall have engaged in willful misconduct); PROVIDED, that
each Bank shall be liable for only its Ratable share of the whole loss or
liability.
7B.13 RESIGNATION -- NCB-Agent (or any successor) may resign as such at
any time upon thirty (30) days prior written notice to Borrower and to
each Bank, in which event all the Banks may, upon obtaining the prior
written consent of Borrower, which consent will not be unreasonably
withheld, appoint a successor agent by giving written notice thereof to
Borrower and the resigning agent. In the absence of a timely appointment,
NCB-Agent shall have the right (but not the duty) to make a temporary
appointment of any Bank (but only with that Bank's consent) to act as its
successor pending an appointment pursuant to the next preceding sentence.
In either case, the successor agent shall deliver its written acceptance
of appointment to Borrower, to each Bank and to the former agent,
whereupon the successor agent shall automatically acquire and assume all
the rights and duties as those prescribed for NCB-Agent by this section
7B. Any resigning agent shall execute and deliver such assignments and
other writings as the Successor agent may reasonably require to facilitate
its becoming the successor agent.
7C. TRANSFER OF SUBJECT LOANS -- Each Bank shall have the right at any time or
times to transfer its Subject Loans (or commitment to make the same) in whole
or in part and without recourse to another financial institution, PROVIDED, in
each such case, that the transferor and the transferee shall have complied with
the following requirements:
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48
7C.01 PRIOR CONSENT -- No Subject Loans (or commitment to make the same)
may be transferred, either in whole or in part, without the prior written
consent of Borrower and NCB-Agent, neither of which consents shall be
unreasonably withheld.
7C.02 AGREEMENT -- The transferee shall execute and deliver to Borrower,
NCB-Agent and each Bank (other than any transferor which thereafter will
have no interest in any Subject Loans or any commitment to make the same) a
counterpart of this Agreement and such additional amendments, assurances
and other writings as NCB-Agent may reasonably require.
7C.03 NOTE -- Borrower shall execute and deliver to the transferee an
appropriate note or notes, as the case may be, and an appropriate release
to the transferor.
7C.04 PARTIES -- Upon satisfaction of the requirements of this section 7C,
(a) the transferee shall become and thereafter be deemed to be a
Bank for the purposes of this Agreement and
(b) The transferor (i) shall continue to be a Bank for the purposes
of this Agreement only if and to the extent that the transfer shall
not have been a transfer of its entire interest in the Subject
Loans (or commitment to make the same) and (ii) shall cease to be
and thereafter shall no longer be deemed to be a Bank in the case
of any transfer of its entire interest in the Subject Loans (or
commitment to make the same).
8. INTERPRETATION -- This Agreement and the Related Writings shall be governed
by the following provisions:
8.01 WAIVERS -- The Banks and NCB-Agent may from time to time grant
waivers and consents in respect of this Agreement or any Related Writing
or assent to amendments thereof, but no such waiver, consent or assent
shall be binding upon the Banks and NCB-Agent or any thereof unless (a)
it shall have been reduced to writing, each such writing to be narrowly
construed and (b) the waiver, consent or amendment shall have been
approved and executed by all of the Banks and NCB-Agent. Without
limiting the generality of the foregoing, Borrower agrees that no course
of dealing in respect of, nor any omission or delay in the exercise of,
any right, power or privilege by Banks and NCB-Agent or any thereof
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any further or other exercise thereof or of
any other right, power or privilege, and each such right, power or
privilege may be exercised either independently or concurrently with
others and as often and in such order as the party or parties exercising
the same may deem expedient.
8.02 CUMULATIVE PROVISIONS -- Each right, power or privilege specified
or referred to in this Agreement or any Related Writing is in addition
to and not in limitation of any other rights, powers and privileges that
Banks and NCB-Agent may respectively otherwise
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have or acquire by operation of law, by other contract or otherwise. All
rights, powers and privileges shall be deemed cumulative.
8.03 BINDING EFFECT -- The provisions of this Agreement and the Related
Writings shall bind and benefit Borrower, NCB-Agent and each Bank and their
respective successors and assigns, including each subsequent holder, if any, of
the Revolving Notes or any thereof; PROVIDED, that no person or entity other
than Borrower may obtain Revolving Loans and Borrower may not assign its rights
or obligations hereunder without Banks' consent; and PROVIDED, FURTHER, that
neither any holder of any Revolving Note or assignee of any Revolving Loan,
whether in whole or in part, shall thereby become obligated thereafter to grant
to Borrower any Revolving Loan.
8.04 SURVIVAL OF PROVISIONS -- All representations and warranties made in or
pursuant to this Agreement or any Related Writing shall survive the execution
and delivery of this Agreement and the Revolving Notes. The provisions of
sections 6 and 7B.12 shall survive the payment of the Subject Indebtedness.
8.05 IMMEDIATE U.S. FUNDS -- Any reference to money is a reference to lawful
money of the United States of America which, if in the form of credits, shall
be in immediately available funds.
8.06 CAPTIONS -- The several captions to different sections and subsections of
this Agreement are inserted for convenience only and shall be ignored in
interpreting the provisions thereof.
8.07 SUBSECTIONS -- Each reference to a section includes a reference to all
subsections thereof (i.e., those having the same character or characters to the
left of the decimal point) EXCEPT where the context clearly does not so permit.
8.08 ILLEGALITY -- If any provision in this Agreement or any Related Writing
shall for any reason be or become illegal, void or unenforceable, that
illegality, voidness or unenforceability shall not affect any other provision.
8.09 OHIO LAW -- This Agreement and the Related Writings and the respective
rights and obligations of the parties hereto shall be construed in accordance
with and governed by internal Ohio law.
8.10 INTEREST/FEE COMPUTATIONS -- All interest and all fees for any given
period shall accrue on the first (1st) day thereof but not on the last day
thereof and in each case shall be computed on the basis of a 360-day year and
the actual number of days elapsed. In no event shall interest accrue at a
higher rate than the maximum rate, if any, permitted by law.
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8.11 NOTICE -- A notice to or request of Borrower shall be deemed to have been
given or made under this Agreement or any Related Writing either upon the
delivery of a writing to that effect (either in person or by transmission of a
telecopy) to an officer of Borrower or five (5) days after a writing to that
effect shall have been deposited in the United States mail and sent, with
postage prepaid, by registered or certified mail, properly addressed to
Borrower (Attention: chief financial officer or controller), with a copy to Ira
C. Kaplan, Esq., Benesch, Friedlander, Coplan and Aronoff, 2300 BP America
Building, 200 Public Square, Cleveland, Ohio 44114. No other method of actually
giving actual notice to or making a request of Borrower is hereby precluded.
Every notice required to be given to NCB-Agent or any Bank pursuant to this
Agreement or any Related Writing shall be delivered (either in person or by
transmission of a telecopy) to an Account Officer of that party. The Banks and
NCB-Agent each agree to give prompt notice to the others whenever it gives any
notice pursuant to section 5A or 5B. A notice or request by mail is properly
addressed to a party when addressed to it at the address set forth opposite its
signature below or at such other address as that party may furnish to each of
the others in writing for that purpose. A telecopy is transmitted to a party
when transmitted to the telecopy number set forth opposite that party's
signature below (or at such other telecopy number as that party may furnish to
the other in writing for that purpose).
8.12 ACCOUNTING TERMS -- Any accounting term used in this Agreement shall have
the meaning customarily ascribed thereto by GAAP subject, however, to such
modification, if any, as may be provided by section 9 or elsewhere in this
Agreement.
8.13 ENTIRE AGREEMENT -- This Agreement and the Related Writings referred to in
or otherwise contemplated by this Agreement set forth the entire agreement of
the parties as to the transactions contemplated by this Agreement.
8.14 WAIVER OF JURY TRIAL -- THE PARTIES ACKNOWLEDGE AND AGREE
THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT AND
THE RELATED WRITINGS WOULD INVOLVE DIFFICULT AND COMPLEX ISSUES
AND THEREFORE AGREE THAT ANY LAW SUIT GROWING OUT OF OR
INCIDENTAL TO ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.15 LATE CHARGE; APPLICATION OF PAYMENTS -- If Borrower fails to pay any
amount due hereunder, or any fee in connection herewith, in full within ten
(10) days after its due date, Borrower will, in each case, incur and shall pay
a late charge equal to the greater of twenty dollars ($20.00) or five percent
(5%) of the unpaid amount. The payment of a late charge will not cure or
constitute a waiver of any Event Of Default under this Agreement. Except as
otherwise agreed in writing, payments will be applied first to accrued but
unpaid interest and fees, in that order, on an invoice by invoice basis in the
order of their respective due dates, until paid in full, then to late charges
and then to principal.
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8.16 EXPENSES -- Borrower agrees to reimburse each Bank, on that Bank's demand
from time to time, for any and all fees, costs and expenses (including, without
limitation, the reasonable fees, interdepartmental charges and disbursements of
legal counsel) incurred by that Bank in connection with (a) preparing and
reviewing any amendments or modifications to this Agreement or the Related
Writings, (b) administering this Agreement and the Subject Indebtedness
evidenced and contemplated hereby and by the other Related Writings, (c) any
filing or recording fees, lien search fees, documentary stamp taxes or other
like fees, taxes or charges, (d) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Banks, Borrower or any other
Person) in any way relating to the Banks' collateral for the Subject
Indebtedness, this Agreement or any of the other Related Writings or Borrower's
affairs, but excluding any litigation between Borrower and Bank as adverse
parties unless otherwise permitted by law in connection with any judgment
awarded in favor of the prevailing party or (e) any inspection, verification or
protection of any of Banks' collateral for the Subject Indebtedness.
Borrower's reimbursement obligations hereunder shall constitute a part of
Borrower's Debt.
8.17 JURISDICTION AND VENUE -- As part of the consideration for new value
received, Borrower hereby consents to the jurisdiction of any state or federal
court located within the state of Ohio and consents that all such service of
process be made by registered or certified mail directed to such Borrower at
the address set forth opposite its name and officer's signature on the
execution page hereof and service so made shall be deemed to be completed upon
actual receipt thereof. Borrower waives any objection to jurisdiction and venue
of any action instituted hereunder or in connection with any Related Writing
and agrees not to assert any defense based on lack of jurisdiction or venue.
Nothing contained herein shall affect the right of Banks or NCB-Agent to serve
legal process in any other manner permitted by law or affect the right of Banks
or NCB-Agent to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction. Borrower agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
8.18 AMBIGUITIES -- Borrower and Banks acknowledge that this Agreement and the
Related Writings have been entered into in the context of free and
understanding negotiations and are the product of individual bargaining, in a
competitive market, between parties enjoying equal bargaining strength. In the
event that a court is called upon to interpret any ambiguous provision in this
Agreement or the Related Writings, Borrower and Banks agree that the ambiguity
shall not be construed against Borrower or Banks simply because Borrower or
Banks, or their respective agents or counsel, may have drafted such provision.
8.19 OTHER WAIVERS AND ACKNOWLEDGMENT -- Except as otherwise provided for in
this Agreement or as required by applicable law, Borrower waives (i)
presentment, demand and protest and notice of presentment, protest, default,
nonpayment, maturity,
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52
release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Banks or NCB-Agent on
which Borrower may in any way be liable and (ii) notice prior to taking
possession or control of any collateral which might be required by any
court prior to allowing Banks to exercise any of Banks' or NCB-Agent's
remedies.
Borrower acknowledges that it has been advised by counsel of its choice
with respect to this Agreement and the transactions contemplated hereby,
and Borrower acknowledges and agrees that (a) each of the waivers set
forth herein, were knowingly and voluntarily made; (b) the rights of
Banks and NCB-Agent hereunder shall be strictly construed in favor of
Banks and NCB-Agent, as the case may be; and (c) no representative of
Banks or NCB-Agent has waived or modified any of the provisions of this
Agreement or any Related Writing as of the date hereof and no such waiver
or modification following the date hereof shall be effective unless made
in accordance with section 8.01 hereof.
9. DEFINITIONS -- As used in this Agreement and in the Related Writings, EXCEPT
where the context clearly requires otherwise,
ACCOUNT DEBTOR means a Person obligated in any way on or in connection
with a Receivable;
ACCOUNT OFFICER means that officer who at the time in question is
designated by the Bank in question as the officer having primary
responsibility for giving consideration to Borrower's requests for
credit or, in that officer's absence, that officer's immediate superior
or any other officer who reports directly to that superior officer;
ACCUMULATED FUNDING DEFICIENCY shall have the meaning ascribed thereto
in section 302(a)(2) of ERISA;
ADVANTAGE means any payment (whether made voluntarily or involuntarily,
by offset of any deposit or other indebtedness or otherwise) received by
a Bank in respect of any of the Subject Indebtedness if the payment
results in that Bank's having less than its Ratable share of the Subject
Indebtedness in question;
AFFILIATE, when used with reference to any corporation (or other
business entity) (the "subject") means, a corporation (or other business
entity) or person that is in control of or under the control of or under
common control (by another) with the subject; the term CONTROL meaning
the direct or indirect power to direct the management or policies of the
subject or the Affiliate or both (as the case may be), whether through
the direct or indirect ownership of voting securities, by contract or
otherwise;
AGREEMENT means this Agreement and includes each amendment, supplement
or restatement, if any, to this Agreement;
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AVAILABILITY means (a) the lesser of the aggregate of the Revolving Commitments
or the Borrowing Base minus (b) the aggregate unpaid principal amount of the
Revolving Loans outstanding at the time of reference plus the aggregate undrawn
balance of the Subject LCs and any unreimbursed drawings pursuant to the
Subject LCs (to the extent PR Loans have not been advanced by Banks in respect
thereof pursuant to subsection 2B.18) plus the amount of any Subject LCs to be
issued pursuant to any unfilled Credit Request under subsection 2C.04;
BANK means one of the banking institutions that is a party to this Agreement;
BANKING DAY means (a) in the case of a LIBOR Loan, a day on which banks in the
London interbank market deal in United States dollar deposits and on which
banking institutions are generally open for domestic and international business
in Cleveland and (b) in any other case, any day other than a Saturday or a
Sunday or a public holiday or other day on which banking institutions in
Cleveland, Ohio are generally closed and do not conduct banking business;
BORROWER means Sudbury, Inc., a Delaware corporation;
BORROWING BASE is defined in subsection 2B.14;
BORROWING BASE REPORT means a report furnished by Borrower pursuant to clause
(d) of subsection 3A.01;
COMPANY refers to Borrower, Cast-Matic Corporation, Frisby P.M.C.,
Incorporated, Industrial Powder Coatings, Inc., Iowa Mold Tooling Co., Inc.,
South Coast Terminals, Inc., Wagner Castings Company or Wagner Havana, Inc., as
the case may be;
CONVERSION DATE shall have the meaning ascribed to that term in subsection
2A.08(a);
CREDIT REQUEST means a request made pursuant to subsection 2B.02 or 2C.04, as
the case may be;
DEBT means, collectively, all liabilities (including principal, interest, fees,
charges, expenses and any other amounts) of the party or parties in question to
the Banks and NCB-Agent or any thereof, whether owing by one such party alone
or with one or more others in a joint, several, or joint and several capacity,
whether now owing or hereafter arising, whether owing absolutely or
contingently, whether created by loan, overdraft, guaranty of payment or other
contract or by quasi-contract or tort, statute or other operation of law or
otherwise, whether incurred directly to the Banks and NCB-Agent of any thereof
or acquired by purchase, pledge or otherwise, and whether participated to or
from the Banks and NCB-Agent or any thereof in whole or in part; and in the
case of Borrower includes, without limitation, the Subject Indebtedness;
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DEFAULT UNDER ERISA means (a) the occurrence or existence of a material
Accumulated Funding Deficiency in respect of any of any of the Companies'
Pension Plans, (b) any material failure by a Company to make a lull and timely
payment of PBGC premiums required by ERISA for insurance against any employer's
liability in respect of any such plan, (c) any material breach of a fiduciary
duty by a Company or any trustee in respect of any such plan or (d) the
existence of any action by the PBGC for the forcible termination of any such
plan;
DEFAULT UNDER THIS AGREEMENT means an event, condition or thing which
constitutes (or which with the lapse of any applicable grace period or the
giving of notice or both would constitute) an Event Of Default referred to in
section 5A and which has not been appropriately waived in writing in accordance
with this Agreement or corrected to Banks' full satisfaction;
DISTRIBUTION means a payment made, liability incurred or other consideration
(other than any stock dividend or stock split payable solely in capital stock
of Borrower) given by a Company for the purchase, acquisition, redemption or
retirement of any capital stock of the Company or as a dividend, return of
capital or other distribution in respect of the Company's capital stock and
DISTRIBUTE means to make a Distribution;
ELIGIBLE INVENTORY means all of the Companies' Inventory that constitutes raw
materials (excluding packaging) and, except as set forth below, first quality
finished goods and that: (a) is not, in NCB-Agent's reasonable judgment,
defective, slow-moving, obsolete or unmerchantable; (b) does not constitute
work-in-process Inventory; (c) upon which NCB-Agent, for the benefit of the
Banks, has a first priority perfected security interest and with respect to
which the Companies have delivered landlords' waivers and/or bailee letters
satisfactory in form and substance to NCB-Agent and the Banks; and (d)
NCB-Agent otherwise deems eligible as the basis for Revolving Loans based on
such other credit and collateral considerations as NCB-Agent may from time to
time establish in its reasonable discretion.
ELIGIBLE RECEIVABLES means those Receivables in which NCB-Agent, for the
benefit of the Banks, has a first priority and, except as set forth below with
respect to the Metzeler Gimetall of Germany and Ford of Germany Receivables,
perfected security interest and which are not ineligible as the basis for
Revolving Loans, based on the following criteria and on such other criteria as
NCB-Agent may from time to time establish in its reasonable discretion. Banks
acknowledge that their security interest in the Receivables of Metzeler
Gimetall of Germany and Ford of Germany does not have to be perfected in
Germany to render those Receivables eligible. Without intending to limit
NCB-Agent's discretion to establish other criteria of eligibility, Eligible
Receivables shall NOT include any Receivable:
(a)(i) in the case of Receivables relating to invoices that are issued
without extended terms, if more than ninety (90) days have elapsed since
the date of the original invoice; or
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(a)(ii) in the case of Receivables relating to invoices that are issued on
extended terms (i.e. they have a due date that is equal to or more than ninety
(90) days from their invoice date) if more than sixty (60) days have elapsed
since the due date or if more than one hundred fifty (150) days have elapsed
since the date of the original invoice; or,
(b) with respect to which any of the representations, warranties, covenants,
and agreements contained in this Agreement are not or have ceased to be
complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check or other instrument for
the payment of money has been received, presented for payment and returned
uncollected for any reason;
(d) which represents a Progress Billing or as to which any Company has extended
the time for payment without the consent of the NCB-Agent; for the purpose
hereof, "Progress Billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon any Company's
completion of any further performance under the contract or agreement;
(e) as to which any one or more of the following events has occurred with
respect to the Account Debtor on such Receivable: death or judicial
declaration of incompetency of an Account Debtor who is any individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as
a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the bankruptcy laws of the United States
or otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Account Debtor; the nonpayment generally by the Account Debtor of its debts as
they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if the aggregate dollar amount of all Receivables owed by the Account
Debtor thereon exceeds a credit limit determined by NCB-Agent in its sole
discretion, but only to the extent such Receivable exceeds such limit;
(g) owed by an Account Debtor which: (i) does not maintain its chief executive
office in the United States; or (ii) is not organized under the laws of the
United States
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or any state thereof; or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof except to the extent that (A)(i) such Receivable is
secured or payable by letter of credit or acceptance terms acceptable to
NCB-Agent; and (A)(ii) NCB-Agent, for the benefit of the Banks, has obtained a
first priority perfected security interest in the proceeds of drawings under
such letters of credit or acceptance or (B) such Receivable is owed by a
Canadian Account Debtor that has neither its chief executive office nor any of
its business operations located in the Provence of Quebec but only then to the
extent the Receivable has been reduced by the amount of any Canadian taxes that
may be due from the applicable Company in connection with receipt of payment of
the Receivable;
(h) owed by the Borrower, any Company or by any Account Debtor which is an
Affiliate of the Borrower other than General Products Delaware Corporation, a
Delaware corporation;
(i) except as provided in clause (k) below, as to which either perfection,
enforceability, or validity of the security interest of NCB-Agent in such
Receivable, or NCB-Agent's right or ability to obtain direct payment to
NCB-Agent, for the benefit of the Banks, of the proceeds of such Receivable, is
governed by any federal, state, or local statutory requirements other than
those of the UCC;
(j) which is owed by an Account Debtor to which any of the Companies is
indebted in any way, or which is subject to any right of set-off by the Account
Debtor, unless the Account Debtor has entered into an agreement acceptable to
NCB-Agent to waive set-off rights; or if the Account Debtor thereon has
disputed liability or made any claim with respect to any other Receivable due
from such Account Debtor but in each such case referred to in this subparagraph
(j) only to the extent of such indebtedness, set-off, dispute, or claim; for
the purposes of this calculation an amount of $500,000 will be used, and may be
reasonably adjusted by NCB-Agent from time to time;
(k) which is owed by the government of the United States of America, or any
department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended, and any other
steps necessary to perfect, for the benefit of the Banks, NCB-Agent's security
interest therein, have been complied with to NCB-Agent's satisfaction with
respect to such Receivable;
(l) which is owed by any state, municipality, or other political subdivision of
the United States of America, or any department, agency, public corporation, or
other instrumentality thereof and as to which NCB-Agent determines that
NCB-Agent's security interest therein, for the benefit of the Banks, is not or
cannot be perfected;
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(m) which arises out of a sale to an Account Debtor on a bill-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or by
chattel paper;
(o) if NCB-Agent believes in its reasonable credit judgment that the
prospect of collection of such Receivable is impaired or that the
Receivable may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) all Receivables owing by a single Account Debtor, if fifty percent
(50%) or more of the balance of all Receivables owing by such Account
Debtor to any Company is ineligible by reason of either of the criteria
set forth in clause (a) above;
(q) which is subject to any contra account, any chargeback, deduction,
unapplied credit or accrual allowance or rebate, but only then to the
extent of any such contra account, chargeback, deduction, unapplied
credit, accrual allowance or rebate;
(r) owed by Metzeler Gimetall of Germany or Ford of Germany to any
Company to the extent that (i) all such Receivables owed by them exceed
at any given time the aggregate amount of $4,000,000.00 or (ii) any such
Receivable contains payment terms of more than ninety (90) days after the
invoice date; or
(s) which arises out of a floor planning or similar financing
arrangement.
ENVIRONMENTAL LAW means the Comprehensive Environmental Response, Compensation,
and Liability Act (42 USC 9601 et seq.), the Hazardous Material Transportation
Act (49 USC 1801 et seq.), the Resource Conservation and Recovery Act (42 USC
6901 et seq.), the Federal Water Pollution Control Act (33 USC 1251 et seq.),
the Toxic Substances Control Act (15 USC 2601 et seq.) and the Occupational
Safety and Health Act (29 USC 651 et seq.), as such laws have been or hereafter
may be amended, and any and all analogous present or future federal, state or
local statutes and the regulations promulgated pursuant thereto;
ERISA means the Employee Retirement Income Security Act of 1974 (P.L. 93-406)
as amended from time to time and in the event of any amendment affecting any
section thereof referred to in this Agreement, that reference shall be a
reference to that section as amended, supplemented, replaced or otherwise
modified;
EVENT OF DEFAULT is defined in section 5A;
EXISTING REVOLVING FACILITY means the loans evidenced by a certain Loan and
Security Agreement dated as of May 28, 1993 between and among Borrower, certain
of Borrower's
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Subsidiaries, BA Business Credit, Inc. (individually and as Agent) and NCB (and
participated in by Star Bank, National Association), as the same has been
amended from time to time;
EXPIRATION DATE means the date referred to as such in subsection 2A.02, EXCEPT
that in the event of any extension pursuant to subsection 2A.05, "Expiration
Date" shall mean the latest date to which the Revolving Commitments shall have
been so extended;
FEDERAL FUNDS RATE means a fluctuating interest rate per annum, as in effect at
the time in question, that is the rate determined by NCB-Agent to be the
opening Federal Funds Rate per annum paid or payable by it on the day in
question in its regional federal funds market for overnight borrowings from
other banking institutions;
FIXED CHARGE RATIO shall have the meaning ascribed to that term in subsection
3B.04;
FUNDED INDEBTEDNESS means indebtedness of the person or entity in question
which matures or which (including each renewal or extension, if any, in whole
or in part) remains unpaid for more than twelve (12) months after the date
originally incurred and includes, without limitation (a) any indebtedness
(regardless of its maturity) if it is renewable or refundable in whole or in
part solely at the option of that person or entity (in the absence of default)
to a date more than one (1) year after the date of determination, (b) any
capitalized lease, (c) any Guaranty of Funded Indebtedness owing by another
person or entity and (d) any long-term indebtedness secured by a security
interest, mortgage or other lien encumbering any property owned or being
acquired by the person or entity in question even if the full faith and credit
of that person or entity is not pledged to the payment thereof; PROVIDED, that
in the case of any indebtedness payable in installments or evidenced by serial
notes or calling for sinking fund payments, those payments maturing within
twelve (12) months after the date of determination shall be considered current
indebtedness rather than Funded Indebtedness for the purposes of section 3B but
shall be considered Funded Indebtedness for all other purposes;
GAAP means generally accepted accounting principles applied in a manner
consistent with those used in Borrower's Most Recent 4A.04 Financial
Statements;
GUARANTOR means one who pledges his credit or property in any manner for the
payment or other performance of the indebtedness, contract or other obligation
of another and includes (without limitation) any guarantor (whether of
collection or payment), any obligor in respect of a standby letter of credit or
surety bond issued for the obligor's account, any surety, any co-maker, any
endorser, and anyone who agrees conditionally or otherwise to make any loan,
purchase or investment in order thereby to enable another to prevent or correct
a default of any kind; and GUARANTY means the obligation of a Guarantor;
INITIAL FUNDING DATE means the date of the initial disbursement of loan
proceeds pursuant to this Agreement by Banks;
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INSIDER, as applied to Subordinated indebtedness, refers to any person (a)(i)
who is a director or officer of a Company or (ii) who is the record and
beneficial owner of ten percent (10%) or more of a Company's capital stock or
(iii) who is a member of the immediate family of any such director, officer or
stockholder, and (b) at the time in question, to whom Subordinated indebtedness
is owed;
INSOLVENCY ACTION means either (a) a pleading of any kind filed by the person,
corporation or entity (an "insolvent") in question to seek relief from the
insolvent's creditors, or filed by the insolvent's creditors or any thereof to
seek relief of any kind against that insolvent, in any court or other tribunal
pursuant to any law (whether federal, state or other) relating generally to the
rights of creditors or the relief of debtors or both, or (b) any other action
of any kind commenced by an insolvent or the insolvent's creditors or any
thereof for the purpose of marshaling the insolvent's assets and liabilities
for the benefit of the insolvent's creditors; and "Insolvency Action" includes
(without limitation) a petition commencing a case pursuant to any chapter of
the federal bankruptcy code, any application for the appointment of a receiver,
trustee, liquidator or custodian for the insolvent or any substantial part of
the insolvent's assets, and any assignment by an insolvent for the general
benefit of the insolvent's creditors;
INVENTORY means, collectively, all goods which at the time in question are
owned by a Company and are held for sale or lease, or furnished (or to be
furnished) by a Company to another party under a contract of service or sale,
or used or consumed (or to be used or consumed) in a Company's business and
includes, without limitation, all raw materials, work in process, finished
goods, supplies, parts and packing materials but excludes leases which are
included among Receivables;
LEVERAGE RATIO shall have the meaning ascribed to that term in subsection
3B.02;
LIBOR CONTRACT PERIOD is defined in subsection 2B.07;
LIBOR LOAN means a Subject Loan having a LIBOR Contract Period described in
subsection 2B.07 and bearing interest in accordance with subsection 2B.11;
LIBOR PRE-MARGIN RATE means the rate per annum (rounded upwards, if necessary,
to the next higher one-sixteenth of one percent (1/16%), as determined by
NCB-Agent, which equals the average rate per annum at which deposits in United
States dollars are offered for deposits of the Maturity and amount in question,
at 11:00 A.M. London time (or as soon thereafter as practicable) two Banking
Days prior to the first (1st) day of the LIBOR Contract Period in question, to
NCB by prime Banking institutions in any Eurodollar market reasonably selected
by NCB;
MARGIN means the applicable margin defined in subsection 2B.11;
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MATURITY means, when used with reference to a Subject Loan, the date (whether
occurring by lapse of time, acceleration or otherwise) upon which that Subject
Loan is due;
MOST RECENT 4A.04 FINANCIAL STATEMENTS means Borrower's most recent financial
statements that are referred to in subsection 4A.04 delivered prior to the date
of this Agreement;
NCB means National City Bank;
NET AMOUNT OF ELIGIBLE RECEIVABLES means the gross amount of Eligible
Receivables less sales, excise or similar taxes, and less returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed;
NET INCOME means net income as determined in accordance with GAAP, after taxes
and after extraordinary items, but without giving effect to any gain resulting
from any reappraisal or write-up of any asset;
NOTEHOLDERS means the holders of those certain 8-3/5% Senior Subordinated
Pay-In-Kind Notes due 1997 issued pursuant to an Indenture dated as of
September 1, 1992 between Borrower and IBJ Schroder Bank and Trust Company, as
trustee;
PBGC means the Pension Benefit Guaranty Corporation;
PENSION PLAN means a defined benefit plan (as defined in section 3(35) of
ERISA) of a Company that is subject to Title IV of ERISA and includes, without
limitation, any such plan that is a multi-employer plan (as defined in section
3(37) of ERISA) applicable to any of the Companies' employees;
PERSON means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited
liability company or partnership or any other entity;
PR LOAN means a Revolving Loan maturing in the manner described in the first
sentence of subsection 2B.08 and bearing interest in accordance with subsection
2B.10;
PRIME RATE means the fluctuating rate of interest which is publicly announced
from time to time by NCB at its principal place of business as being its "Prime
Rate" or "base rate" thereafter in effect, with each change in the Prime Rate
automatically, immediately and without notice changing the fluctuating interest
rate thereafter applicable hereunder, it being agreed that the Prime Rate is
not necessarily the lowest rate of interest then available from NCB on
fluctuating rate loans;
PROFORMA COVENANT COMPLIANCE means compliance by Borrower with the general
financial standards contained in Section 3B of this Agreement as of the time of
the event in question and based upon the Projections delivered by Borrower in
contemplation of such event;
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PROGRESS BILLINGS shall have the meaning ascribed to that term in clause (d) of
the definition of Eligible Receivable herein;
PROJECTIONS shall have the meaning ascribed to that term in subsection
3A.01(f);
RATABLE and RATABLY mean in the proportion that the Subject Loan is divided
among the Banks as set forth in section 2;
RECEIVABLE means a claim of any Company for money due or to become due, whether
classified as an account, instrument, chattel paper, general intangible,
incorporeal hereditament or otherwise, and any proceeds of the foregoing and
any right, title and interest in the merchandise or services which gave rise
thereto, including the rights of reclamation and stoppage in transit and all
rights of an unpaid seller thereof;
RELATED WRITING means any note, mortgage, security agreement, other lien
instrument, financial statement, audit report, notice, legal opinion, Credit
Request, officer's certificate or other writing of any kind which is delivered
to Banks and NCB-Agent or any thereof and which is relevant in any manner to
this Agreement or any other Related Writing and includes, without limitation,
the Revolving Notes and the other writings referred to in sections 3A and 4A;
REPORTABLE EVENT has the meaning ascribed thereto by ERISA other than any event
as to which the requirement of notifying PBGC has been waived by regulation;
REPRICING EVENT means an acquisition or divestiture by any Company, a breach of
any covenant or agreement contained in this Agreement or any Related Writing, a
stock repurchase or public or private stock or debt offering by any Company;
REVOLVING COMMITMENT means the commitment of a Bank to extend credit to
Borrower pursuant to sections 2A and 2B of this Agreement and upon the terms,
subject to the conditions and in accordance with the other provisions of this
Agreement;
REVOLVING LOAN means a loan obtained by Borrower pursuant to subsections 2A and
2B of this Agreement and evidenced by a Revolving Note;
REVOLVING NOTE means a note executed and delivered by Borrower and being in the
form and substance of EXHIBIT B with the blanks appropriately filled;
SARDAS OPTIONS means (i) the options to purchase shares of stock of Borrower
which Jacques R. Sardas has pursuant to an Amended Employment Agreement dated
January 13, 1992 between Borrower and Mr. Sardas (without giving effect to any
amendments or supplements thereto or other modifications thereof, after the
date of this Agreement) as well as a certain Non-Statutory Stock Option
Agreement between such parties dated as of September 1, 1992
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(without giving effect to any amendments or supplements thereto or other
modifications thereof, after the date of this Agreement) and any other
agreement providing for the employ of Mr. Sardas beyond the term of his
existing employment agreement or any other agreement and which options with
respect to which he has a right to cause Borrower to make payment to him in
cancellation of such options in certain circumstances described in such
agreements and (ii) any shares of stock of Borrower issued from time to time to
Mr. Sardas upon the exercise of such options;
SERIES means a borrowing obtained by Borrower from the Banks pursuant to this
Agreement and divided Ratably among the Banks and includes, without limitation,
a borrowing the proceeds of which represent new money to Borrower and a
borrowing the proceeds of which are applied to other Subject Loans at the
stated Maturity thereof;
SUBJECT INDEBTEDNESS means, collectively, the principal of and interest on the
Revolving Loans, the principal of and interest on any term loans relating to
Borrower's exercise of its Term Out Option and all fees and other liabilities,
if any, incurred by Borrower to Banks and NCB-Agent or any thereof pursuant to
this Agreement or any Related Writing;
SUBJECT LC means a standby letter of credit as defined in Section 2C;
SUBJECT LOAN means any loan obtained by Borrower pursuant to this Agreement;
SUBORDINATED, as applied to any liability of Borrower, means a liability which
at the time in question is subordinated (by written instrument in form and
substance satisfactory to Banks) first in favor of the prior payment in full of
the Subject Indebtedness and then, subject to the prior payment in full of the
Subject Indebtedness, in favor of the prior payment in full of all of
Borrower's other Debt, if any, to the Banks and NCB-Agent or any thereof;
SUBSIDIARY means a corporation or other business entity if shares constituting
a majority of its outstanding capital stock (or other form of ownership) or
constituting a majority of the voting power in any election of directors (or
shares constituting both majorities) are (or upon the exercise of any
outstanding warrants, options or other rights would be) owned directly or
indirectly at the time in question by the corporation in question or another
"Subsidiary" of that corporation or any combination of the foregoing;
SUPPLEMENTAL SCHEDULE means the schedule incorporated into this Agreement as
Exhibit A;
TANGIBLE NET WORTH means the excess (as determined in accordance with GAAP) of
the net book value (after deducting all applicable valuation reserves and
without any consideration to any re-appraisal or write-up of assets except
those reflected on the Most Recent 4A.04 Financial Statements) of the
Companies' consolidated tangible assets (i.e., all assets other than
intangibles such as patents, costs of businesses over net assets acquired, good
will and treasury shares) over the Companies' consolidated Total Liabilities;
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TERM OUT OPTION shall have the meaning ascribed to that term in subsection
2A.08;
TERM MATURITY DATE shall have the meaning ascribed to that term in
subsection 2A.08(b);
TOTAL LIABILITIES means the aggregate (without duplication) of all
liabilities of the Companies in question and includes, without
limitation, (a) any indebtedness which is secured by any mortgage,
security interest or other lien on any of its property even if the full
faith and credit of it is not pledged to the payment thereof, (b) any
indebtedness for borrowed money or Funded Indebtedness if a Company is a
Guarantor thereof and (c) any Subordinated indebtedness; PROVIDED, that
there shall be excluded any liability under a reimbursement agreement
relating to a letter of credit issued to finance the importation or
exportation of goods;
the foregoing definitions shall be applicable to the respective plurals
of the foregoing defined terms.
10. EXECUTION - This Agreement may be executed in one or more counterparts,
each counterpart to be executed by Borrower, by NCB-Agent and by one or more or
all of the Banks. Each such executed counterpart shall be deemed to be an
executed original for all purposes but all such counterparts taken together
shall constitute but one agreement, which agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
Address: SUDBURY, INC.
30100 Chagrin Blvd., Suite #203
Cleveland, Ohio 44124
Telecopy: 216/464-4429 By:/s/ Mark E. Brody
-------------------------
Printed Name: Mark E. Brody
Title: Vice President and
Chief Financial Officer
Address: NATIONAL CITY BANK
1900 East Ninth Street
Attn: Metro/Ohio Division
Cleveland, Ohio 44114-3484 By:/s/ James R. Myers
Telecopy: 216/575-9396 -------------------------
Printed Name: James R. Myers
Title: Vice President
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Address: NATIONAL CITY BANK, as Agent
1900 East Ninth Street
Attn: Metro/Ohio Division
Cleveland, Ohio 44114-3484 By: /s/ James R. Myers
Telecopy: 216/575-9396 ----------------------------
Printed Name: James R. Myers
Title: Vice President
Address: STAR BANK, National Association
1350 Euclid Avenue, Suite 220
Mail Location 4432
Cleveland, Ohio 44115 By: /s/ John D. Barrett
Telecopy: 216/623-9289 ----------------------------
Printed Name: John D. Barrett
Title: Vice President
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