Exhibit 4.5
[EXECUTION COPY]
CREDIT AGREEMENT,
dated as of June 30, 1997,
among
LEINER HEALTH PRODUCTS GROUP INC.,
as the U.S. Borrower (prior to the Assumption),
VITA HEALTH COMPANY (1985) LTD.,
as the Canadian Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the U.S. Lenders
and the Canadian Lenders,
THE BANK OF NOVA SCOTIA,
as the U.S. Agent
for the U.S. Lenders,
THE BANK OF NOVA SCOTIA,
as the Canadian Agent
for the Canadian Lenders,
MERRILL LYNCH CAPITAL CORPORATION,
as Documentation Agent,
and
SALOMON BROTHERS HOLDING COMPANY INC,
as Syndication Agent.
TABLE OF CONTENTS
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SECTION PAGE
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms 5
1.2. Use of Defined Terms 57
1.3. Cross-References 57
1.4. Accounting and Financial Determinations 57
ARTICLE II
U.S. COMMITMENTS AND BORROWING
2.1. U.S. Commitments 58
2.1.1. U.S. Revolving Loan Commitment and U.S. Swing Line
Loan Commitment 58
2.1.2. U.S. Letter of Credit Commitment 59
2.1.3. Term Loan Commitment 59
2.1.4. U.S. Lenders Not Permitted or Required to Make Loans 60
2.1.5. U.S. Issuer Not Permitted or Required to Issue U.S.
Letters of Credit 61
2.2. Reduction of the U.S. Commitment Amounts; Reallocation 61
2.2.1. Optional 61
2.2.2. Mandatory 61
2.2.3. Reallocation 62
2.3. Borrowing Procedures 63
2.3.1. Borrowings of other than U.S. Swing Line Loans 63
2.3.2. U.S. Swing Line Loans 63
2.4. Continuation and Conversion Elections 65
2.5. Funding 65
2.6. U.S. Register; U.S. Notes 65
ARTICLE III
CANADIAN COMMITMENTS, BORROWING AND CANADIAN BAS
3.1. Canadian Commitments 67
3.1.1. Canadian Revolving Loan Commitment and Canadian Swing
Line Loan Commitment 67
3.1.2. Canadian Letter of Credit Commitment 68
3.1.3. Canadian Lenders Not Permitted or Required to Make Loans 68
3.1.4. Canadian Issuer Not Permitted or Required to Issue
Canadian Letters of Credit 69
3.2. Reduction of the Canadian Commitment Amounts;
Reallocation 69
3.2.1. Optional 69
3.2.2. Reallocation 69
3.3. Borrowing Procedures 70
3.3.1. Borrowings of other than Canadian Swing Line Loans 70
3.3.2. Canadian Swing Line Loans 71
3.4. Continuation and Conversion Elections 72
3.4.1. Converting Canadian Prime Rate Loans to Canadian BAs 72
3.4.2. Converting Canadian BAs to Canadian Prime Rate Loans 73
3.5. Canadian BAs 73
3.5.1. Funding of Canadian BAs 73
3.5.2. Acceptance Fees 74
3.5.3. Presigned Draft Forms 74
3.5.4. Bill C-90. 74
3.6. Special Provisions Relating to Acceptance Notes 75
3.7. Canadian Register; Canadian Revolving Notes 75
ARTICLE IV
U.S. AND CANADIAN LETTER OF CREDIT SUBFACILITIES
4.1. Issuance Procedures 77
4.1.1. Other Lenders' Participation 77
4.1.2. Disbursements; Conversion to Loans 78
4.1.3. Reimbursement 79
(ii)
4.1.4. Deemed Disbursements 79
4.1.5. Nature of Reimbursement Obligations 80
ARTICLE V
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
5.1. Repayments and Prepayments; Application 81
5.1.1. Repayments and Prepayments 81
5.1.2. Application 86
5.2. Interest Provisions 87
5.2.1. Rates 87
5.2.2. Post-Maturity Rates 87
5.2.3. Payment Dates 88
5.2.4. Interest Act Provision 88
5.3. Fees 89
5.3.1. Commitment Fee 89
5.3.2. Agents' Fees 89
5.3.3. Letter of Credit Fees 89
ARTICLE VI
CERTAIN LIBO RATE, CANADIAN BA AND OTHER PROVISIONS
6.1. LIBO Rate Lending Unlawful 90
6.2. Deposits Unavailable; Circumstances Making Canadian BAs
Unavailable 90
6.3. Increased Loan Costs, etc. 91
6.4. Funding Losses 92
6.5. Increased Capital Costs 92
6.6. Taxes 93
6.7. Payments, Computations, etc. 97
6.8. Sharing of Payments 97
6.9. Setoff 98
6.10. Lender's Duty to Mitigate 98
6.11. Replacement of Lenders 99
(iii)
ARTICLE VII
CONDITIONS TO CREDIT EXTENSIONS
7.1. Initial Credit Extensions 100
7.1.1. Resolutions, etc. 100
7.1.2. Delivery of Documents 101
7.1.3. Transaction Closing Papers 101
7.1.4. Consummation of Transaction 101
7.1.5. Receipt of Capital Contribution, etc 101
7.1.6. Subordinated Debt 102
7.1.7. Delivery of Notes 102
7.1.8. Pledge Agreements 102
7.1.9. Management Services Agreement 104
7.1.10. Guaranties 104
7.1.11. Security Agreements 104
7.1.12. Trademark Security Agreement 105
7.1.13. Mortgages 105
7.1.14. Closing Date Certificates 106
7.1.15. Compliance Certificate 106
7.1.16. Solvency, etc. 106
7.1.17. Financial Information, etc. 106
7.1.18. Payment of Outstanding Indebtedness, etc. 106
7.1.19. Closing Fees, Expenses, etc. 107
7.1.20. Tax Sharing Agreement 107
7.1.21. Reliance Letters and Reports 107
7.1.22. Opinions of Counsel 107
7.2. All Credit Extensions 108
7.2.1. Compliance with Warranties, No Default, etc. 108
7.2.2. Credit Extension Request, etc. 109
7.2.3. Satisfactory Legal Form 109
(iv)
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1. Organization, etc. 109
8.2. Due Authorization, Non-Contravention, etc. 109
8.3. Government Approval, Regulation, etc. 110
8.4. Validity, etc. 111
8.5. Financial Information 111
8.6. No Material Adverse Change 111
8.7. Litigation, Labor Controversies, etc. 111
8.8. Subsidiaries 112
8.9. Ownership of Properties 112
8.10. Taxes 112
8.11. Pension and Welfare Plans 112
8.12. Environmental Warranties 113
8.13. Intellectual Property 114
8.14. Regulations G, U and X 115
8.15. Accuracy of Information 115
8.16. Senior Indebtedness, etc. 115
ARTICLE IX
COVENANTS
9.1. Affirmative Covenants 116
9.1.1. Financial Information, Reports, Notices, etc. 116
9.1.2. Compliance with Laws, etc. 119
9.1.3. Maintenance of Properties 119
9.1.4. Insurance 119
9.1.5. Books and Records 120
9.1.6. Environmental Covenant 121
9.1.7. Future Subsidiaries 121
9.1.8. Process Agent 123
9.1.9. Use of Proceeds 123
9.1.10. Rate Protection Agreements 124
(v)
9.1.11. Assumption Agreement 124
9.1.12. Appraisal 124
9.1.13. Kalamazoo, Michigan Property 124
9.2. Negative Covenants 125
9.2.1. Business Activities 125
9.2.2. Indebtedness 125
9.2.3. Liens 128
9.2.4. Financial Condition and Operations 130
9.2.5. Investments 132
9.2.6. Restricted Payments, etc. 134
9.2.7. Stock of Subsidiaries 136
9.2.8. Rental Obligations 136
9.2.9. Take or Pay Contracts 136
9.2.10. Consolidation, Merger, etc. 136
9.2.11. Permitted Dispositions. 137
9.2.12. Modification of Certain Agreements 138
9.2.13. Transactions with Affiliates 139
9.2.14. Negative Pledges, Restrictive Agreements, etc. 140
9.2.15. Sale and Leaseback 141
9.2.16. Capital Expenditures 141
ARTICLE X
EVENTS OF DEFAULT
10.1. Listing of Events of Default 143
10.1.1. Non-Payment of Obligations 143
10.1.2. Breach of Warranty 143
10.1.3. Non-Performance of Certain Covenants and
Obligations 143
10.1.4. Non-Performance of Other Covenants and
Obligations 143
10.1.5. Default on Other Indebtedness 143
10.1.6. Judgments 144
10.1.7. Pension Plans 144
10.1.8. Change in Control 144
10.1.9. Bankruptcy, Insolvency, etc. 144
10.1.10. Impairment of Security, etc. 145
(vi)
10.1.11. Subordinated Notes 145
10.1.12. Redemption 146
10.1.13. Termination of Receivables Facility 146
10.2. Action if Bankruptcy 146
10.3. Action if Other Event of Default 146
ARTICLE XI
THE AGENTS
11.1. Actions 146
11.2. Funding Reliance, etc. 147
11.3. Exculpation 147
11.4. Successor 148
11.5. Loans by the Agents 149
11.6. Credit Decisions 149
11.7. Copies, etc. 149
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Waivers, Amendments, etc. 149
12.2. Notices 151
12.3. Payment of Costs and Expenses 151
12.4. Indemnification 152
12.5. Survival 153
12.6. Severability 153
12.7. Headings 153
12.8. Execution in Counterparts, Effectiveness, etc. 153
12.9. Governing Law; Entire Agreement 154
12.10. Successors and Assigns 154
12.11. Sale and Transfer of Loans and Notes; Participations
in Loans and Notes 154
12.11.1. Assignments 154
12.11.2. Participations 157
12.12. Other Transactions 158
(vii)
12.13. Execution on Behalf of Corporation 158
12.14. Forum Selection and Consent to Jurisdiction 158
12.15. Waiver of Jury Trial 160
12.16. Acknowledgments and Representations by Lenders 160
12.17. Confidentiality 160
(viii)
SCHEDULE I - Disclosure Schedule to Credit Agreement
SCHEDULE II - Percentages; Administrative Information
EXHIBIT A-1 - Form of U.S. Revolving Note
EXHIBIT A-2 - Form of Canadian Revolving Note
EXHIBIT A-3 - Form of Term B Note
EXHIBIT A-4 - Form of Term C Note
EXHIBIT A-5 - Form of U.S. Swing Line Note
EXHIBIT A-6 - Form of Canadian Swing Line Note
EXHIBIT A-7 - Form of Acceptance Note
EXHIBIT B-1 - Form of U.S. Borrowing Request
EXHIBIT B-2 - Form of Canadian Borrowing Request
EXHIBIT B-3 - Form of U.S. Issuance Request
EXHIBIT B-4 - Form of Canadian Issuance Request
EXHIBIT C-1 - Form of U.S. Continuation/ Conversion Notice
EXHIBIT C-2 - Form of Canadian Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E-1 - Form of U.S. Borrower Pledge Agreement
EXHIBIT E-2 - Form of Canadian Borrower Pledge Agreement
EXHIBIT E-3 - Form of Parent Pledge Agreement
EXHIBIT E-4 - Form of Canadian Holdings Pledge Agreement
EXHIBIT E-5 - Form of U.S. Subsidiary Pledge Agreement
EXHIBIT E-6 - Form of Canadian Subsidiary Pledge Agreement
EXHIBIT F-1 - Form of U.S. Borrower Guaranty
EXHIBIT F-2 - Form of Parent Guaranty
EXHIBIT F-3 - Form of Canadian Holdings Guaranty
EXHIBIT F-4 - Form of U.S. Subsidiary Guaranty
EXHIBIT F-5 - Form of Canadian Subsidiary Guaranty
EXHIBIT G-1 - Form of U.S. Borrower Security Agreement
EXHIBIT G-2 - Form of Canadian Borrower Debenture
EXHIBIT G-3 - Form of Canadian Holdings Debenture
EXHIBIT G-4 - Form of U.S. Subsidiary Security Agreement
EXHIBIT G-5 - Form of Canadian Subsidiary Debenture
EXHIBIT H - Form of Mortgage
EXHIBIT I - Form of Compliance Certificate
EXHIBIT J-1 - Form of U.S. Borrower Closing Date Certificate
EXHIBIT J-2 - Form of Canadian Borrower Closing Date Certificate
EXHIBIT J-3 - Form of Parent Closing Date Certificate
EXHIBIT K - Form of Master Subordination Agreement
EXHIBIT L-1 - Form of Opinion of New York Counsel to the Obligors
EXHIBIT L-2 - Form of Opinion of Canadian Counsel to the Obligors
EXHIBIT M - Form of Confidentiality Agreement
(ix)
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 30, 1997, is among LEINER
HEALTH PRODUCTS GROUP INC., a Delaware corporation ("LHPG" or, prior to the
Assumption (as defined below), the "U.S. BORROWER"), VITA HEALTH COMPANY (1985)
LTD., a Manitoba corporation (the "CANADIAN BORROWER", and together with the
U.S. Borrower, the "BORROWERS"), the various financial institutions as are or
may become parties hereto which extend a Commitment (such term and other
capitalized terms being used herein with the meanings provided in SECTION 1.1)
under the U.S. Facility (collectively, the "U.S. LENDERS"), the various
financial institutions as are or may become parties hereto which extend a
Commitment under the Canadian Facility (collectively, the "CANADIAN LENDERS",
and together with the U.S. Lenders, the "LENDERS"), THE BANK OF NOVA SCOTIA
("SCOTIABANK"), as agent for the U.S. Lenders under the U.S. Facility (in such
capacity, the "U.S. AGENT"), Scotiabank, currently acting through its executive
offices in Toronto, Ontario, as agent for the Canadian Lenders under the
Canadian Facility (in such capacity, the "CANADIAN AGENT", and together with the
U.S. Agent, collectively, the "AGENTS"), MERRILL LYNCH CAPITAL CORPORATION, as
Documentation Agent, and SALOMON BROTHERS HOLDING COMPANY INC, as Syndication
Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Leiner and its various Subsidiaries are engaged in the
business of manufacturing and marketing, labeling, packaging and distributing at
wholesale and retail vitamins, minerals, nutritional supplements, health foods,
over-the-counter drugs and other pharmaceutical, health and beauty aid or
related items;
WHEREAS, (a) LHP Acquisition Corp., a Delaware corporation ("NEWCO"),
is controlled by North Castle Partners I, L.L.C., a Delaware limited liability
company ("NORTH CASTLE"), (b) Leiner is a direct, wholly-owned Subsidiary of PLI
Holdings Inc., a Delaware corporation ("PARENT"), (c) Parent is a direct,
wholly-owned Subsidiary of LHPG, (d) the Canadian Borrower is a direct,
wholly-owned (other than, on the Effective Date, for certain outstanding
preferred stock) Subsidiary of VH Holdings Inc., a Manitoba corporation
("CANADIAN HOLDINGS") and (e) Canadian Holdings is a direct, wholly-owned
Subsidiary of Leiner;
WHEREAS, AEA Investors Inc., a Delaware corporation ("AEA INVESTORS")
and certain of its co-investors (collectively, the "AEA GROUP") and Mr. Charles
F. Baird, Jr. ("C. BAIRD") are the holders of approximately 92% of the Existing
LHPG Common Stock, and Robert M. Kaminski, Gale Bensussen and other current and
former members of senior management and employees of LHPG and its Subsidiaries
(the "MANAGEMENT SHAREHOLDERS") collectively hold the remaining approximately 8%
of the Existing LHPG Common Stock;
WHEREAS, certain of the Management Shareholders hold stock options
(the "EXISTING OPTIONS") that, if exercised, would increase their share of
ownership of the Existing LHPG Common Stock to approximately 20%;
WHEREAS, in accordance with and subject to the terms and conditions
contained in the Stock Purchase Agreement and Agreement and Plan of Merger,
dated as of May 31, 1997 (as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with SECTION 9.2.12, the
"MERGER AGREEMENT"), by and among LHPG, North Castle and Newco, Newco will merge
(the "MERGER", with the date of consummation of the Merger being referred to as
the "MERGER DATE", and the time that the Certificate of Merger becomes effective
being referred to as the "MERGER EFFECTIVE TIME") with and into LHPG, and
immediately upon such Merger, the separate corporate existence of Newco shall
cease and LHPG shall be the surviving corporation of the Merger and shall
continue as a corporation existing under the laws of Delaware;
WHEREAS, pursuant to the Merger Agreement, among other things,
(i) upon the effectiveness of the Merger, (x) the Existing LHPG
Common Stock (other than shares as to which statutory appraisal rights
shall have been exercised) will be converted into the right to receive
cash (if any), shares of LHPG Common Stock (if any) and warrants for LHPG
Common Stock, and (y) each share of Newco common stock will be canceled
and retired without payment therefor,
(ii) concurrently with the Merger, North Castle will purchase LHPG
Common Stock for a cash amount of not less than $75,000,000, and
(iii) as a result of the Merger, (x) certain current members of
management and employees of, and consultants to, LHPG and its Subsidiaries
and C. Baird will hold or have the right to receive shares of LHPG Common
Stock that, together with the shares thereof purchased by, or contributed
to, North Castle, will have a value of $99,000,000 based upon the per
share purchase price so paid by North Castle, and (y) members of the AEA
Group and certain former members of management and employees of LHPG and
its Subsidiaries will hold shares of LHPG Common Stock that will have a
value of approximately $11,000,000 based on such per share purchase price;
WHEREAS, in consideration of, among other things, the making
available to Leiner of the U.S. revolving credit facility under this Agreement,
the contribution to Leiner by LHPG of funds to repay substantially all of
Leiner's existing Indebtedness, and the grant by Parent of the Parent Guaranty,
Leiner will, immediately following the making of the initial Credit Extensions,
assume (the "ASSUMPTION") all of LHPG's rights and obligations under this
Agreement, the other Loan Documents and the Subordinated Debt Instruments
pursuant to SECTION 9.1.11, and LHPG will (on the succeeding day following the
effectiveness of such Assumption) be fully and unconditionally released and
discharged from all liabilities and
2
obligations in respect of this Agreement, the other Loan Documents and the
Subordinated Debt Instruments;
WHEREAS, subject to the terms of this Agreement (including ARTICLE
VII), and in connection with the Transaction and in order to (i) finance in part
the Transaction (including related fees, taxes and expenses) and refinance in
part certain existing Indebtedness of Leiner and its Subsidiaries and (ii)
finance the working capital and other business needs of Leiner and its
Subsidiaries following the consummation of the Transaction, the Borrowers desire
to obtain
(a) from the U.S. Lenders, a Term B Loan Commitment and a Term C Loan
Commitment pursuant to which Borrowings of Term Loans, in a maximum
aggregate principal amount not to exceed $45,000,000 (in the case of Term
B Loans) and $40,000,000 (in the case of Term C Loans), will be made to
the U.S. Borrower in a single Borrowing to occur on the date of the
initial Credit Extensions;
(b) from the U.S. RL Lenders, a U.S. Revolving Loan Commitment (to
include availability for U.S. Revolving Loans, U.S. Swing Line Loans and
U.S. Letters of Credit) pursuant to which Borrowings of U.S. Revolving
Loans and U.S. Swing Line Loans, in a maximum aggregate principal amount
(together with all U.S. Letter of Credit Outstandings) not to exceed the
then existing U.S. Revolving Loan Commitment Amount, will be made to the
U.S. Borrower from time to time on and subsequent to the date of the
initial Credit Extensions but prior to the U.S. Revolving Loan Commitment
Termination Date;
(c) from the U.S. Issuers (and participated in by the U.S. RL
Lenders), a U.S. Letter of Credit Commitment pursuant to which the U.S.
Issuers will issue U.S. Letters of Credit for the account of the U.S.
Borrower and, subject to SECTION 2.1.2, its U.S. Subsidiaries from time
to time on and subsequent to the date of the initial Credit Extensions
but prior to the U.S. Revolving Loan Commitment Termination Date in a
maximum aggregate Stated Amount at any one time outstanding not to exceed
$35,000,000 (PROVIDED that the aggregate outstanding principal amount of
U.S. Revolving Loans, Swing Line Loans and U.S. Letter of Credit
Outstandings at any time shall not exceed the then existing U.S. Revolving
Loan Commitment Amount);
(d) from the U.S. Swing Line Lender (and participated in by the
U.S. RL Lenders), a U.S. Swing Line Loan Commitment pursuant to which
Borrowings of U.S. Swing Line Loans in an aggregate outstanding principal
amount not to exceed $15,000,000 will be made on and subsequent to the
date of the initial Credit Extensions but prior to the U.S. Revolving Loan
Commitment Termination Date (PROVIDED that the aggregate outstanding
principal amount of such U.S. Swing Line Loans, U.S. Revolving Loans and
U.S. Letter of Credit Outstandings at any time shall not exceed the then
existing U.S. Revolving Loan Commitment Amount);
3
(e) from the Canadian Lenders, a Canadian Revolving Loan Commitment
(to include availability for Canadian Revolving Loans, Canadian Swing Line
Loans and Canadian Letters of Credit) pursuant to which Borrowings of
Canadian Revolving Loans and Canadian Swing Line Loans, in a maximum
aggregate principal amount (together with all Canadian Letter of Credit
Outstandings) not to exceed the then existing Canadian Revolving Loan
Commitment Amount, will be made to the Canadian Borrower from time to time
on and subsequent to the date of the initial Credit Extensions but prior
to the Canadian Revolving Loan Commitment Termination Date;
(f) from the Canadian Issuers (and participated in by the Canadian
Lenders), a Canadian Letter of Credit Commitment pursuant to which the
Canadian Issuers will issue Canadian Letters of Credit for the account of
the Canadian Borrower and, subject to SECTION 3.1.2, the Canadian
Borrower's Subsidiaries from time to time on and subsequent to the date
of the initial Credit Extensions but prior to the Canadian Revolving Loan
Commitment Termination Date in a maximum aggregate Stated Amount at any
one time outstanding not to exceed Cdn $13,000,000 (PROVIDED that the
aggregate outstanding principal amount of Canadian Revolving Loans and
Canadian Letter of Credit Outstandings at any time shall not exceed the
then existing Canadian Revolving Loan Commitment Amount); and
(g) from the Canadian Swing Line Lender (and participated in by the
Canadian Lenders), a Canadian Swing Line Loan Commitment pursuant to which
Borrowings of Canadian Swing Line Loans in an aggregate outstanding
principal amount not to exceed Cdn $1,400,000 will be made on and
subsequent to the date of the initial Credit Extensions but prior to the
Canadian Revolving Loan Commitment Termination Date (PROVIDED that the
aggregate outstanding principal amount of such Canadian Swing Line Loans,
Canadian Revolving Loans and Canadian Letter of Credit Outstandings at any
time shall not exceed the then existing Canadian Revolving Loan Commitment
Amount);
with all the proceeds of the Credit Extensions to be used for one or more of
the purposes specified in SECTION 9.1.9; and
WHEREAS, the Lenders and the Issuers are willing, on the terms and
subject to the conditions hereinafter set forth (including ARTICLE VII), to
extend such Commitments and make such Loans to the Borrowers and issue (or
participate in) Letters of Credit for the account of the Borrowers and their
Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
4
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"ACCEPTANCE NOTE" is defined in CLAUSE (b) of SECTION 3.6.
"ACCOUNT" means any account (as that term is defined in Section 9-106
of the UCC) of the U.S. Borrower or any of its Subsidiaries arising from the
sale or lease of goods or rendering of services.
"ADJUSTED NET WORTH" means, at any time, $110,000,000, PLUS an amount
equal to cumulative Net Income from July 1, 1997 to the end of the most recently
ended Fiscal Quarter for which financial statements have been delivered pursuant
to CLAUSE (a) or CLAUSE (b) of SECTION 9.1.1 , as shown in the consolidated
financial statements of the U.S. Borrower and its Subsidiaries that have been so
delivered; PROVIDED, that there shall be excluded from the determination of
Adjusted Net Worth
(a) the cumulative adjustments due to foreign currency translation
required by FASB 52 arising after the date of the initial Credit
Extensions; and
(b) the amount deducted, in determining Net Income, of all Specified
Adjustments (on an after-tax basis), to the extent incurred.
"AEA" means AEA Investors, and its current or future employees,
shareholders, directors and officers and (i) trusts for the benefit of such
Persons or the spouses, issue, parents or other relatives of such Persons, (ii)
entities controlling or controlled by such Persons and (iii) in the event of the
death of any such individual Person, heirs or testamentary legatees of such
Person.
"AEA GROUP" is defined in the THIRD RECITAL.
"AEA INVESTORS" is defined in the THIRD RECITAL.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). With respect to any Lender or Issuer, a Person shall
be deemed to be "controlled by" another Person if such other Person possesses,
directly or indirectly, power to vote 51% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or
managing
5
general partners or to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise. With respect to all
other Persons, a Person shall be deemed to be "controlled by" another Person
if such other Person possesses, directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"AGENT" and "AGENTS" are defined in the PREAMBLE.
"AGREEMENT" means, on any date, this Credit Agreement as originally
in effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"AGGREGATE LIMIT" is defined in SECTION 9.2.6.
"APPLICABLE CANADIAN BA STAMPING FEE" means at all times during the
applicable periods set forth below with respect to Canadian BAs, the applicable
percentage set forth below under the column entitled "Applicable Canadian BA
Stamping Fee":
APPLICABLE CANADIAN
LEVERAGE RATIO BA STAMPING FEE
-------------- -------------------
Less than 3.0:1 0.750%
Greater than or equal
to 3.0:1 and less than 3.5:1 0.875%
Greater than or equal
to 3.5:1 and less than 4.0:1 1.125%
Greater than or equal to 4.0:1 and less than 4.5:1 1.500%
Greater than or equal to 4.5:1 and less than 5.0:1 2.000%
Greater than or equal to 5.0:1 and less than 5.75:1 2.250%
Greater than or equal to 5.75:1 2.500%.
The Leverage Ratio used to compute the Applicable Canadian BA
Stamping Fee shall be the Leverage Ratio set forth in the Compliance Certificate
most recently delivered by the U.S. Borrower to the U.S. Agent pursuant to
CLAUSE (c) of SECTION 9.1.1 (PROVIDED, HOWEVER, for purposes of determining the
Applicable Canadian BA Stamping Fee for the period from the
6
Effective Date through (and including) the date on which the U.S. Agent
receives the Compliance Certificate in respect of the Fiscal Quarter ended
September 30, 1997 delivered pursuant to CLAUSE (c) of SECTION 9.1.1, such
Leverage Ratio shall be the Leverage Ratio set forth in the Compliance
Certificate delivered by the U.S. Borrower pursuant to SECTION 7.1.15);
changes in the Applicable Canadian BA Stamping Fee resulting from a change in
the Leverage Ratio shall become effective upon delivery by the U.S. Borrower
to the U.S. Agent of a new Compliance Certificate pursuant to CLAUSE (c) of
SECTION 9.1.1 and notice therein of such change. If the U.S. Borrower shall
fail to deliver a Compliance Certificate within 45 days after the end of any
Fiscal Quarter (or within 90 days, in the case of the last Fiscal Quarter of
the Fiscal Year) as required pursuant to CLAUSE (c) of SECTION 9.1.1, the
Applicable Canadian BA Stamping Fee from and including the 46th (or 91st, as
the case may be) day after the end of such Fiscal Quarter to but not
including the date the U.S. Borrower delivers to the U.S. Agent a Compliance
Certificate shall conclusively equal the next higher Applicable Canadian BA
Stamping Fee from the Applicable Canadian BA Stamping Fee (or if there is
none higher, such Applicable Canadian BA Stamping Fee) that was in effect
when the last Compliance Certificate was so delivered by the U.S. Borrower to
the U.S. Agent.
"APPLICABLE COMMITMENT FEE MARGIN" means at all times during the
applicable periods set forth below with respect to the commitment fee payable to
the U.S. RL Lenders or the Canadian Lenders, as the case may be, pursuant to
SECTION 5.3.1, the applicable percentage set forth below under the column
entitled "Applicable Commitment Fee Margin":
APPLICABLE COMMITMENT
LEVERAGE RATIO FEE MARGIN
-------------- ---------------------
Less than 3.5:1 0.250%
Greater than or equal to 3.5:1 and less
than 4.5:1 0.375%
Greater than or equal to 4.5:1 0.500%.
The Leverage Ratio used to compute the Applicable Commitment Fee
Margin shall be the Leverage Ratio set forth in the Compliance Certificate most
recently delivered by the U.S. Borrower to the U.S. Agent pursuant to CLAUSE (C)
of SECTION 9.1.1 (PROVIDED, HOWEVER, for purposes of determining the Applicable
Commitment Fee Margin for the period from the Effective Date through (and
including) the date on which the U.S. Agent receives the Compliance Certificate
in respect of the Fiscal Quarter ended September 30, 1997 delivered pursuant to
CLAUSE (c) of SECTION 9.1.1, such Leverage Ratio shall be the Leverage Ratio set
forth in the Compliance Certificate delivered by the U.S. Borrower pursuant to
SECTION 7.1.15); changes in the Applicable Commitment Fee Margin resulting from
a change in the Leverage Ratio shall become effective upon delivery by the U.S.
Borrower to the U.S. Agent of a new Compliance Certificate pursuant to CLAUSE
(c) of SECTION 9.1.1 and notice therein of such change. If the U.S. Borrower
shall fail to deliver a Compliance Certificate within 45 days after the end of
any Fiscal Quarter (or within 90 days, in the case of the last Fiscal
7
Quarter of the Fiscal Year) as required pursuant to CLAUSE (c) of SECTION
9.1.1, the Applicable Commitment Fee Margin from and including the 46th (or
91st, as the case may be) day after the end of such Fiscal Quarter to but not
including the date the U.S. Borrower delivers to the U.S. Agent a Compliance
Certificate shall conclusively equal the next higher Applicable Commitment
Fee Margin from the Applicable Commitment Fee Margin (or if there is none
higher, such Applicable Commitment Fee Margin) that was in effect when the
last Compliance Certificate was so delivered by U.S. Borrower to the U.S.
Agent.
"APPLICABLE MARGIN" means at all times during the applicable
periods set forth below,
(a) with respect to the unpaid principal amount of each (i) Revolving
Loan maintained as a U.S. Base Rate Loan or a Canadian Prime Rate Loan,
the applicable percentage set forth below under the column entitled
"Applicable Margin for U.S. Base Rate Loans and Canadian Prime Rate Loans"
and (ii) U.S. Revolving Loan maintained as a LIBO Rate Loan, the
applicable percentage set forth below under the column entitled
"Applicable Margin for LIBO Rate Loans":
APPLICABLE
MARGIN FOR
U.S. BASE RATE APPLICABLE
LOANS AND MARGIN FOR
CANADIAN PRIME LIBO
LEVERAGE RATIO RATE LOANS RATE LOANS
-------------- --------------- ----------
Less than 3.0:1 0.000% 0.750%
Greater than or equal to 3.0:1
and less than 3.5:1 0.000% 0.875%
Greater than or equal to 3.5:1
and less than 4.0:1 0.125% 1.125%
Greater than or equal to 4.0:1
and less than 4.5:1 0.500% 1.500%
Greater than or equal to 4.5:1
and less than 5.0:1 1.000% 2.000%
Greater than or equal to 5.0:1
and less than 5.75:1 1.250% 2.250%
Greater than or equal to 5.75:1 1.500% 2.500%.
(b) with respect to the unpaid principal amount of each Term B Loan
maintained as a (i) U.S. Base Rate Loan, the applicable percentage set
forth below under the column entitled "Applicable Margin for U.S. Base
Rate Loans" and (ii) LIBO Rate Loan, the
8
applicable percentage set forth below under the column entitled
"Applicable Margin for LIBO Rate Loans":
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
U.S. BASE LIBO
LEVERAGE RATIO RATE LOANS RATE LOANS
-------------- ---------- ----------
Less than 5.0:1 1.375% 2.375%
Greater than or equal to 5.0:1
and less than 5.75:1 1.625% 2.625%
Greater than or equal to 5.75:1 1.875% 2.875%.
(c) with respect to the unpaid principal amount of each Term C Loan
maintained as a (i) U.S. Base Rate Loan, the applicable percentage set
forth below under the column entitled "Applicable Margin for U.S. Base
Rate Loans" and (ii) LIBO Rate Loan, the applicable percentage set forth
below under the column entitled "Applicable Margin for LIBO Rate Loans":
APPLICABLE APPLICABLE
MARGIN FOR MARGIN FOR
U.S. BASE LIBO
LEVERAGE RATIO RATE LOANS RATE LOANS
-------------- ---------- ----------
Less than 5.0:1 1.500% 2.500%
Greater than or equal to 5.0:1
and less than 5.75:1 1.750% 2.750%
Greater than or equal to 5.75:1 2.000% 3.000%.
The Leverage Ratio used to compute the Applicable Margin shall be
the Leverage Ratio set forth in the Compliance Certificate most recently
delivered by the U.S. Borrower to the U.S. Agent pursuant to CLAUSE (c) of
SECTION 9.1.1 (PROVIDED, HOWEVER, for purposes of determining the Applicable
Margin for the period from the Effective Date through (and including) the
date on which the U.S. Agent receives the Compliance Certificate in respect
of the Fiscal Quarter ended September 30, 1997 delivered pursuant to CLAUSE
(c) of SECTION 9.1.1, such Leverage Ratio shall be the Leverage Ratio set
forth in the Compliance Certificate delivered by the U.S. Borrower pursuant
to SECTION 7.1.15); changes in the Applicable Margin resulting from a change
in the Leverage Ratio shall become effective upon delivery by the U.S.
Borrower to the U.S. Agent of a new Compliance Certificate pursuant to CLAUSE
(c) of SECTION 9.1.1 and notice therein of such change. If the U.S. Borrower
shall fail to deliver a Compliance Certificate within 45 days after the end
of any Fiscal Quarter (or within 90 days, in the case of the last Fiscal
Quarter of the Fiscal Year) as required pursuant to CLAUSE (c) of
9
SECTION 9.1.1, the Applicable Margin from and including the 46th (or 91st, as
the case may be) day after the end of such Fiscal Quarter to but not
including the date the U.S. Borrower delivers to the U.S. Agent a Compliance
Certificate shall conclusively equal the next higher Applicable Margin from
the Applicable Margin (or if there is none higher, such Applicable Margin)
that was in effect when the last Compliance Certificate was so delivered by
the U.S. Borrower to the U.S. Agent.
"ASSIGNEE LENDER" is defined in SECTION 12.11.1.
"ASSUMPTION" is defined in the SEVENTH RECITAL.
"ASSUMPTION AGREEMENT" means an assumption agreement in form and
substance satisfactory to the U.S. Agent to be executed and delivered by LHPG
and Leiner, pursuant to which Leiner shall assume all obligations of LHPG
under the Loan Documents and in respect of all Subordinated Debt.
"AUTHORIZED OFFICER" means, relative to any Borrower and any other
Obligor, those of its officers or managing members (in the case of a limited
liability company) whose signatures and incumbency shall have been certified
to the Agents and the Lenders pursuant to SECTION 7.1.1.
"BORROWERS" is defined in the PREAMBLE.
"BORROWING" means the Loans of the same type and, in the case of
LIBO Rate Loans or Canadian BAs, having the same Interest Period made by all
U.S. Lenders or Canadian Lenders, respectively, on the same Business Day and
pursuant to the same Borrowing Request in accordance with SECTION 2.3 or
SECTION 3.3, respectively.
"BORROWING REQUEST" means a U.S. Borrowing Request or a Canadian
Borrowing Request.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor
(i) relative to matters under the U.S. Facility, a legal
holiday on which banks are authorized or required to be closed in New York,
New York, or
(ii) relative to matters under the Canadian Facility, a legal
holiday on which banks are authorized or required to be closed in Toronto,
Ontario; and
(b) relative to the making, continuing, prepaying or repaying of
any LIBO Rate Loans, any day which is a Business Day described in
CLAUSE (a) above and which is also a
10
day on which dealings in U.S. Dollars are carried on in the interbank
eurodollar market of the U.S. Agent's LIBOR Office.
"C. BAIRD" is defined in the THIRD RECITAL.
"CALCULATION PERIOD" is defined in CLAUSE (a) of SECTION 5.2.4.
"CANADIAN AGENT" is defined in the PREAMBLE.
"CANADIAN BA" means a bill of exchange drawn by the Canadian Borrower
and accepted by a Canadian Lender that is denominated in Canadian Dollars with a
term of 30, 60, 90 or 180 days, issued and payable only in Canada and having a
face amount of an integral multiple of Cdn $100,000; PROVIDED, HOWEVER, that,
(a) to the extent the context shall require, each Acceptance Note
shall be deemed to be a Canadian BA; and
(b) references to outstanding principal amounts relating to
Canadian BAs shall refer to the stated amount of unmatured Canadian BAs
which have not been collateralized pursuant to, and in accordance with,
the terms of CLAUSE (g) or (h) of SECTION 5.1.1.
"CANADIAN BA RATE" means, for a particular term, the discount rate
per annum, calculated on the basis of a year of 365 days or 366 days, as the
case may be, equal to the average rate per annum for Canadian Dollar bankers'
acceptances having such term that appears on the Reuters Screen CDOR Page (or
any successor page) as of 10:00 a.m. (local time) on the first day of such
term as determined by the Canadian Agent.
"CANADIAN BORROWER" is defined in the PREAMBLE; PROVIDED, HOWEVER,
that if the Canadian Borrower is merged or amalgamated with or liquidated
into Canadian Holdings in accordance with SECTION 9.2.10, then the "Canadian
Borrower" shall mean the surviving or resulting corporation of such merger,
amalgamation or liquidation.
"CANADIAN BORROWER CLOSING DATE CERTIFICATE" means the closing
date certificate executed and delivered by the Canadian Borrower pursuant to
SECTION 7.1.14, substantially in the form of EXHIBIT J-2 hereto.
"CANADIAN BORROWER DEBENTURE" means the Security Agreement
executed and delivered by the Canadian Borrower pursuant to SECTION 7.1.11,
substantially in the form of EXHIBIT G-2, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"CANADIAN BORROWER PLEDGE AGREEMENT" means the Pledge Agreement
executed and delivered by the Canadian Borrower pursuant to SECTION 7.1.8,
substantially in the form of
11
EXHIBIT E-2 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"CANADIAN BORROWING REQUEST" means a Loan request and certificate
duly executed by an Authorized Officer of the Canadian Borrower,
substantially in the form of EXHIBIT B-2 hereto.
"CANADIAN COMMITMENT" is defined in SECTION 3.1.
"CANADIAN CONTINUATION/CONVERSION NOTICE" means a notice of
continuation or conversion and certificate duly executed by an Authorized
Officer of the Canadian Borrower, substantially in the form of EXHIBIT C-2
hereto.
"CANADIAN CREDIT EXTENSION" means, as the context may require,
(a) the making of a Canadian Revolving Loan (including the
acceptance of a Canadian BA) by a Canadian Lender;
(b) the making of a Canadian Swing Line Loan by the Canadian
Swing Line Lender; or
(c) the issuance of a Canadian Letter of Credit, or the extension
of any Stated Expiry Date of any previously issued Canadian Letter of
Credit, by a Canadian Issuer.
"CANADIAN DOLLAR" and "CDN $" each mean the lawful money of Canada.
"CANADIAN FACILITY" is defined in SECTION 3.1.
"CANADIAN FACILITY GUARANTOR" means each of Parent, the U.S.
Borrower, any U.S. Subsidiary Guarantor, Canadian Holdings, each Canadian
Subsidiary Guarantor and, to the extent not prohibited by applicable law
(including the law of the jurisdiction under which such Subsidiary is
organized), each other Subsidiary of the U.S. Borrower, in each case in its
capacity as a Guarantor.
"CANADIAN HOLDINGS" is defined in the SECOND RECITAL.
"CANADIAN HOLDINGS DEBENTURE" means the Security Agreement
executed and delivered by Canadian Holdings in its capacity as a Canadian
Facility Guarantor pursuant to SECTION 7.1.11, substantially in the form of
EXHIBIT G-3, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"CANADIAN HOLDINGS GUARANTY" means the Guaranty executed and
delivered by Canadian Holdings in its capacity as a Canadian Facility
Guarantor pursuant to SECTION 7.1.10,
12
substantially in the form of EXHIBIT F-3 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"CANADIAN HOLDINGS PLEDGE AGREEMENT" means the Pledge Agreement
executed and delivered by Canadian Holdings in its capacity as a Canadian
Facility Guarantor pursuant to SECTION 7.1.8, substantially in the form of
EXHIBIT E-4 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"CANADIAN ISSUANCE REQUEST" means a Letter of Credit request and
certificate duly executed by an Authorized Officer of the Canadian Borrower,
substantially in the form of EXHIBIT B-4 hereto.
"CANADIAN ISSUER" means, collectively, Scotiabank (or any
affiliate, unit or agency thereof) in its individual capacity hereunder as
issuer of any Canadian Letters of Credit and such other Canadian Lender as
may be designated by Scotiabank (and agreed to by the Canadian Borrower and
such Canadian Lender) in its individual capacity as the issuer of any
Canadian Letters of Credit.
"CANADIAN LENDERS" is defined in the PREAMBLE.
"CANADIAN LETTER OF CREDIT" is defined in CLAUSE (a) of SECTION
3.1.2.
"CANADIAN LETTER OF CREDIT COMMITMENT" means,
(a) relative to a Canadian Issuer, such Canadian Issuer's
obligation to issue Canadian Letters of Credit pursuant to SECTION 3.1.2;
and
(b) relative to each Canadian Lender, its obligation to
participate in such Canadian Letters of Credit pursuant to SECTION 4.1.1.
"CANADIAN LETTER OF CREDIT COMMITMENT AMOUNT" means, on any date,
a maximum amount of Cdn $13,000,000, as such amount may be reduced from time
to time pursuant to SECTION 3.2.
"CANADIAN LETTER OF CREDIT OUTSTANDINGS" means, on any date, an
amount equal to the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding Canadian Letters of Credit,
PLUS
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations in respect of such Canadian Letters of Credit.
13
"CANADIAN LOAN" means, as the context may require, a Canadian
Revolving Loan or a Canadian Swing Line Loan.
"CANADIAN NOTE" means, as the context may require, a Canadian
Revolving Note or a Canadian Swing Line Note.
"CANADIAN PENSION PLAN" means a "registered pension plan", as such
term is defined in subsection 248(1) of the Income Tax Act (Canada), which is
subject to the Pension Benefits Act (Manitoba), or similar legislation in
another Province, and of which Canadian Holdings, the Canadian Borrower or
any Canadian Subsidiary is a participating employer.
"CANADIAN PERCENTAGE" means, relative to any Canadian Lender, the
applicable percentage relating to Canadian Revolving Loans as set forth
opposite its name on SCHEDULE II hereto or set forth in a Lender Assignment
Agreement, as such percentage may be adjusted from time to time (a) pursuant
to Lender Assignment Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to SECTION 12.11.1 or (b) by a reallocation
pursuant to SECTION 3.2.2.
"CANADIAN PERSON" means a Person that is not a "non-resident" of
Canada within the meaning of the Income Tax Act (Canada).
"CANADIAN PRIME RATE" means, on any date and relative to all
Canadian Prime Rate Loans, a fluctuating rate of interest per annum equal to
the higher of
(a) the rate of interest most recently established by the
Canadian Agent at its Domestic Office as its prime rate for Canadian Dollar
loans in Canada; and
(b) the Canadian BA Rate most recently determined by the Canadian
Agent PLUS the lesser of (i) 1% and (ii) the Applicable Canadian BA Stamping
Fee.
The Canadian Prime Rate is not necessarily intended to be the lowest rate of
interest determined by the Canadian Agent in connection with extensions of
credit. Changes in the rate of interest on that portion of any Canadian
Revolving Loans maintained as Canadian Prime Rate Loans will take effect
simultaneously with each change in the Canadian Prime Rate. The Canadian
Agent will give notice promptly to the Canadian Borrower and the Canadian
Lenders of changes in the Canadian Prime Rate.
"CANADIAN PRIME RATE LOAN" means a Canadian Revolving Loan bearing
interest at a fluctuating rate determined by reference to the Canadian Prime
Rate.
"CANADIAN REGISTER" is defined in SECTION 3.7.
"CANADIAN REVOLVING LOAN" is defined in SECTION 3.1.1.
14
"CANADIAN REVOLVING LOAN COMMITMENT" means, relative to any
Canadian Lender, such Canadian Lender's obligation (if any) to make Canadian
Revolving Loans pursuant to SECTION 3.1.1.
"CANADIAN REVOLVING LOAN COMMITMENT AMOUNT" means, on any date,
the Cdn $ Equivalent of $20,000,000, as such amount may be reduced or
reallocated from time to time pursuant to SECTION 3.2, and as determined by
the Canadian Agent in accordance with its customary banking practice for
determining currency exchange rates on each Quarterly Payment Date for such
date through (but excluding) the next Quarterly Payment Date.
"CANADIAN REVOLVING LOAN COMMITMENT TERMINATION DATE" means the
earliest of
(a) September 1, 1997 (if the initial Credit Extensions have not
occurred on or prior to such date);
(b) June 30, 2003;
(c) the date on which the Canadian Revolving Loan Commitment
Amount is terminated in full or reduced to zero pursuant to SECTION 3.2
(other than SECTION 3.2.2); and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in the preceding CLAUSE (c) or
(d), the Canadian Revolving Loan Commitments shall terminate automatically
and without any further action.
"CANADIAN REVOLVING NOTE" means a promissory note of the Canadian
Borrower payable to any Canadian Lender, substantially in the form of EXHIBIT
A-2 hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate Indebtedness of the
Canadian Borrower to such Canadian Lender resulting from outstanding Canadian
Revolving Loans, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"CANADIAN SUBSIDIARY" means each Subsidiary of the Canadian
Borrower.
"CANADIAN SUBSIDIARY DEBENTURE" means any Security Agreement
executed and delivered by a Canadian Subsidiary in its capacity as a Canadian
Subsidiary Guarantor pursuant to the terms of this Agreement (including
CLAUSE (a) of SECTION 9.1.7), substantially in the form of EXHIBIT G-5
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.
"CANADIAN SUBSIDIARY GUARANTOR" means each Canadian Subsidiary
which has executed and delivered a Canadian Subsidiary Guaranty.
15
"CANADIAN SUBSIDIARY GUARANTY" means a Subsidiary Guaranty
executed and delivered by a Canadian Subsidiary in its capacity as a Canadian
Subsidiary Guarantor pursuant to the terms of this Agreement (including
CLAUSE (a) of SECTION 9.1.7), substantially in the form of EXHIBIT F-5
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.
"CANADIAN SUBSIDIARY PLEDGE AGREEMENT" means any Pledge Agreement
executed and delivered by a Canadian Subsidiary in its capacity as a Canadian
Subsidiary Guarantor pursuant to the terms of this Agreement (including
CLAUSE (a) of SECTION 9.1.7), substantially the form of EXHIBIT E-6 hereto,
as amended, supplemented, amended and restated or otherwise modified from
time to time.
"CANADIAN SWING LINE LENDER" means, on the Effective Date,
Scotiabank (or, at any time thereafter, another Canadian Lender designated by
Scotiabank with the consent of the Canadian Borrower, if such Canadian Lender
agrees to be the Canadian Swing Line Lender hereunder), in such Person's
capacity as the maker of Canadian Swing Line Loans.
"CANADIAN SWING LINE LOAN" is defined in CLAUSE (b) of SECTION
3.1.1.
"CANADIAN SWING LINE LOAN COMMITMENT" is defined in CLAUSE (b) of
SECTION 3.1.1.
"CANADIAN SWING LINE LOAN COMMITMENT AMOUNT" means, on any date,
Cdn $1,400,000, as such amount may be reduced from time to time pursuant to
SECTION 3.2.
"CANADIAN SWING LINE NOTE" means a promissory note of the Canadian
Borrower payable to the Canadian Swing Line Lender, in the form of EXHIBIT
A-6 hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate Indebtedness of the
Canadian Borrower to the Canadian Swing Line Lender resulting from
outstanding Canadian Swing Line Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"CANADIAN TRANSACTION" means the acquisition in January, 1997 of
all of the issued and outstanding shares of capital stock of G.S. Investments
Ltd. by the Canadian Borrower (as the successor to, among others, VH
Acquisition Inc., resulting from a series of short form amalgamations (in
January, 1997) involving the Canadian Borrower, Seier Holdings Ltd., G.S.
Investments Ltd. and VH Acquisition Inc.).
"CAPITAL EXPENDITURES" means, for any period, the aggregate amount
of all expenditures of the U.S. Borrower and its Subsidiaries for fixed or
capital assets made during such period which, in accordance with GAAP, would
be classified as capital expenditures (excluding (i) with respect to all
leasing or similar arrangements entered into during such period which, in
accordance with GAAP, would be classified as a capitalized lease, the
aggregate capitalized amount of all rental payments payable during the term
of such lease (including the portion of such payments allocable to interest
expense) and (ii) expenditures
16
made in connection with the replacement or restoration of assets, to the
extent (A) of the sales price received for the assets being restored or
replaced at the time of such expenditure or the credit granted by the seller
of such assets for the assets being traded in at such time or (B) such
replacement or restoration is financed with (x) insurance proceeds paid on
account of the loss of or damage to the assets so replaced or restored or (y)
awards of compensation arising from the taking by condemnation or eminent
domain of the assets so replaced) and, for purposes of the definition of
"Excess Cash Flow" and SECTION 9.2.16 only (and not for purposes of the
calculation of any covenants contained in SECTION 9.2.4) shall also include
the aggregate amount of investments in intangible assets which, in accordance
with GAAP, would be included on the balance sheet of the U.S. Borrower and
its Subsidiaries, including deferred start-up costs and computer software.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of
the Borrowers or any of their Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as a
capitalized lease, and, for purposes of this Agreement and each other Loan
Document, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a premium or a penalty.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital, whether now
outstanding or issued after the Effective Date.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the government of the United
States (or any agency or instrumentality thereof) or the government of
Canada or, if such evidence is rated at least R1(mid) by Dominion Bond
Rating Service Limited or CBRS Inc., by the government of any Province of
Canada;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia or under the laws of Canada or of any Province
of Canada and rated A-l by S&P, P-1 by Moody's, or R1(mid) by
Dominion Bond Rating Service Limited or CBRS Inc., or
(ii) any Lender (or its holding company);
17
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued or accepted by either
(i) a commercial banking institution that (x) is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $250,000,000 (or the Cdn $
Equivalent thereof), (y) is listed on Schedule I of the Bank Act
(Canada) or (z) had a credit rating of Aa or better from Moody's or a
comparable rating from S&P, or
(ii) any Lender; or
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in CLAUSE (c)(i))
which
(i) is secured by a fully perfected security interest in any
obligation of the type described in CLAUSE (a); and
(ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of
such Lender (or other commercial banking institution) thereunder.
"CASH FLOW COVERAGE RATIO" means, at the close of any Fiscal Quarter,
the ratio computed (except as set forth in CLAUSES (c), (d), (e) and (f)) for
the period consisting of such Fiscal Quarter and each of the three immediately
prior Fiscal Quarters of:
(a) EBITDA (for all such Fiscal Quarters) minus Capital
Expenditures made during such Fiscal Quarters
TO
(b) the sum (for all such Fiscal Quarters) of
(i) Interest Expense paid in cash;
PLUS
(ii) scheduled principal repayments of Debt (including scheduled
principal repayments of the Term Loans pursuant to the provisions of
CLAUSES (d) and (e) of SECTION 5.1.1, but excluding the amount of
Debt which is refinanced with other Debt pursuant to SECTION 9.2.2,
to the extent so refinanced (including the principal repayments of
Subordinated Debt to the extent made with the proceeds of other
Subordinated Debt issued to refinance or replace such original
Subordinated Debt in accordance with the terms of this Agreement));
18
PLUS
(iii) all federal, state, provincial, local and foreign
income taxes actually paid in cash by the U.S. Borrower and its
Subsidiaries;
PROVIDED, HOWEVER, that in computing the Cash Flow Coverage Ratio for
(c) the second Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (b) above shall equal the Second Quarter Adjusted
Amount, multiplied by four;
(d) the third Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (b) above shall equal (i) the sum of (x) such amount
for such Fiscal Quarter PLUS (y) the Second Quarter Adjusted Amount,
multiplied by (ii) two;
(e) the fourth Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (B) above shall equal (i) the sum of (x) such amount
for the third and fourth Fiscal Quarters of the 1998 Fiscal Year PLUS (y)
the Second Quarter Adjusted Amount, multiplied by (ii) 1.333; and
(f) the first Fiscal Quarter of the 1999 Fiscal Year, the amount set
forth in CLAUSE (B) above shall equal the sum of (x) such amount for the
third and fourth Fiscal Quarters of the 1998 Fiscal Year and for the first
Fiscal Quarter of the 1999 Fiscal Year PLUS (y) the Second Quarter
Adjusted Amount.
"CDN $ EQUIVALENT" means the Exchange Equivalent in Canadian
Dollars of any amount of U.S. Dollars.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"CHANGE IN CONTROL" means
(a) at any time prior to the creation of a Public Market, the failure
of AEA, North Castle, C. Baird and Senior Management to directly or
indirectly own beneficially at least 51% of the outstanding Voting Stock
of LHPG on a fully diluted basis, such Voting Stock to be held free and
clear of all Liens (except (i) in the case of AEA and Senior Management
only, Persons described in the definition of "AEA" and such Senior
Management may grant or otherwise create or suffer to exist Liens on their
shares of LHPG so long as all such Liens of all such Persons are not in
favor of a single Person or group of Persons acting in concert and (ii) in
the case of North Castle and C. Baird, non-
19
consensual Liens that arise by operation of law but which do not result
in a change in the ownership of such Capital Stock); or
(b) at any time after the creation of a Public Market (i) the failure
of AEA, North Castle, C. Baird and Senior Management to directly or
indirectly own beneficially at least 30% of the outstanding Voting Stock
of LHPG on a fully diluted basis, such Voting Stock to be held free and
clear of all Liens (except (i) in the case of AEA and Senior Management
only, Persons described in the definition of "AEA" and such Senior
Management may grant or otherwise create or suffer to exist Liens on their
shares of LHPG so long as all such Liens of all such Persons are not in
favor of a single Person or group of Persons acting in concert and (ii) in
the case of North Castle and C. Baird, non-consensual Liens that arise by
operation of law but which do not result in a change in the ownership of
such Capital Stock), or (iii) any person or group (within the meaning of
Sections 13(d) and 14(d) under the Exchange Act) (other than any of AEA,
North Castle, C. Baird and Senior Management) shall become the ultimate
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership"
of all securities that such person has the right to acquire, whether such
right is exercisable immediately, after the passage of time, upon the
happening of an event or otherwise) directly or indirectly, of shares
representing 20% or more of the Voting Stock of LHPG on a fully diluted
basis; or
(c) during any period of 24 consecutive months, individuals who at
the beginning of such period constituted the Board of Directors of LHPG
(together with any new directors whose election by such Board or whose
nomination for election by the stockholders of LHPG was approved by (i)
directors appointed by North Castle or (ii) a vote of 66 2/3% of the
directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board of
Directors of LHPG then in office; or
(d) the failure of LHPG to directly own beneficially and of
record all of the outstanding Voting Stock of Parent on a fully diluted
basis, such Voting Stock to be held free and clear of all Liens; or
(e) the failure of Parent to directly own beneficially and of
record all of the outstanding Voting Stock of Leiner on a fully diluted
basis, such Voting Stock to be held free and clear of all Liens, except in
favor of the Secured Parties; or
(f) so long as the Canadian Facility has not been terminated or there
are any Obligations owing by an Obligor with respect to the Canadian
Facility (other than in the case where the Canadian Facility is being
terminated and all Obligations in respect of the Canadian Facilities are
being repaid or cash collateralized on terms reasonably satisfactory to
the Canadian Agent contemporaneously with the diminution of Leiner's
ownership in the Canadian Borrower), the failure of Leiner to directly or
indirectly own beneficially and of record all of the outstanding Voting
Stock of the Canadian Borrower on a fully diluted
20
basis (excluding non-voting preferred stock of the Canadian Borrower
existing on the Effective Date after giving effect to the Transaction),
such Voting Stock to be held free and clear of all Liens except in favor
of the Secured Parties; or
(g) at any time, the failure of C. Baird to be a managing member
of North Castle (other than a failure resulting from the death,
incompetency or disability of C. Baird); or
(h) a "Change of Control" (as defined in any Subordinated Debt
Instrument) shall occur.
"CODE" means the Internal Revenue Code of 1986, and the
regulations thereunder, in each case as amended, reformed or otherwise
modified from time to time.
"COMMITMENT" means, as the context may require, a U.S. Lender's
Term B Loan Commitment, Term C Loan Commitment, U.S. Revolving Loan
Commitment or U.S. Letter of Credit Commitment, a U.S. Issuer's U.S. Letter
of Credit Commitment, the U.S. Swing Line Lender's U.S. Swing Line Loan
Commitment, a Canadian Lender's Canadian Revolving Loan Commitment or
Canadian Letter of Credit Commitment, a Canadian Issuer's Canadian Letter of
Credit Commitment or the Canadian Swing Line Lender's Canadian Swing Line
Loan Commitment.
"COMMITMENT AMOUNT" means, as the context may require, the Term B
Loan Commitment Amount, the Term C Loan Commitment Amount, the U.S. Revolving
Loan Commitment Amount, the U.S. Letter of Credit Commitment Amount, the U.S.
Swing Line Loan Commitment Amount, the Canadian Revolving Loan Commitment
Amount, the Canadian Letter of Credit Commitment Amount or the Canadian Swing
Line Loan Commitment Amount.
"COMMITMENT TERMINATION DATE" means, as the context may require,
the U.S. Revolving Loan Commitment Termination Date, the Term B Loan
Commitment Termination Date, the Term C Loan Commitment Termination Date or
the Canadian Revolving Loan Commitment Termination Date.
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Event of Default described in CLAUSES
(a) through (d) of SECTION 10.1.9; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of all or any portion of the Loans to be
due and payable pursuant to SECTION 10.3, or
(ii) the giving of notice by the U.S. Agent, acting at the
direction of the Required Lenders, to the Borrowers that the
Commitments have been terminated.
21
"COMPLIANCE CERTIFICATE" means a certificate duly completed and
executed by an Authorized Officer of the U.S. Borrower, substantially in the
form of EXHIBIT I hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time, together with such changes thereto as
the U.S. Agent may from time to time reasonably request for the purpose of
monitoring the U.S. Borrower's compliance with the financial covenants
contained herein.
"CONDUIT ENTITY" is defined in CLAUSE (d) of SECTION 6.6.
"CONFIDENTIAL INFORMATION" means information relating to LHPG or
any of its Subsidiaries obtained by either Agent or any Lender pursuant to or
in connection with this Agreement, or otherwise from or on behalf of LHPG or
any of its Subsidiaries or Affiliate (to the extent identified as an
Affiliate to the Lenders) (including any information obtained by either Agent
or any Lender in the course of any review of the books or records of either
Borrower or any Subsidiary thereof as contemplated herein), but excluding
information (i) that was previously known to such Agent or Lender (other than
through a previous lending or other business relationship with LHPG or any of
its Subsidiaries), or (ii) that is or subsequently becomes generally publicly
known through no act or omission by either Agent or any Lender or any Person
acting therefor.
"CONTINGENT LIABILITY" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or
is contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
Indebtedness of any other Person (other than by endorsements of instruments
in the course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any limitation
set forth therein) be deemed to be the outstanding principal amount of the
debt, obligation or other liability guaranteed thereby.
"CONTINUATION/CONVERSION NOTICE" means, as the context may
require, a U.S. Continuation/Conversion Notice or a Canadian
Continuation/Conversion Notice.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
U.S. Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.
"COPYRIGHT SECURITY AGREEMENT" means any Copyright Security
Agreement (if and to the extent executed and delivered by any Obligor in
accordance with the terms of a Loan Document) in substantially the form of
Exhibit C to any Security Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
22
"CREDIT EXTENSION" means, as the context may require, a Canadian
Credit Extension or a U.S. Credit Extension.
"CREDIT EXTENSION REQUEST" means, as the context may require, any
Borrowing Request or Issuance Request.
"CURRENT ASSETS" means, at any time, all amounts (other than cash
and Cash Equivalent Investments) which, in accordance with GAAP, would be
included as current assets on a consolidated balance sheet of the U.S.
Borrower and its Subsidiaries at such time.
"CURRENT LIABILITIES" means, at any time, all amounts which, in
accordance with GAAP, would be included as current liabilities on a
consolidated balance sheet of the U.S. Borrower and its Subsidiaries at such
time, excluding current maturities of Indebtedness.
"DEFAULT" means any Event of Default or any condition, occurrence
or event which, after notice or lapse of time or both, would constitute an
Event of Default.
"DISBURSEMENT" is defined in SECTION 4.1.2.
"DISBURSEMENT DATE" is defined in SECTION 4.1.2.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto as SCHEDULE I, as it may be amended, supplemented, amended and
restated or otherwise modified from time to time by the Borrowers with the
written consent of the U.S. Agent and the Required Lenders.
"DOLLAR", "U.S. DOLLAR" and "$" each mean the lawful money of the
United States.
"DOMESTIC OFFICE" means,
(a) relative to any U.S. Lender, the office of such Lender designated
as such Lender's "Domestic Office" below its signature hereto or in a
Lender Assignment Agreement, or such other office of a U.S. Lender (or any
successor or assign of such Lender) within the United States as may be
designated from time to time by notice from such Lender, as the case may
be, to each other Person party hereto, and
(b) relative to any Canadian Lender, the office of such Lender
designated as such Lender's "Domestic Office" below its signature hereto
or in a Lender Assignment Agreement, or such other office of a Canadian
Lender (or any successor or assign of such Lender) within Canada as may be
designated from time to time by notice from such Lender, as the case may
be, to each other Person party hereto.
"DUAL LENDERS" means, collectively, those U.S. RL Lenders that
also are Canadian Lenders.
23
"EASTERN CONSOLIDATION" means the consolidation of the U.S.
Borrower's eastern United States packaging and distribution operations into a
new facility in South Carolina, including the closure of certain discontinued
facilities, and the incurrence of moving and relocation expenses for equipment
and personnel, severance expenses in connection with the closure of such
discontinued facilities and training expenses in connection with the opening of
the new facility.
"EBITDA" means, for any applicable period, the sum (without
duplication) of
(a) Net Income MINUS the aggregate amount of payments made in
accordance with CLAUSE (g)(i) and CLAUSE (g)(iv) of SECTION 9.2.13,
PLUS
(b) the amount deducted, in determining Net Income, representing
amortization of assets (including amortization with respect to goodwill,
deferred financing costs, other non-cash interest and all other intangible
assets),
PLUS
(c) the amount deducted, in determining Net Income, of all income
taxes (whether paid or deferred) of the U.S. Borrower and its
Subsidiaries,
PLUS
(d) the amount deducted, in determining Net Income, of Interest
Expense of the U.S. Borrower and its Subsidiaries (including, for
purposes of this definition only, the Canadian Borrower and its
Subsidiaries as if the Canadian Transaction had occurred at the beginning
of the applicable period), to the extent incurred, plus, without
duplication, any non-cash interest expense,
PLUS
(e) the amount deducted, in determining Net Income, representing
depreciation of assets,
PLUS
(f) the amount deducted, in determining Net Income, of all management
fees paid in cash in accordance with CLAUSE (b) of SECTION 9.2.13,
PLUS
24
(g) the amount deducted, in determining Net Income, due to
foreign currency translation required by FASB 52 arising after the date of
the initial Credit Extensions,
PLUS
(h) the amount deducted, in determining Net Income, of all
Specified Adjustments.
"EFFECTIVE DATE" means the date this Agreement becomes effective
pursuant to SECTION 12.8.
"ENVIRONMENTAL LAWS" means all U.S. and Canadian federal, state,
provincial or local statutes, laws, ordinances, by-laws, codes, rules,
regulations, guidelines, decrees and orders relating to public health and
safety, the environment, pollution or waste management.
"EQUITY RIGHTS" means the right to receive, under certain
circumstances, LHPG Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections thereto.
"ESCROW ACCOUNT" is defined in CLAUSE (c) of SECTION 5.1.1.
"EVENT OF DEFAULT" is defined in SECTION 10.1.
"EXCESS CASH FLOW" means, for any Fiscal Year, the excess (if any), of
(a) EBITDA for such Fiscal Year or (in the case of the 1998
Fiscal Year) for the period that begins from the date of the first Fiscal
Quarter beginning after the date of the initial Credit Extensions to March
31, 1998 (referred to as the "POST-CLOSING 1998 PERIOD")
OVER
(b) the sum (for such Fiscal Year or, in the case of the 1998
Fiscal Year, the Post-Closing 1998 Period) of
(i) Interest Expense;
PLUS
(ii) scheduled payments and optional prepayments, to the extent
actually made, of the principal amount of the Term Loans and any
other Indebtedness permitted
25
pursuant to CLAUSES (d), (g) and (i) of SECTION 9.2.2 (other than
(i) Indebtedness of a revolving loan or similar type, except to the
extent that a corresponding amount of the commitment to lend is
permanently terminated or reduced and (ii) Indebtedness of a type
described in CLAUSES (c), (e) or (f) of SECTION 9.2.2), and optional
prepayments of the principal amount of the Revolving Loans in
connection with a reduction of the Revolving Loan Commitment Amount;
PLUS
(iii) all federal, state, provincial, local and foreign
income taxes actually paid in cash by the U.S. Borrower and its
Subsidiaries;
PLUS
(iv) Capital Expenditures actually made;
PLUS
(v) dividends (other than dividends paid pursuant to CLAUSES
(d), (e) and (g) of SECTION 9.2.6) paid in cash by the U.S. Borrower
to Parent;
PLUS
(vi) the amount of liabilities paid in cash to the extent
such liabilities were reserved for in accordance with GAAP on the
Opening Consolidated Balance Sheet;
PLUS
(vii) all management and consulting fees (including
reimbursement of expenses) paid or payable by the U.S. Borrower and
its Subsidiaries to North Castle or any Affiliate thereof, in
accordance with CLAUSE (b) of SECTION 9.2.13;
PLUS
(viii) the aggregate amount of Specified Adjustments paid in
cash;
PLUS
(ix) 75% (in the 1998 Fiscal Year) and 100% (in the case of each
subsequent Fiscal Year) of the amount of the net increase, if greater
than zero, of Current Assets over Current Liabilities of the U.S.
Borrower and its Subsidiaries from the last day of the immediately
preceding Fiscal Year to the end of the relevant Fiscal Year.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
26
"EXCHANGE EQUIVALENT" means, on any date, relative to any amount
(the "ORIGINAL AMOUNT") expressed in either Canadian Dollars or U.S. Dollars
(the "ORIGINAL CURRENCY"), the amount expressed in the other currency which
would be required to buy the Original Amount of the Original Currency using
the noon spot rate exchange for Canadian interbank transactions applied in
converting the other currency into the Original Currency published by the
Bank of Canada for such date.
"EXISTING LHPG COMMON STOCK" means the common stock of LHPG prior
to the Recapitalization.
"EXISTING OPTIONS" is defined in the FOURTH RECITAL.
"FACILITY" means, as the context may require, the Canadian
Facility or the U.S. Facility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the U.S. Agent from three federal funds
brokers of recognized standing selected by it.
"FEE LETTER" means that certain confidential letter, dated May 30,
1997, from Scotiabank to North Castle, LHPG and the Canadian Borrower,
relating to, among other things, certain fees to be paid in connection with
this Agreement.
"FISCAL QUARTER" means a quarter ending on the last day of March,
June, September or December.
"FISCAL YEAR" means any period of twelve consecutive calendar
months ending on March 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1997 Fiscal Year") refer to
the Fiscal Year ending on March 31 of such calendar year.
"FOREIGN PLEDGE AGREEMENT" means any supplemental pledge agreement
governed by the laws of a jurisdiction other than the United States or a
State thereof executed and delivered by a Borrower or any of its Subsidiaries
pursuant to the terms of this Agreement, in form and substance satisfactory
to the Agents, as may be necessary or desirable under the laws of
organization or incorporation of a Subsidiary to further protect or perfect
the Lien on and
27
security interest in any Pledged Shares and/or Pledged Notes (as such terms
are defined in a Pledge Agreement).
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in SECTION 1.4.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
province, canton or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, the National Association of
Insurance Commissioners, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"GUARANTOR" means, as the context may require, a Canadian Facility
Guarantor or a U.S. Facility Guarantor.
"GUARANTY" means, as the context may require, the U.S. Borrower
Guaranty, the Parent Guaranty, the Canadian Holdings Guaranty or a Subsidiary
Guaranty.
"HAZARDOUS MATERIAL" means:
(a) with respect to the U.S. Facility,
(i) any "hazardous substance", as defined by CERCLA;
(ii) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; or
(iii) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance (including any petroleum
product) within the meaning of any other applicable federal, state or
local law, regulation, ordinance or requirement (including consent
decrees and administrative orders) relating to or imposing liability
or standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material, all as amended; and
(b) with respect to the Canadian Facility,
(i) any substances that are defined or listed in, or otherwise
classified pursuant to, any applicable Environmental Laws as
"hazardous substances", "hazardous materials", "hazardous wastes",
"toxic substances", "contaminants", "pollutants" or any other
formulation intended to define, list or classify substances by reason
of adverse effects on the environment or deleterious properties such
as ignitability,
28
corrosivity, reactivity, carcinogenicity, reproductive toxicity or
"TLCP" toxicity or "EP" toxicity;
(ii) any oil, petroleum or petroleum derived substances,
natural gas, natural gas liquids;
(iii) any flammable substances or explosives or any
radioactive materials; or
(iv) any asbestos in any form or electrical equipment which
contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty parts per million.
"HEDGING OBLIGATIONS" means, with respect to any Person, all
liabilities of such Person under currency exchange agreements, interest rate
swap agreements, interest rate cap agreements and interest rate collar
agreements, and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms
contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not
to any particular Section, paragraph or provision of this Agreement or such
other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the U.S. Borrower, any qualification or exception to such
opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to
cause a Borrower to be in default of any of its obligations under
SECTION 9.2.4.
"INCLUDING" and "INCLUDE" means including without limiting the
generality of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that the rule
of EJUSDEM GENERIS shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
29
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and banker's
acceptances, in each case issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) net liabilities (after giving effect to any gains) of such
Person under all Hedging Obligations;
(e) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (PROVIDED that the term "deferred purchase price for
services" shall not include deferred payment for services incurred or
created by the Person relating to its employees and former employees) and
indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person or
is limited in recourse;
(f) all Receivables Facility Outstandings; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing types of obligations of such Person or any other Persons.
For all purposes of this Agreement, (i) the term "Indebtedness" shall exclude
(y) customer deposits and interest payable thereon in the ordinary course of
business and (z) trade and other accounts and accrued expenses payable in the
ordinary course of business in accordance with customary trade terms
(including time drafts payable to foreign suppliers and, notwithstanding
CLAUSES (a) and (e) above, notes payable in respect of the deferred payment
of insurance policy premiums), and in the case of both (y) and (z) above,
which are not overdue for a period of more than 90 days or, if overdue for
more than 90 days, as to which a dispute exists and adequate reserves in
conformity with GAAP have been established on the books of such Person, and
(ii) the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer (except to the extent that either by operation of law or by
the express terms of the relevant partnership or joint venture agreement any
such liabilities incurred in connection therewith are completely without
recourse to such Person).
"INDEMNIFIED LIABILITIES" is defined in SECTION 12.4.
30
"INDEMNIFIED PARTIES" is defined in SECTION 12.4.
"INTEREST COVERAGE RATIO" means, at the close of any Fiscal Quarter,
the ratio computed (except as set forth in CLAUSES (c), (d), (e) and (f) below)
for the period consisting of such Fiscal Quarter and each of the three
immediately prior Fiscal Quarters of:
(a) EBITDA (for all such Fiscal Quarters)
TO
(b) the sum (for all such Fiscal Quarters) of Interest Expense
paid in cash;
PROVIDED, HOWEVER, that in computing the Interest Coverage Ratio for
(c) the second Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (b) above shall equal the Second Quarter Adjusted
Amount, multiplied by four;
(d) the third Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (b) above shall equal (i) the sum of (x) Interest
Expense for such Fiscal Quarter PLUS (y) the Second Quarter Adjusted
Amount, multiplied by (ii) two;
(e) the fourth Fiscal Quarter of the 1998 Fiscal Year, the amount
set forth in CLAUSE (b) above shall equal (i) the sum of (x) Interest
Expense for the third and fourth Fiscal Quarters of the 1998 Fiscal
Year PLUS (y) the Second Quarter Adjusted Amount, multiplied by (ii)
1.333; and
(f) the first Fiscal Quarter of the 1999 Fiscal Year, the amount set
forth in CLAUSE (b) above shall equal the sum of (x) Interest Expense for
the third and fourth Fiscal Quarters of the 1998 Fiscal Year and for the
first Fiscal Quarter of the 1999 Fiscal Year PLUS (y) the Second Quarter
Adjusted Amount.
"INTEREST EXPENSE" means, for any Fiscal Quarter, the aggregate
interest expense (net of interest income) of the U.S. Borrower and its
Subsidiaries for such Fiscal Quarter, as determined in accordance with GAAP,
including (i) the portion of any payments made in respect of Capitalized Lease
Liabilities allocable to interest expense and (ii) interest (or other fees in
the nature of interest or discount accrued and paid or payable in cash for such
Fiscal Quarter) in respect of the Permitted Receivables Transaction, but
excluding deferred financing costs and other non-cash interest expense.
"INTEREST PERIOD" means,
(a) relative to any LIBO Rate Loans, the period beginning on (and
including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to SECTION 2.3 or 2.4 and
continuing to (but excluding) the day which,
31
numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month) as the U.S. Borrower may select in
its relevant notice pursuant to SECTION 2.3 or 2.4; and
(b) relative to any Canadian BA or Acceptance Note, the period
beginning on (and including) the date on which such Canadian BA is
accepted or rolled over pursuant to SECTION 3.3 or 3.4 or such Acceptance
Note is issued pursuant to SECTION 3.6 and continuing to (but excluding)
the date which is 30, 60, 90 or 180 days thereafter as the Canadian
Borrower may select in its relevant notice pursuant to SECTION 3.3 or 3.4;
PROVIDED, HOWEVER, that
(c) the U.S. Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than four different dates with respect to Revolving
Loans and four different dates with respect to Term Loans;
(d) the Canadian Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration
dates occurring on more than five different dates;
(e) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless, if such Interest Period applies to a LIBO Rate Loan,
such next following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the Business Day
next preceding such numerically corresponding day); and
(f) no Interest Period may end later than the Stated Maturity
Date for such Loan.
"INVESTMENT" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel, petty cash and similar advances to
directors, officers and employees made in the ordinary course of
business);
(b) any Contingent Liability of such Person incurred in
connection with loans or advances described in CLAUSE (a); and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and otherwise without
adjustment by reason of the financial condition of such other Person) and shall,
if made by the transfer or exchange of property other than cash, be deemed to
have been made in an original principal or capital amount equal to the fair
market value of such property at the time of such Investment.
32
"ISSUANCE REQUEST" means, as the context may require, a U.S.
Issuance Request or a Canadian Issuance Request.
"ISSUER" means, as the context may require, a Canadian Issuer or a
U.S. Issuer.
"LAW CHANGE" is defined in CLAUSE (b) of SECTION 6.6.
"LEINER" means Leiner Health Products Inc., a Delaware corporation.
"LENDERS" is defined in the PREAMBLE and, in addition, shall
include any commercial bank or other financial institution that becomes a
Lender pursuant to SECTION 12.11.1.
"LENDER ASSIGNMENT AGREEMENT" means a lender assignment agreement
substantially in the form of EXHIBIT D hereto.
"LENDER'S ENVIRONMENTAL LIABILITY" means any and all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential
damages), disbursements or expenses of any kind or nature whatsoever
(including reasonable attorneys' fees at trial and appellate levels and
experts' fees and disbursements and expenses incurred in investigating,
defending against or prosecuting any litigation, claim or proceeding) which
may at any time be imposed upon, incurred by or asserted or awarded against
any Lender or any of such Lender's parent and subsidiary corporations, and
their Affiliates, shareholders, directors, officers, employees, and agents in
connection with or arising from:
(a) any Hazardous Material on, in, under or affecting all or any
portion of any property of a Borrower or any Subsidiary, the groundwater
thereunder, or any surrounding areas thereof to the extent caused by
Releases from a Borrower's or any of such Borrower's Subsidiaries' or any
of their respective predecessors' properties;
(b) any misrepresentation, inaccuracy or breach of any warranty,
contained or referred to in SECTION 8.12;
(c) any violation or claim of violation by a Borrower or any of
its Subsidiaries of any Environmental Laws; or
(d) the imposition of any lien for damages caused by or the recovery
of any costs for the cleanup, release or threatened release of Hazardous
Material by a Borrower or any of its Subsidiaries, or in connection with
any property owned or formerly owned by a Borrower or any of its
Subsidiaries.
"LETTER OF CREDIT" means, as the context may require, a Canadian
Letter of Credit or a U.S. Letter of Credit.
33
"LETTER OF CREDIT COMMITMENT AMOUNT" means, as the context may
require, the Canadian Letter of Credit Commitment Amount or the U.S. Letter
of Credit Commitment Amount.
"LETTER OF CREDIT OUTSTANDING" means, as the context may require,
the Canadian Letter of Credit Outstandings or the U.S. Letter of Credit
Outstandings.
"LEVERAGE RATIO" means, as of the last day of any Fiscal Quarter,
the ratio of
(a) Total Debt outstanding on the last day of such Fiscal Quarter
TO
(b) EBITDA computed for the period consisting of such Fiscal
Quarter and each of the three immediately preceding Fiscal Quarters.
"LHPG" is defined in the PREAMBLE.
"LHPG COMMON STOCK" means the common stock of LHPG after giving
effect to the Recapitalization.
"LIBO RATE" means, relative to any Interest Period for LIBO Rate
Loans, the rate of interest equal to the average (rounded upwards, if necessary,
to the nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to Scotiabank's LIBOR Office in the
London, England interbank market as at or about 11:00 a.m. London, England time
two Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount approximately equal to
the amount of Scotiabank's LIBO Rate Loan and for a period approximately equal
to such Interest Period.
"LIBO RATE LOAN" means a U.S. Revolving Loan or a Term Loan bearing
interest, at all times during an Interest Period applicable to such Loan, at a
fixed rate of interest determined by reference to the LIBO Rate (Reserve
Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined pursuant to the following formula:
LIBO Rate = LIBO RATE
(Reserve Adjusted) ------------------------------
1.00--LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO
Rate Loans will be determined by the U.S. Agent on the basis of the LIBOR
Reserve Percentage in effect on,
34
and the applicable rates furnished to and received by the U.S. Agent from
Scotiabank, two Business Days before the first day of such Interest Period.
"LIBOR OFFICE" means, relative to any U.S. Lender, the office of such
U.S. Lender designated as such U.S. Lender's "LIBOR Office" below its signature
hereto or in a Lender Assignment Agreement, or such other office of a U.S.
Lender as designated from time to time by notice from such U.S. Lender to the
U.S. Borrower and the U.S. Agent, whether or not outside the United States,
which shall be making or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of or including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or other priority or preferential
arrangement of any kind or nature whatsoever, to secure payment of a debt or
performance of an obligation, except for liens arising from the filing of
"precautionary" UCC or PPSA financing statements in connection with obligations
under leases that are not Capitalized Lease Liabilities to the extent that such
financing statements relate solely to the property subject to such lease
obligations and where the debtor named on such financing statements is not the
legal or beneficial owner of the described property.
"LOAN" means, as the context may require, a Canadian Revolving
Loan or a U.S. Loan.
"LOAN DOCUMENTS" collectively means this Agreement, the Notes, the
Letters of Credit, each Pledge Agreement, each Security Agreement, each
Mortgage, each Rate Protection Agreement relating to Hedging Obligations of a
Borrower or any of its Subsidiaries, each Borrowing Request, each Issuance
Request, each Foreign Pledge Agreement, the Fee Letter, the Master
Subordination Agreement, each Guaranty and each other agreement, certificate,
document or instrument delivered in connection with this Agreement and such
other agreements, whether or not specifically mentioned herein or therein.
"LOANS" means, as the context may require, a Revolving Loan, a
Term Loan or a Swing Line Loan, of any type.
"LOCAL TIME" means
35
(a) relative to matters under the U.S. Facility, New York, New
York time, or
(b) relative to matters under the Canadian Facility, Toronto time.
"MANAGEMENT INVESTORS" means any of the officers, directors,
employees and other members of the management of LHPG or any of its
Subsidiaries, or family members or relatives thereof, or trusts for the
benefit of any of the foregoing, or their heirs, executors, successors and
legal representatives.
"MANAGEMENT SERVICES AGREEMENT" means the Consulting Agreement to
be entered into in connection with the Recapitalization and delivered
pursuant to SECTION 7.1.24 among North Castle Partners, L.L.C., LHPG and
Leiner, as amended, supplemented, amended and restated or otherwise modified
from time to time.
"MANAGEMENT SHAREHOLDERS" is defined in the THIRD RECITAL.
"MASTER SUBORDINATION AGREEMENT" means the Master Subordination
Agreement, substantially in the form of EXHIBIT K hereto.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the financial condition, operations, assets, business or properties of the
U.S. Borrower or the U.S. Borrower and its Subsidiaries, taken as a whole,
(b) the rights and remedies of the Agents or any Secured Party under any Loan
Document or (c) the perfection or priority of the Secured Parties' Liens upon
the collateral described in any Loan Document.
"MERGER" is defined in the FIFTH RECITAL.
"MERGER AGREEMENT" is defined in the FIFTH RECITAL.
"MERGER EFFECTIVE TIME" is defined in the FIFTH RECITAL.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means each mortgage, deed of trust or agreement
executed and delivered by the U.S. Borrower or any other Obligor in favor of
the U.S. Agent and shall also include any of the Canadian Borrower Debenture,
the Canadian Holdings Debenture and any Canadian Subsidiary Debenture which
creates a Lien on Mortgaged Real Property, pursuant to the terms of this
Agreement, substantially in the form of EXHIBIT H hereto (if the real
property which is to be encumbered is located in the U.S.), under which a
Lien is granted on the Mortgaged Real Property and fixtures described
therein, in each case as amended, supplemented, amended and restated or
otherwise modified from time to time.
"MORTGAGED REAL PROPERTY" means each fee or leasehold interest in
the Real Property owned (or leased) by the U.S. Borrower, the Canadian
Borrower or any other Obligor which
36
has been mortgaged in favor of the U.S. Agent or the Canadian Agent, as such
Real Properties are described in Item 8.10 of the Disclosure Schedule on the
Effective Date, and all other Real Properties as may from time to time
following the Effective Date be required to be encumbered in favor of the
Secured Parties in accordance with the terms of this Agreement.
"NET DISPOSITION PROCEEDS" means the excess of
(a) the gross cash proceeds received by a Borrower or any of its
Subsidiaries from any Permitted Disposition of the type described in
CLAUSE (d) of SECTION 9.2.11 and any cash payments received in respect of
promissory notes or other non-cash consideration delivered to such
Borrower or such Subsidiary in respect of such Permitted Disposition,
OVER
(b) (i) all reasonable and customary fees and expenses with respect
to legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements actually incurred
in connection with such Permitted Disposition which have not been paid to
Affiliates of such Borrower (except as permitted pursuant to SECTION
9.2.13),
(ii) all taxes and other governmental costs and expenses actually
paid or estimated by such Borrower (in good faith) to be payable in cash
in connection with such Permitted Disposition,
(iii) payments made by such Borrower or any of its Subsidiaries
to retire Indebtedness (other than the Loans) of such Borrower or any of
its Subsidiaries where payment of such Indebtedness is required in
connection with such Permitted Disposition, and
(iv) amounts, in the reasonable judgment of such Borrower, provided
by such Borrower or any of its Subsidiaries, as the case may be, as a
reserve, against any liabilities associated with such Permitted
Disposition to the extent, but only to the extent, that the amounts so
deducted, or for which such Borrower or any Subsidiary is liable, as the
case may be, are, at the time of receipt of such cash, paid or payable to
a Person that is not an Affiliate or, if payable to an Affiliate, are
permitted under SECTION 9.2.13, and are properly attributable to such
transaction or to the asset that is the subject thereof;
PROVIDED, HOWEVER, that if, after the payment of all taxes with respect to
such Permitted Disposition, (x) the amount of estimated taxes, if any,
pursuant to CLAUSE (b)(ii) above exceeded the tax amount actually paid in
cash in respect of such Permitted Disposition or (y) the amount reserved, if
any, pursuant to CLAUSE (b)(iv) above exceeded the actual associated
liabilities in respect of such Permitted Disposition, the aggregate amount of
such excess shall be immediately payable, pursuant to CLAUSE (C) of SECTION
5.1.1, as Net Disposition Proceeds. "Net Disposition Proceeds" shall exclude
(x) an aggregate amount equal to $15,000,000 of
37
proceeds of Permitted Dispositions over the term of this Agreement and (y)
100% of proceeds from Permitted Dispositions of the type permitted pursuant
to CLAUSE (e) of SECTION 9.2.11, in a maximum aggregate amount over the term
of this Agreement not to exceed $5,000,000 (with such amount being referred
to as the "RETAINED AMOUNT") to the extent
(i) the Retained Amount is directly generated from the sale or
issuance after the date hereof of any newly issued stock, warrants or
options (I.E., other than stock, warrants or options outstanding on the
Effective Date) of any Subsidiary to any Person (other than such Borrower
or a wholly-owned Subsidiary),
(ii) such Borrower has, no less than 5 Business Days (or such shorter
period agreed to by the applicable Agent) prior to such sale or issuance,
notified the applicable Agent thereof and delivered to the applicable
Agent copies of all relevant registration statements, documents and other
instruments prepared in connection with such sale or issuance and such
other information relating thereto as the applicable Agent may otherwise
request), and
(iii) the applicable Agent shall have received a certificate from an
Authorized Officer of such Borrower certifying (A) as to the proposed
reinvestment of the Retained Amount in such Subsidiary, (B) as to the
value received by the Subsidiary for the sale or issuance of such newly
issued stock, warrants or options and (C) that the value of such
Borrower's ownership interest (whether held directly or indirectly) in
such Subsidiary has not been reduced as a result of such sale or issuance;
PROVIDED, HOWEVER, that to the extent any Retained Amount is not reinvested
in such Subsidiary in the method previously certified to the Agent within
twelve months from the date of receipt of the Retained Amount, then the
portion of the Retained Amount not so reinvested shall constitute Net
Disposition Proceeds and 100% of such unreinvested Retained Amount shall be
applied to the prepayment of Term Loans pursuant to CLAUSE (c) of SECTION
5.1.1.
"NET EQUITY PROCEEDS" means with respect to the sale or issuance
by Parent or LHPG to any Person of any stock, warrants or options or the
exercise of any such warrants or options, the EXCESS of:
(a) the gross cash proceeds received by such Person from such
sale, exercise or issuance,
OVER
(b) all reasonable and customary underwriting commissions and legal,
investment banking, brokerage and accounting and other professional fees,
sales commissions and disbursements actually incurred in connection with
such sale, exercise or issuance which have not been paid to Affiliates of
a Borrower in connection therewith.
38
Net Equity Proceeds shall exclude the proceeds of any issuance or exercise of
stock options or warrants issued (i) in connection with the Recapitalization,
including pursuant to the Merger Agreement, (ii) to any Management Investor in
connection with a subscription agreement, incentive plan or similar arrangement,
or (iii) contributed in cash to the capital of Parent or LHPG by a replacement
officer or employee following the death, disability, retirement or termination
of employment of another officer or employee of LHPG or its Subsidiaries.
"NET INCOME" means, for any period, the aggregate of all amounts
(exclusive of (i) all amounts in respect of any extraordinary gains or
extraordinary losses, (ii) gains and losses arising from the sale of material
assets not in the ordinary course of business and (iii) earnings and losses
from discontinued operations) which, in accordance with GAAP, would be
included as net income on the consolidated financial statements of the U.S.
Borrower and its Subsidiaries for such period (including, for periods prior
to the Fiscal Quarter ended June 30, 1998, the Canadian Borrower and its
Subsidiaries as if the Canadian Transaction had occurred at the beginning of
such period).
"NET TANGIBLE ASSETS" means, at any time, the aggregate amount
which, in accordance with GAAP, would be included as total assets (less
intangible assets) on the balance sheet of the U.S. Borrower and its
Subsidiaries at such time MINUS the aggregate amount which, in accordance
with GAAP, would be included as Current Liabilities on the balance sheet of
the U.S. Borrower and its Subsidiaries at such time.
"NET UNREPATRIATED DISPOSITION PROCEEDS" means, at any time, the
total amount of Net Disposition Proceeds at such time that have not (i) been
applied to prepay Loans pursuant to CLAUSE (c) of SECTION 5.1.1 or resulted
in a reduction of the U.S. Revolving Loan Commitment pursuant to SECTION
2.2.2, or (ii) been deposited in an escrow account pursuant to the terms of
an escrow agreement in accordance with CLAUSE (c) of SECTION 5.1.1.
"NEWCO" is defined in the SECOND RECITAL.
"NORTH CASTLE" is defined in the SECOND RECITAL.
"NOTE" means, as the context may require, a U.S. Note or a
Canadian Note.
"NOTIONAL BA PROCEEDS" means, relative to a particular Canadian
Revolving Loan by way of Canadian BAs, the aggregate face amount of such
Canadian BAs less the aggregate of:
(a) a discount from the aggregate face amount of such Canadian
BAs calculated in accordance with normal market practice based on the
Canadian BA Rate for the term of such Canadian BAs; and
(b) the amount of the Applicable Canadian BA Stamping Fees in
respect of such Canadian BAs calculated in accordance with SECTION 3.5.2.
39
"OBLIGATIONS" means all obligations (monetary or otherwise,
whether absolute or contingent, matured or unmatured, direct or indirect,
choate or inchoate, sole, joint, several or joint and several, due or to
become due, heretofore or hereafter contracted or acquired) of the Borrowers
and each other Obligor arising under or in connection with this Agreement,
the Notes, the Letters of Credit and each other Loan Document including (i)
all obligations for principal or interest under the Notes, whether incurred
on the date hereof or after the Effective Date, (ii) all other obligations
and liabilities of each Obligor, whether incurred on the date hereof or after
the Effective Date, whether for fees, costs, indemnification or otherwise,
arising hereunder or under any other Loan Document, (iii) all out-of-pocket
costs and expenses, including attorneys' fees and legal expenses, incurred by
the Agents or any Lender to the extent set forth in this Agreement in
connection with such Indebtedness, obligations and liabilities (iv) following
the occurrence and during the continuance of an Event of Default, all
advances made by the Agents or any Lender for the maintenance, protection,
preservation or enforcement of, or realization upon, the collateral in which
the Agents have been granted a security interest pursuant to a Loan Document
(or any portion thereof) including advances for storage, transportation
charges, taxes, insurance, repairs and the like, and (v) Hedging Obligations
owed to a Lender or an Affiliate thereof (or a Person that was a Lender or an
Affiliate of a Lender at the time the applicable Rate Protection Agreement
was entered into).
"OBLIGOR" means, as the context may require, each Borrower,
Parent, each Guarantor and any other Person (other than a Secured Party) to
the extent such Person is obligated under this Agreement or any other Loan
Document.
"OPENING CONSOLIDATED BALANCE SHEET" means the consolidated
balance sheet of Leiner and its Subsidiaries as of the date of the Merger,
giving effect to the Recapitalization and the Assumption, prepared in
accordance with GAAP.
"ORGANIC DOCUMENT" means, relative to any Obligor, as applicable,
its certificate of incorporation, by-laws, certificate of partnership,
partnership agreement, certificate of formation, limited liability company
agreement and all shareholder agreements, voting trusts and similar
arrangements applicable to any of such Obligor's partnership interests,
limited liability company interests or authorized shares of Capital Stock.
"PARENT" is defined in the SECOND RECITAL.
"PARENT CLOSING DATE CERTIFICATE" means the closing date
certificate executed and delivered by Parent pursuant to SECTION 7.1.14,
substantially in the form of EXHIBIT J-3 hereto.
"PARENT GUARANTY" means the Guaranty executed and delivered by
Parent pursuant to SECTION 7.1.10, substantially in the form of EXHIBIT F-2
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.
40
"PARENT PLEDGE AGREEMENT" means the Pledge Agreement executed and
delivered by Parent pursuant to SECTION 7.1.8, substantially in the form of
EXHIBIT E-3 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"PARTICIPANT" is defined in SECTION 12.11.2.
"PATENT SECURITY AGREEMENT" means any Patent Security Agreement
(if and to the extent executed and delivered from time to time by any Obligor
in accordance with the terms of a Loan Document) in substantially the form of
Exhibit A to any Security Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means, as the context may require, a U.S. Pension
Plan or a Canadian Pension Plan.
"PERCENTAGE" means, as the context may require, a U.S. Percentage
or a Canadian Percentage.
"PERMITTED ACQUISITION" means an acquisition (whether pursuant to
an acquisition of stock, assets or otherwise) by a Borrower or any Subsidiary
(other than a Restricted Subsidiary) from any Person of a business in which
all of the following is satisfied:
(a) such business is, taken as a whole, reasonably related or
reasonably similar to the business of such Borrower and its Subsidiaries
as described in the FIRST RECITAL;
(b) immediately before and after giving effect to such
acquisition no Default shall have occurred and be continuing; and
(c) such Borrower or Subsidiary shall have delivered to the U.S.
Agent consolidated financial statements for the period of four full Fiscal
Quarters immediately preceding such acquisition (prepared in good faith
and in a manner and using such methodology which is consistent with the
most recent financial statements delivered pursuant to SECTION 9.1.1)
giving effect to the consummation of such acquisition and evidencing
compliance with the covenants set forth in SECTION 9.2.4.
"PERMITTED DISPOSITION" means a disposition of assets by a
Borrower or any of its Subsidiaries permitted pursuant to SECTION 9.2.11.
"PERMITTED RECEIVABLES TRANSACTION" means any transaction
providing for the sale or financing of Accounts; PROVIDED, HOWEVER, that the
expiration date, term, conditions and structure (including the legal and
organizational structure of any Receivables Co. and the
41
restrictions imposed on its activities) of, and the documentation relating
to, the Permitted Receivables Transaction must be on terms and conditions
satisfactory to the U.S. Agent.
"PERSON" means any natural person, corporation, limited liability
company, partnership, joint venture, joint stock company, firm, association,
trust or unincorporated organization, government, governmental agency, court
or any other legal entity, whether acting in an individual, fiduciary or
other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PLEDGE AGREEMENT" means, as the context may require, the U.S.
Borrower Pledge Agreement, the Canadian Borrower Pledge Agreement, the Parent
Pledge Agreement, the Canadian Holdings Pledge Agreement, any Subsidiary
Pledge Agreement or any Foreign Pledge Agreement.
"PLEDGED SUBSIDIARY" means, at any time, each Subsidiary in
respect of which the applicable Agent has been granted, at such time, a
security interest in and to, or a pledge of, (i) any of the issued and
outstanding shares of Capital Stock of such Subsidiary, or (ii) any
intercompany notes of such Subsidiary owing to a Borrower or another
Subsidiary of a Borrower.
"POST-CLOSING 1998 PERIOD" is defined in CLAUSE (a) of the
definition of "Excess Cash Flow".
"PPSA" means The Personal Property Security Act (Manitoba), as in
effect from time to time.
"PROCESS AGENT" is defined in SECTION 12.14.
"PRO FORMA BALANCE SHEET" is defined in CLAUSE (b) of SECTION
7.1.17.
"PUBLIC EQUITY OFFERING" means a public offering of the Voting
Stock of Parent or LHPG pursuant to an effective registration statement under
the Securities Act of 1933, as amended.
"PUBLIC MARKET" shall exist if (i) a Public Equity Offering has
been consummated and (ii) any Voting Stock of Parent or LHPG has been
distributed by means of an effective registration statement under the
Securities Act of 1933, as amended.
"QUARTERLY PAYMENT DATE" means the fifteenth day of March, June,
September and December, or, if any such day is not a Business Day, the next
succeeding Business Day.
"RATE PROTECTION AGREEMENT" means, collectively, any currency or
interest rate swap, cap, collar or similar agreement entered into by an
Obligor under which the counterparty to
42
such agreement is (or, at the time such Rate Protection Agreement was entered
into, was) a Lender or an Affiliate of a Lender.
"REAL PROPERTY" means, with respect to any Person, such Person's
present and future right, title and interest (including, without limitation, any
leasehold estate) in
(a) any plots, pieces or parcels of land;
(b) any improvements, buildings, structures and fixtures now or
hereafter located or erected thereon or attached thereto of every nature
whatsoever (the rights and interest described in CLAUSES (a) and (b) being
the "PREMISES");
(c) all easements, rights of way, gores of land or any lands occupied
by streets, ways, alleys, passages, sewer rights, water courses, water
rights and powers, and public places adjoining such land, and any other
interests in property constituting appurtenances to the Premises, or which
hereafter shall in any way belong, relate or be appurtenant thereto;
(d) all hereditaments, gas, oil, minerals (with the right to
extract, sever and remove such gas, oil and minerals), and easements, of
every nature whatsoever, located in or on the Premises; and
(e) all other rights and privileges thereunto belonging or
appertaining and all extensions, additions, improvements, betterments,
renewals, substitutions and replacements to or of any of the rights and
interests described in CLAUSES (c) and (d) above.
"RECAPITALIZATION" means the recapitalization of LHPG in
accordance with the terms of the Merger Agreement.
"RECEIVABLES CO." means any special purpose wholly-owned
Subsidiary of the U.S. Borrower organized after the date hereof (or such
other Person agreed to by the Agents) that purchases Accounts generated by
the U.S. Borrower or any of its Subsidiaries in connection with the Permitted
Receivables Transaction.
"RECEIVABLES FACILITY OUTSTANDINGS" means, at any date of
determination, with respect to the Permitted Receivables Transaction, the
aggregate cash proceeds received by the U.S. Borrower or any of its
Subsidiaries from the sale or financing of Accounts pursuant to the Permitted
Receivables Transaction which are outstanding on the date of determination.
"RECEIVABLES PROCEEDS" means, with respect to the Permitted
Receivables Transaction, the maximum amount of the commitment to purchase
Accounts under the Permitted Receivables Transaction.
"REFUNDED CANADIAN SWING LINE LOANS" is defined in CLAUSE (B) of
SECTION 3.3.2.
43
"REFUNDED U.S. SWING LINE LOANS" is defined in CLAUSE (b) of
SECTION 2.3.2.
"REGISTER" means, as applicable, the Canadian Register or the U.S.
Register.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 4.1.3.
"RELEASE" means a "RELEASE", as such term is defined in CERCLA.
"RENTALS" means, for any period and determined in accordance with
GAAP, all fixed payments made by the U.S. Borrower or any of its
Subsidiaries, as lessee or sublessee under any lease of real or personal
property (including as such all payments that the U.S. Borrower or any of its
Subsidiaries, as the case may be, is obligated to make to the lessor on
termination of the lease or surrender of the property), but shall be
exclusive of any amounts required to be paid by the U.S. Borrower or any such
Subsidiary (whether or not designated as rents or additional rents) on
account of maintenance, repairs, insurance, taxes, assessments and similar
charges. Fixed rents under any so called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be
paid by the U.S. Borrower or any of its Subsidiaries, as the case may be,
regardless of sales or gross revenues.
"REPLACEMENT NOTICE" is defined in SECTION 6.11.
"REQUIRED LENDERS" means, at any time,
(a) prior to the date of the making of the initial Credit
Extensions hereunder, Lenders having at least 51% of the Commitments; and
(b) on and after the date of the initial Credit Extensions,
Lenders holding at least 51% of the Total Exposure Amount.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as amended.
"RESTRICTED SUBSIDIARY" means, collectively, any direct or
indirect, non-wholly-owned Subsidiary (and Subsidiaries thereof) of the U.S.
Borrower (other than the Canadian Borrower) or any direct or indirect,
wholly-owned non-U.S. Subsidiary of the U.S. Borrower resulting from an
Investment by the U.S. Borrower permitted by CLAUSE (i) of SECTION 9.2.5.
"REVOLVING LOAN" means, as the context may require, a U.S.
Revolving Loan or a Canadian Revolving Loan.
"REVOLVING LOAN COMMITMENT" means, as the context may require, the
Canadian Revolving Loan Commitment or the U.S. Revolving Loan Commitment.
44
"REVOLVING LOAN COMMITMENT AMOUNT" means, as the context may
require, the U.S. Revolving Loan Commitment Amount or the Canadian Revolving
Loan Commitment Amount.
"REVOLVING NOTE" means, as the context may require, a U.S.
Revolving Note or a Canadian Revolving Note.
"RL LENDER" means, as the context may require, a U.S. RL Lender or
a Canadian Lender.
"S&P" means Standard & Poor's Rating Services.
"SCOTIABANK" is defined in the PREAMBLE.
"SEC" means the Securities and Exchange Commission.
"SECOND QUARTER ADJUSTED AMOUNT" means the product of (x) the
actual amounts set forth in clause (b) of the definition of the applicable
ratio for the period from the date of the initial Credit Extensions through
September 30, 1997 (the "STUB PERIOD"), multiplied by (y) a fraction the
numerator of which is equal to the total number of days in the Fiscal Quarter
ended September 30, 1997 and the denominator of which is equal to the number
of days in the Stub Period.
"SECURED PARTIES" means, collectively, the Lenders, the Issuers,
the Agents, each counterparty to a Rate Protection Agreement that is (or, at
the time such Rate Protection Agreement was entered into, was) a Lender or an
Affiliate thereof and (in each case) each of their respective successors,
permitted transferees and permitted assigns.
"SECURITY AGREEMENT" means, as the context may require, the U.S.
Borrower Security Agreement, the Canadian Borrower Debenture, the Canadian
Holdings Debenture, each U.S. Subsidiary Security Agreement and each Canadian
Subsidiary Debenture, in each case as amended, supplemented, amended and
restated or otherwise modified from time to time.
"SENIOR MANAGEMENT" means, collectively, Robert M. Kaminski, Gale
K. Bensussen, William B. Towne, Kevin J. Lanigan, Stanley J. Kahn, Scott C.
Rexinger, Giffen H. Ott and Robert J. LaFerriere.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary that, together with its Subsidiaries, (i) for the most recent
Fiscal Year of the U.S. Borrower, accounted for (or, in the case of any
Subsidiary that is acquired following the Effective Date, would have
accounted for) more than 3% of the consolidated revenues of the U.S. Borrower
and its Subsidiaries during such Fiscal Year or (ii) as of the end of the
most recent Fiscal Year of the U.S. Borrower, was the owner of (or, in the
case of any Subsidiary that is acquired following the Effective Date, would
have been the owner of) more than 3% of the consolidated assets of the U.S.
Borrower and its Subsidiaries at the end of such Fiscal Year, all as set
forth
45
on the most recently available consolidated financial statements of the U.S.
Borrower for such Fiscal Year.
"SPECIFIED ADJUSTMENTS" means an amount equal to the sum of
(1) documented, non-recurring
(a) charges incurred pursuant to the Eastern Consolidation after
the date of the initial Credit Extensions in an amount not to exceed
$3,800,000,
PLUS
(b) costs incurred during the 1997 Fiscal Year in connection with
the closure of the OTC liquid pharmaceuticals facility of Leiner in
Chicago, Illinois in an amount not to exceed $1,920,000,
PLUS
(c) costs incurred during the 1997 Fiscal Year in connection with
the management reorganization in an amount not to exceed $1,000,000,
PLUS
(d) costs incurred during the 1997 Fiscal Year in connection with
the preparation of the S-1 filing in an amount not to exceed $410,000,
PLUS
(e) costs incurred by the Canadian Borrower for discontinued
bonuses paid to its former owners in an amount not to exceed $2,400,000,
PLUS
(f) costs incurred as a management transaction bonus for the
Recapitalization in an amount not to exceed $5,200,000,
PLUS
(g) compensation charges incurred during the 1998 Fiscal Year for
the in-the-money value of stock options which will be, as part of the
Recapitalization, cashed out, exchanged for LHPG Common Stock or converted
into Equity Rights, in an amount not to exceed $15,500,000,
PLUS
46
(2) documented non-cash compensation expenses arising from the
granting of stock options.
"STATED AMOUNT" of each Letter of Credit means the total amount
available to be drawn under such Letter of Credit upon the issuance thereof.
"STATED EXPIRY DATE" is defined in SECTION 4.1.
"STATED MATURITY DATE" means
(a) in the case of U.S. Revolving Loans, June 30, 2003;
(b) in the case of Canadian Revolving Loans, June 30, 2003;
(c) in the case of Term B Loans, December 30, 2004; and
(d) in the case of Term C Loans, December 30, 2005.
"SUBJECT LENDER" is defined in CLAUSE (a) of SECTION 6.11.
"SUBORDINATED DEBT" means the unsecured Indebtedness of the U.S.
Borrower evidenced by the Subordinated Notes and any other unsecured
Indebtedness of the U.S. Borrower subordinated to the Obligations on terms
and conditions, and pursuant to documentation, reasonably satisfactory to the
U.S. Agent and the Required Lenders.
"SUBORDINATED DEBT INSTRUMENTS" means the Subordinated Indenture,
the Subordinated Notes and all other agreements and instruments delivered in
connection therewith or pursuant to which the same shall have been issued or
are governed, as amended, supplemented, amended and restated or otherwise
modified in accordance with SECTION 9.2.12.
"SUBORDINATED INDENTURE" means the Indenture, dated as of June 30,
1997, between LHPG (prior to the Assumption) and Leiner (following the
Assumption) and United States Trust Company of New York, as trustee, as
amended, supplemented, amended and restated or otherwise modified from time
to time in accordance with SECTION 9.2.12.
"SUBORDINATED NOTE HOLDERS" means any and all holders of
Subordinated Notes.
"SUBORDINATED NOTES" means the 9.625% Senior Subordinated Notes
due 2007 issued by the U.S. Borrower pursuant to the Subordinated Indenture
in connection with the Transaction in accordance with SECTION 7.1.6, or in
exchange for any initially issued Subordinated Notes pursuant to an exchange
offer following the initial closing of the Transaction, in each case as
amended, supplemented, amended and restated or otherwise modified from time
to time in accordance with SECTION 9.2.12.
47
"SUBORDINATION PROVISIONS" is defined in SECTION 10.1.11.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other business entity of which more than 50% of the outstanding
Capital Stock (or other ownership interest) having ordinary voting power to
elect a majority of the board of directors, managers or other voting members of
the governing body of such entity (irrespective of whether at the time Capital
Stock (or other ownership interest) of any other class or classes of such entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by such Person, by such Person and one or
more other Subsidiaries of such Person, or by one or more other Subsidiaries of
such Person. Unless the context otherwise specifically requires, the term
"Subsidiary" shall be a reference to a Subsidiary of a Borrower.
"SUBSIDIARY GUARANTOR" means each Subsidiary party to a Subsidiary
Guaranty (including each Subsidiary that is required, pursuant to CLAUSE (a) of
SECTION 9.1.7 to become a party to a Subsidiary Guaranty).
"SUBSIDIARY GUARANTY" means, as the context may require, a U.S.
Subsidiary Guaranty or a Canadian Subsidiary Guaranty.
"SUBSIDIARY PLEDGE AGREEMENT" means, as the context may require, a
U.S. Subsidiary Pledge Agreement or a Canadian Subsidiary Pledge Agreement.
"SUBSIDIARY SECURITY AGREEMENT" means, as the context may require,
a U.S. Subsidiary Security Agreement or a Canadian Subsidiary Debenture.
"SWING LINE LENDER" means, as the context may require, the U.S.
Swing Line Lender or the Canadian Swing Line Lender.
"SWING LINE LOAN" means, as the context may require, a U.S. Swing
Line Loan or a Canadian Swing Line Loan.
"SWING LINE LOAN COMMITMENT" means, as the context may require,
the U.S. Swing Line Loan Commitment or the Canadian Swing Line Loan
Commitment.
"SWING LINE LOAN COMMITMENT AMOUNT" means, as the context may
require, the U.S. Swing Line Loan Commitment Amount or the Canadian Swing
Line Loan Commitment Amount.
"SWING LINE NOTE" means, as the context may require, a U.S. Swing
Line Note or a Canadian Swing Line Note.
"TAXES" is defined in SECTION 6.6.
48
"TAX SHARING AGREEMENT" means the tax sharing agreement between the
U.S. Borrower and LHPG delivered pursuant to SECTION 7.1.23, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"TERM B LOAN" is defined in SECTION 2.1.3.
"TERM B LOAN COMMITMENT" means, relative to any U.S. Lender, such
Lender's obligation (if any) to make Term B Loans pursuant to CLAUSE (a) of
SECTION 2.1.3.
"TERM B LOAN COMMITMENT AMOUNT" means, on any date, $45,000,000.
"TERM B LOAN COMMITMENT TERMINATION DATE" means the earliest of
(a) September 1, 1997 (if the Term B Loans have not been made on
or prior to such date); and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in CLAUSE (b), the Term B Loan
Commitments shall terminate automatically and without any further action.
"TERM B NOTE" means a promissory note of the U.S. Borrower payable
to any U.S. Lender, in the form of EXHIBIT A-3 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the U.S. Borrower to such U.S.
Lender resulting from outstanding Term B Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"TERM C LOAN" is defined in SECTION 2.1.3.
"TERM C LOAN COMMITMENT" means, relative to any U.S. Lender, such
Lender's obligation (if any) to make Term C Loans pursuant to CLAUSE (a) of
SECTION 2.1.3.
"TERM C LOAN COMMITMENT AMOUNT" means, on any date, $40,000,000.
"TERM C LOAN COMMITMENT TERMINATION DATE" means the earliest of
(a) September 1, 1997 (if the Term C Loans have not been made on
or prior to such date); and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in CLAUSE (b), the Term C Loan
Commitments shall terminate automatically and without any further action.
49
"TERM C NOTE" means a promissory note of the U.S. Borrower payable
to any U.S. Lender, in the form of EXHIBIT A-4 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the U.S. Borrower to such U.S.
Lender resulting from outstanding Term C Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"TERM LOAN" means, as the context may require, a Term B Loan or a
Term C Loan.
"TERM LOAN COMMITMENT" means, as the context may require, the Term
B Loan Commitment or the Term C Loan Commitment.
"TERM LOAN COMMITMENT AMOUNT" means, as the context may require,
the Term B Loan Commitment Amount or the Term C Loan Commitment Amount.
"TERM LOAN COMMITMENT TERMINATION DATE" means, as the context may
require, the Term B Loan Commitment Termination Date or the Term C Loan
Commitment Termination Date.
"TERM NOTE" means, as the context may require, a Term B Note or a
Term C Note.
"TOTAL ADJUSTED CAPITAL" means, on any date, an amount equal to
the sum (without duplication) of
(a) Total Debt on such date
PLUS
(b) Adjusted Net Worth on such date.
"TOTAL DEBT" means, on any date, the outstanding principal amount
of all Indebtedness of the U.S. Borrower and its Subsidiaries of the type
referred to in CLAUSE (a), CLAUSE (b) (including the U.S. $ Equivalent amount
(on such date of determination) of the Letter of Credit Outstandings), CLAUSE
(c) and CLAUSE (f), in each case of the definition of "Indebtedness"
(exclusive of intercompany Indebtedness between the U.S. Borrower and any of
its Subsidiaries or between any Subsidiaries of the U.S. Borrower) and
(without duplication) any Contingent Liability in respect of any of the
foregoing types of obligations of such Person or any other Person.
"TOTAL EXPOSURE AMOUNT" means, on any date of determination, the
outstanding principal amount of all U.S. Loans, U.S. Letter of Credit
Outstandings, the U.S. $ Equivalent (measured on the date immediately
preceding such date of determination) of all Canadian Revolving Loans, the
U.S. $ Equivalent (measured on the date immediately preceding such date of
determination) of all Canadian Letter of Credit Outstandings and, without
duplication, the unfunded amount of both Revolving Loan Commitment Amounts.
50
"TRADEMARK SECURITY AGREEMENT" means any Trademark Security
Agreement executed and delivered by any Obligor substantially in the form of
Exhibit B to any Security Agreement, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"TRANSACTION" means the consummation of the Merger, the
Recapitalization, the issuance of the Subordinated Notes and the making of
the initial Credit Extensions.
"TRANSACTION DOCUMENTS" means the Merger Agreement and all
certificates, filings, documents, instruments, consents, approvals, board of
directors resolutions and opinions furnished pursuant to or in connection
with the Merger Agreement and the Transaction.
"Type" means, relative to any Loan, the portion thereof, if any,
being maintained as a U.S. Base Rate Loan, a LIBO Rate Loan or a Canadian
Prime Rate Loan.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"UNITED STATES" or "U.S." means the United States of America, its
fifty states and the District of Columbia.
"U.S. AGENT" is defined in the PREAMBLE.
"U.S. ALTERNATE BASE RATE" means, on any date relative to all U.S.
Base Rate Loans, a fluctuating rate of interest per annum equal to the higher
of
(a) the rate of interest most recently established by the U.S.
Agent at its Domestic Office as its base rate for U.S. Dollar loans made
in the United States; and
(b) the U.S. Federal Funds Rate most recently determined by the
U.S. Agent PLUS 1/2 of 1%.
The U.S. Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by the U.S. Agent in connection with extensions
of credit. Changes in the rate of interest on that portion of any U.S. Loans
maintained as U.S. Base Rate Loans will take effect simultaneously with each
change in the U.S. Alternate Base Rate. The U.S. Agent will give notice
promptly to the U.S. Borrower and the U.S. Lenders of changes in the U.S.
Alternate Base Rate.
"U.S. BASE RATE LOAN" means a U.S. Loan bearing interest at a
fluctuating rate determined by reference to the U.S. Alternate Base Rate.
"U.S. BORROWER" means LHPG (immediately prior to the Assumption)
and Leiner (following the Assumption).
51
"U.S. BORROWER CLOSING DATE CERTIFICATE" means the closing date
certificate executed and delivered by the U.S. Borrower pursuant to SECTION
7.1.14, substantially in the form of EXHIBIT J-1 hereto.
"U.S. BORROWER GUARANTY" means the Guaranty executed and delivered
by the U.S. Borrower pursuant to SECTION 7.1.10, substantially in the form of
EXHIBIT F-1 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"U.S. BORROWER PLEDGE AGREEMENT" means the Pledge Agreement
executed and delivered by the U.S. Borrower pursuant to SECTION 7.1.8,
substantially in the form of EXHIBIT E-1 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"U.S. BORROWER SECURITY AGREEMENT" means the Security Agreement
executed and delivered by the U.S. Borrower pursuant to SECTION 7.1.11,
substantially in the form of EXHIBIT G-1 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"U.S. BORROWING REQUEST" means a Loan request and certificate duly
executed by an Authorized Officer of the U.S. Borrower, substantially in the
form of EXHIBIT B-1 hereto.
"U.S. COMMITMENT" is defined in SECTION 2.1.
"U.S. CONTINUATION/CONVERSION NOTICE" means a notice of
continuation or conversion and certificate duly executed by an Authorized
Officer of the U.S. Borrower, substantially in the form of EXHIBIT C-1 hereto.
"U.S. CREDIT EXTENSION" means, as the context may require,
(a) the making of a Term Loan or a U.S. Revolving Loan by a U.S.
Lender;
(b) the making of a Swing Line Loan by the Swing Line Lender; or
(c) the issuance of a U.S. Letter of Credit, or the extension of
the Stated Expiry Date of a previously issued Letter of Credit, by a U.S.
Issuer.
"U.S. $ EQUIVALENT" means the Exchange Equivalent in U.S. Dollars
of any amount of Canadian Dollars.
"U.S. FACILITY" is defined in ARTICLE II.
"U.S. FACILITY GUARANTOR" means each of Parent and each U.S.
Subsidiary Guarantor, in each case in its capacity as a Guarantor.
52
"U.S. FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the U.S. Agent from three federal funds brokers
of recognized standing selected by it.
"U.S. ISSUANCE REQUEST" means a Letter of Credit request and
certificate duly executed by an Authorized Officer of the U.S. Borrower,
substantially in the form of EXHIBIT B-3 hereto.
"U.S. ISSUER" means, collectively, Scotiabank (or any affiliate,
unit or agency thereof) in its individual capacity hereunder as issuer of any
U.S. Letters of Credit and such other U.S. Lender as may be designated by
Scotiabank (and agreed to by the U.S. Borrower and such U.S. Lender) in its
individual capacity as the issuer of any U.S. Letters of Credit.
"U.S. LENDER" is defined in the PREAMBLE.
"U.S. LETTER OF CREDIT" is defined in CLAUSE (a) OF SECTION 2.1.2.
"U.S. LETTER OF CREDIT COMMITMENT" means,
(a) relative to a U.S. Issuer, such U.S. Issuer's obligation to
issue U.S. Letters of Credit pursuant to SECTION 2.1.2; and
(b) relative to each U.S. RL Lender, its obligation to participate
in U.S. Letters of Credit pursuant to SECTION 4.1.1.
"U.S. LETTER OF CREDIT COMMITMENT AMOUNT" means, on any date, a
maximum amount of $35,000,000, as such amount may be reduced from time to time
pursuant to SECTION 2.2.
"U.S. LETTER OF CREDIT OUTSTANDINGS" means, on any date, an amount
equal to the sum of
(a) the then aggregate amount which is undrawn and available
under all issued and outstanding U.S. Letters of Credit,
53
PLUS
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations in respect of such U.S. Letters of Credit.
"U.S. LOAN" means, as the context may require, a Term B Loan, a
Term C Loan, a U.S. Revolving Loan or a Swing Line Loan.
"U.S. NOTE" means, as the context may require, a U.S. Revolving
Note, a Term B Note, a Term C Note or a Swing Line Note.
"U.S. PENSION PLAN" means a "pension plan", as such term is
defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA
(other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA),
and to which the U.S. Borrower or any corporation, trade or business that is,
along with the U.S. Borrower, a member of a Controlled Group, may have
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing
sponsor under Section 4069 of ERISA.
"U.S. PERCENTAGE" means, relative to any U.S. Lender, the
applicable percentage relating to U.S. Revolving Loans, Term B Loans or Term
C Loans, as the case may be, as set forth opposite its name on SCHEDULE II
hereto or set forth in a Lender Assignment Agreement, as such percentage may
be adjusted from time to time (a) pursuant to Lender Assignment Agreement(s)
executed by such Lender and its Assignee Lender(s) and delivered pursuant to
SECTION 12.11.1 or (b) by a reallocation pursuant to SECTION 2.2.3.
"U.S. PERSON" means any Person who is a United States Person
within the meaning of Section 7701(a)(30) of the Code (or any applicable
successor provision).
"U.S. REGISTER" is defined in Section 2.6(b).
"U.S. REVOLVING LOAN" is defined in SECTION 2.1.1.
"U.S. REVOLVING LOAN COMMITMENT" means, relative to any U.S. RL
Lender, such U.S. RL Lender's obligation (if any) to make U.S. Revolving
Loans pursuant to CLAUSE (a) of SECTION 2.1.1.
"U.S. REVOLVING LOAN COMMITMENT AMOUNT" means, on any date,
$105,000,000, as such amount may be reduced or reallocated from time to time
pursuant to SECTION 2.2.
"U.S. REVOLVING LOAN COMMITMENT TERMINATION DATE" means the
earliest of
(a) September 1, 1997 (if the initial Credit Extensions have not
occurred on or prior to such date);
54
(b) June 30, 2003;
(c) the date on which the U.S. Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to SECTION 2.2 (other than
SECTION 2.2.3); and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in the preceding CLAUSE (c) or
(d), the U.S. Revolving Loan Commitments shall terminate automatically and
without any further action.
"U.S. REVOLVING NOTE" means a promissory note of the U.S. Borrower
payable to any U.S. RL Lender, substantially in the form of EXHIBIT A-1
hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate Indebtedness of the
U.S. Borrower to such U.S. RL Lender resulting from outstanding U.S.
Revolving Loans, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"U.S. RL LENDERS" means those U.S. Lenders with a Commitment to
make U.S. Revolving Loans.
"U.S. SUBSIDIARY" means any Subsidiary that is incorporated under
the laws of the United States or a state thereof.
"U.S. SUBSIDIARY GUARANTOR" means each U.S. Subsidiary which has
executed and delivered a U.S. Subsidiary Guaranty.
"U.S. SUBSIDIARY GUARANTY" means a Subsidiary Guaranty executed
and delivered by a U.S. Subsidiary Guarantor pursuant to the terms of this
Agreement (including CLAUSE (a) of SECTION 9.1.7), substantially in the form
of EXHIBIT F-4 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"U.S. SUBSIDIARY PLEDGE AGREEMENT" means any Pledge Agreement
executed and delivered by a U.S. Subsidiary pursuant to the terms of this
Agreement (including CLAUSE (a) of SECTION 9.1.7), substantially in the form
of EXHIBIT E-5 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"U.S. SUBSIDIARY SECURITY AGREEMENT" means any Security Agreement
executed and delivered by a U.S. Subsidiary pursuant to the terms of this
Agreement (including CLAUSE (a) of SECTION 9.1.7), substantially in the form
of EXHIBIT G-4 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"U.S. SWING LINE LENDER" means, on the Effective Date, Scotiabank
(or, at any time thereafter, another U.S. RL Lender designated by Scotiabank
with the consent of the U.S.
55
Borrower, if such U.S. RL Lender agrees to be
the U.S. Swing Line Lender hereunder), in such Person's capacity as the maker
of U.S. Swing Line Loans.
"U.S. SWING LINE LOAN" is defined in CLAUSE (b) of SECTION 2.1.1.
"U.S. SWING LINE LOAN COMMITMENT" is defined in CLAUSE (b) of
SECTION 2.1.1.
"U.S. SWING LINE LOAN COMMITMENT AMOUNT" means, on any date,
$15,000,000, as such amount may be reduced from time to time pursuant to
SECTION 2.2.
"U.S. SWING LINE NOTE" means a promissory note of the U.S.
Borrower payable to the U.S. Swing Line Lender, in the form of EXHIBIT A-5
hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate Indebtedness of the
U.S. Borrower to the U.S. Swing Line Lender resulting from outstanding U.S.
Swing Line Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"VOTING STOCK" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"WELFARE PLAN" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
"wholly-owned" means, with respect to any direct or indirect
Subsidiary, any Subsidiary all of the outstanding common stock (or similar
equity interest) of which (other than any director's qualifying shares or
investments by foreign nationals mandated by applicable laws) is owned
directly or indirectly by a Borrower.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each other Loan Document, the
Disclosure Schedule, or any Borrowing Request, Issuance Request,
Continuation/Conversion Notice, Compliance Certificate, notice or other
communications delivered from time to time in connection with this Agreement
or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article
or Section are references to such Article or Section of this Agreement or
such other Loan Document, as the case may be, and, unless otherwise
specified, references in any Article, Section or definition to any clause are
references to such clause of such Article, Section or definition.
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SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. (a) Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, and all accounting determinations and
computations hereunder or thereunder (including under SECTION 9.2.4) shall be
made, in accordance with those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to
in CLAUSE (a) of SECTION 7.1.17; PROVIDED, HOWEVER, that all financial
statements required to be delivered hereunder or under any other Loan
Document shall be prepared in accordance with GAAP as in effect from time to
time. Unless otherwise expressly provided, all financial covenants and
defined financial terms shall be computed on a consolidated basis for the
U.S. Borrower and its Subsidiaries, in each case without duplication.
(b) If any changes in accounting principles from those used in the
preparation of the financial statements referred to in SECTION 8.5 hereafter
occur as a result of the promulgation of rules, regulations, pronouncements,
or opinions by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors thereto or agencies
with similar functions) and such changes result in a change in the method of
calculation of financial covenants, standards or terms found in this
Agreement, the Borrowers and the Lenders agree to enter into negotiations in
order to amend such financial covenants, standards or terms so as to
equitably reflect such changes with the desired result that the evaluations
of the U.S. Borrower's financial condition shall be the same after such
changes as if such changes had not been made; PROVIDED, HOWEVER, that until
the parties hereto have reached a definitive agreement on such amendments,
the U.S. Borrower's financial condition shall continue to be evaluated on the
same principles as those used in the preparation of the financial statements
referred to in SECTION 8.5.
ARTICLE II
U.S. COMMITMENTS AND BORROWING
SECTION 2.1. U.S. COMMITMENTS. On the terms and subject to the
conditions of this Agreement (including SECTIONS 2.1.4, 2.1.5 and ARTICLE
VII),
(a) each U.S. Lender severally agrees to make U.S. Loans (other
than U.S. Swing Line Loans) pursuant to the U.S. Commitments and the U.S.
Swing Line Lender agrees to make U.S. Swing Line Loans pursuant to the
U.S. Swing Line Loan Commitment, in each case as described in this
SECTION 2.1;
and
(b) each U.S. Issuer severally agrees that it will issue U.S.
Letters of Credit pursuant to SECTION 2.1.2, and each U.S. RL Lender
severally agrees that it will purchase participation interests in such
U.S. Letters of Credit pursuant to SECTION 4.1.1.
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Such agreements of each U.S. Lender are referred to collectively as its "U.S.
COMMITMENT", and all U.S. Commitments of U.S. Lenders are referred to
collectively as the "U.S. FACILITY".
SECTION 2.1.1. U.S. REVOLVING LOAN COMMITMENT AND U.S. SWING LINE
LOAN COMMITMENT. (a) From time to time on any Business Day occurring prior
to the U.S. Revolving Loan Commitment Termination Date, each U.S. RL Lender
will make loans (relative to such Lender, its "U.S. REVOLVING LOANS") to the
U.S. Borrower equal to such U.S. RL Lender's U.S. Percentage of the aggregate
amount of each Borrowing of the U.S. Revolving Loans requested by the U.S.
Borrower to be made on such day. The Commitment of each such U.S. RL Lender
described in this SECTION 2.1.1 is herein referred to as its "U.S. REVOLVING
LOAN COMMITMENT". On the terms and subject to the conditions hereof, the
U.S. Borrower may from time to time borrow, prepay and reborrow the U.S.
Revolving Loans.
(b) From time to time on any Business Day occurring prior to the
U.S. Revolving Loan Commitment Termination Date, the U.S. Swing Line
Lender will make loans (relative to the U.S. Swing Line Lender, its
"U.S. SWING LINE LOANS") to the U.S. Borrower equal to the principal
amount of the U.S. Swing Line Loans requested by the U.S. Borrower to
be made on such day. The Commitment of the U.S. Swing Line Lender
described in this CLAUSE (b) is herein referred to as its "U.S. SWING
LINE LOAN COMMITMENT". On the terms and subject to the conditions
hereof, the U.S. Borrower may from time to time borrow, prepay and
reborrow U.S. Swing Line Loans.
SECTION 2.1.2. U.S. LETTER OF CREDIT COMMITMENT. From time to
time on any Business Day occurring prior to the U.S. Revolving Loan
Commitment Termination Date, the applicable U.S. Issuer will
(a) issue one or more standby or documentary letters of credit
(relative to such U.S. Issuer, its "U.S. LETTER OF CREDIT") for the
account of the U.S. Borrower (which may be for the benefit of a U.S.
Subsidiary that has delivered a Subsidiary Guaranty) in the Stated
Amount requested by the U.S. Borrower on such day; or
(b) extend the Stated Expiry Date of an existing standby U.S.
Letter of Credit previously issued hereunder to a date not later than
the earlier of (x) the then scheduled U.S. Revolving Loan Commitment
Termination Date and (y) one year from the date of such extension.
SECTION 2.1.3. TERM LOAN COMMITMENT. In a single Borrowing
(which shall be on a Business Day) occurring on or prior to the Term Loan
Commitment Termination Date, each U.S. Lender that has a Term B Loan
Commitment or a Term C Loan Commitment, as applicable,
(a) will make loans (relative to such U.S. Lender, its "TERM B
LOANS") to the U.S. Borrower equal to such U.S. Lender's U.S.
Percentage of the aggregate amount of the Borrowing of Term B Loans
requested by the U.S. Borrower to be made on such day
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(with the commitment of each such U.S. Lender described in this CLAUSE
(a) herein referred to as its "TERM B LOAN COMMITMENT"); and
(b) will make loans (relative to such U.S. Lender, its "TERM C
LOANS") to the U.S. Borrower equal to such U.S. Lender's U.S. Percentage
of the aggregate amount of the Borrowing of Term C Loans requested by the
U.S. Borrower to be made on such day (with the commitment of each such
U.S. Lender described in this CLAUSE (b) herein referred to as its "TERM C
LOAN COMMITMENT").
No amounts paid or prepaid with respect to Term B Loans or Term C Loans may be
reborrowed.
SECTION 2.1.4. U.S. LENDERS NOT PERMITTED OR REQUIRED TO MAKE LOANS.
No U.S. Lender shall be permitted or required to make any U.S. Loan if, after
giving effect thereto, the aggregate outstanding principal amount of
(a) all U.S. Revolving Loans
(i) of all U.S. RL Lenders and the outstanding principal amount
of all U.S. Swing Line Loans, together with the aggregate amount of
all U.S. Letter of Credit Outstandings, would exceed the then
existing U.S. Revolving Loan Commitment Amount; or
(ii) of such U.S. RL Lender, together with such U.S. RL
Lender's U.S. Percentage of the aggregate amount of all U.S. Letter
of Credit Outstandings and such U.S. RL Lender's U.S. Percentage of
the outstanding principal amount of all U.S. Swing Line Loans, would
exceed such U.S. RL Lender's U.S. Percentage of the then existing
U.S. Revolving Loan Commitment Amount;
(b) all Term B Loans or Term C Loans, as the case may be,
(i) of all U.S. Lenders would exceed the Term B Loan Commitment
Amount (in the case of Term B Loans) or the Term C Loan Commitment
Amount (in the case of Term C Loans); or
(ii) of such U.S. Lender with a Term B Loan Commitment or a Term
C Loan Commitment, as the case may be, would exceed such U.S.
Lender's U.S. Percentage of the Term B Loan Commitment Amount (in the
case of Term B Loans) or the Term C Loan Commitment Amount (in the
case of Term C Loans); or
(c) (i) all U.S. Swing Line Loans would exceed the then existing
U.S. Swing Line Loan Commitment Amount or (ii) unless otherwise agreed
to by the U.S. Swing Line Lender, in its sole discretion, the sum of
all U.S. Swing Line Loans and U.S. Revolving Loans made by the U.S.
Swing Line Lender plus the U.S. Swing Line Lender's U.S.
59
Percentage multiplied by the aggregate amount of U.S. Letter of Credit
Outstandings would exceed the amount determined by multiplying the U.S.
Swing Line Lender's U.S. Percentage by the then existing U.S. Revolving
Loan Commitment Amount.
SECTION 2.1.5. U.S. ISSUER NOT PERMITTED OR REQUIRED TO ISSUE
U.S. LETTERS OF CREDIT. No U.S. Issuer shall be permitted or required to
issue any U.S. Letter of Credit if, after giving effect thereto, (a) the
aggregate amount of all U.S. Letter of Credit Outstandings would exceed the
U.S. Letter of Credit Commitment Amount or (b) the sum of the aggregate
amount of all U.S. Letter of Credit Outstandings plus the aggregate principal
amount of all U.S. Revolving Loans and U.S. Swing Line Loans then outstanding
would exceed the U.S. Revolving Loan Commitment Amount.
SECTION 2.2. REDUCTION OF THE U.S. COMMITMENT AMOUNTS;
REALLOCATION. The U.S. Commitment Amounts are subject to reduction from time
to time pursuant to SECTIONS 2.2.1 and 2.2.2, and to reallocation from time
to time pursuant to SECTION 2.2.3.
SECTION 2.2.1. OPTIONAL. The U.S. Borrower may, from time to time
on any Business Day occurring after the Effective Date, voluntarily reduce
the amount of the U.S. Revolving Loan Commitment Amount, the U.S. Swing Line
Loan Commitment Amount or the U.S. Letter of Credit Commitment Amount on the
Business Day so specified by the U.S. Borrower; PROVIDED, HOWEVER, that all
such reductions shall require at least one Business Day's prior notice to the
U.S. Agent and be permanent, and any partial reduction of any U.S. Commitment
Amount shall be in a minimum amount of $1,000,000 and in an integral multiple
of $500,000. Any reduction of the U.S. Revolving Loan Commitment Amount which
reduces the U.S. Revolving Loan Commitment Amount below the then current
amount of the U.S. Letter of Credit Commitment Amount or the U.S. Swing Line
Loan Commitment Amount, as the case may be, shall result in an automatic and
corresponding reduction of the U.S. Letter of Credit Commitment Amount or the
U.S. Swing Line Loan Commitment Amount, as the case may be, to the amount of
the U.S. Revolving Loan Commitment Amount, as so reduced, without any further
action on the part of any U.S. Lender, any U.S. Issuer or the U.S. Swing Line
Lender, as the case may be.
SECTION 2.2.2. MANDATORY. The U.S. Revolving Loan Commitment
Amount shall be reduced as set forth below.
(a) Following the prepayment of the Term Loans in full, the U.S.
Revolving Loan Commitment Amount shall, without any further action,
automatically and permanently be reduced concurrently with the receipt of
any Net Disposition Proceeds received by the U.S. Borrower or its U.S.
Subsidiaries, in an amount equal to 100% of such Net Disposition Proceeds;
PROVIDED, HOWEVER, that Net Disposition Proceeds attributable to
dispositions by non-U.S. Subsidiaries shall not be deemed "received" for
purposes of this clause until such time as such Net Disposition Proceeds
would have been required to be applied to repay Term Loans (determined as
if any Term Loans were still outstanding) pursuant to CLAUSE (c) of
SECTION 5.1.1; and PROVIDED, FURTHER, that the U.S. Borrower shall
60
comply with its obligation to repatriate such Net Disposition Proceeds as
promptly as possible in accordance with CLAUSE (c) of SECTION 5.1.1.
(b) The U.S. Revolving Loan Commitment Amount shall be reduced on
each Business Day on which a Permitted Receivables Transaction is
consummated in an amount equal to the Receivables Proceeds.
Notwithstanding the foregoing, in no event shall the U.S. Revolving Loan
Commitment Amount be reduced as a result of CLAUSE (a) of this Section to less
than $50,000,000.
SECTION 2.2.3. REALLOCATION. At any time after the first anniversary
of the Effective Date and prior to the U.S. Revolving Loan Commitment
Termination Date, the Borrowers may, periodically after at least twelve months
have elapsed since the most recent reallocation made pursuant to this SECTION
2.2.3 or SECTION 3.2.2, upon five Business Days' prior irrevocable written
notice delivered to the Agents, elect to reallocate the U.S. $ Equivalent of the
then unused Canadian Revolving Loan Commitment Amount to the U.S. Revolving Loan
Commitment Amount; PROVIDED, HOWEVER, that the U.S. Revolving Loan Commitment
Amount shall not at any time exceed $125,000,000 (or such lesser amount if the
U.S. Revolving Loan Commitment Amount has been permanently reduced in accordance
with SECTIONS 2.2.1 or 2.2.2) as a result of such reallocation. Any such
reallocation will automatically reduce the Canadian Revolving Loan Commitment
Amount by a corresponding amount and, upon the effectiveness of such
reallocation, the U.S. Percentages relating to U.S. Revolving Loans of the Dual
Lenders shall be increased, and the U.S. Percentages of the U.S. RL Lenders that
are not Dual Lenders shall be decreased, as set forth in the next two sentences
to the extent necessary to reflect the Dual Lenders' commitment to make U.S.
Revolving Loans in the increased amount so reallocated to the U.S. Revolving
Loan Commitment Amount, it being the intent of the parties hereto that the U.S.
Revolving Loan Commitment of U.S. RL Lenders that are not Dual Lenders shall not
be increased above that which was in effect immediately prior to giving effect
to such reallocation. The U.S. Percentage of the U.S. Revolving Loan Commitment
Amount of a U.S. RL Lender that is not a Dual Lender shall equal the maximum
principal amount of U.S. Revolving Loans that such U.S. RL Lender would be
required to make immediately prior to giving effect to a reallocation pursuant
to this Section DIVIDED by the U.S. Revolving Loan Commitment Amount immediately
after giving effect to the increase in the U.S. Revolving Loan Commitment Amount
resulting from such reallocation. The U.S. Percentage of the U.S. Revolving Loan
Commitment Amount of a U.S. RL Lender that is a Dual Lender shall equal the
quotient of (a) the sum of (i) the maximum principal amount of U.S. Revolving
Loans that such Dual Lender would be required to make immediately prior to
giving effect to a reallocation pursuant to this Section PLUS (ii) the product
of (x) such Dual Lender's Canadian Percentage to make Canadian Revolving Loans
MULTIPLIED by (y) the U.S. $ Equivalent of the Canadian Revolving Loan
Commitment Amount reallocated pursuant to this Section, DIVIDED by (b) the U.S.
Revolving Loan Commitment Amount immediately after giving effect to the increase
in the U.S. Revolving Loan Commitment Amount resulting from such reallocation.
If the U.S. Revolving Loan Commitment Amount is reduced as a result of a
reallocation that increases the Canadian
61
Revolving Loan Commitment Amount pursuant to SECTION 3.2.2, then the U.S.
Percentages of the U.S. RL Lenders that are not Dual Lenders shall be
increased and the U.S. Percentages of the Dual Lenders shall be decreased
based upon the foregoing principles (it being understood that the Commitment
Amounts of the U.S. RL Lenders that are not Dual Lenders shall not be changed
as a result of such reallocation). Upon (and as a condition to) a
reallocation pursuant to this Section which increases the U.S. Revolving Loan
Commitment Amount, the U.S. Borrower shall execute and deliver to each of the
Dual Lenders a new U.S. Revolving Note to reflect the increased U.S.
Revolving Loan Commitment of such Dual Lender. The U.S. Agent shall
distribute to the Borrowers and the Lenders the modified Percentages in
effect after giving effect to a reallocation pursuant to this Section.
SECTION 2.3. BORROWING PROCEDURES. U.S. Loans (other than U.S.
Swing Line Loans) shall be made by the U.S. Lenders in accordance with
SECTION 2.3.1, and U.S. Swing Line Loans shall be made by the U.S. Swing Line
Lender in accordance with SECTION 2.3.2.
SECTION 2.3.1. BORROWINGS OF OTHER THAN U.S. SWING LINE LOANS. In
the case of other than U.S. Swing Line Loans, by delivering a Borrowing
Request to the U.S. Agent on or before 1:00 p.m. (local time) on a Business
Day, the U.S. Borrower may from time to time irrevocably request, on not less
than one Business Day's notice in the case of U.S. Base Rate Loans, or three
Business Days' notice in the case of LIBO Rate Loans, and in either case not
more than five Business Days' notice, that a Borrowing be made, in the case
of LIBO Rate Loans, in a minimum amount of $1,000,000 and an integral
multiple of $1,000,000, in the case of U.S. Base Rate Loans, in a minimum
amount of $1,000,000 and an integral multiple of $250,000 or, in either case,
in the unused amount of the applicable U.S. Commitment; PROVIDED, HOWEVER,
that all initial U.S. Loans shall be made as U.S. Base Rate Loans. On the
terms and subject to the conditions of this Agreement, each Borrowing shall
be comprised of the type of U.S. Loans, and shall be made on the Business
Day, specified in such Borrowing Request. In the case of other than U.S.
Swing Line Loans, on or before 11:00 a.m. (local time) on such Business Day,
each U.S. Lender that has a U.S. Commitment to make the U.S. Loans being
requested shall deposit with the U.S. Agent same day funds in an amount equal
to such U.S. Lender's U.S. Percentage of the requested Borrowing. Such
deposit will be made to an account which the U.S. Agent shall specify from
time to time by notice to the U.S. Lenders. To the extent funds are received
from the U.S. Lenders, the U.S. Agent shall make such funds available to the
U.S. Borrower by wire transfer to the accounts the U.S. Borrower shall have
specified in its Borrowing Request. No U.S. Lender's obligation to make any
U.S. Loan shall be affected by any other U.S. Lender's failure to make any
U.S. Loan.
SECTION 2.3.2. U.S. SWING LINE LOANS. (a) By telephonic notice,
promptly followed (within one Business Day) by the delivery of a confirming
Borrowing Request, to the U.S. Swing Line Lender on or before 1:00 p.m. (local
time) on the Business Day the proposed U.S. Swing Line Loan is to be made, the
U.S. Borrower may from time to time irrevocably request that U.S. Swing Line
Loans be made by the U.S. Swing Line Lender in an aggregate minimum principal
amount of $200,000 and an integral multiple of $100,000. All U.S. Swing Line
Loans shall be made as U.S. Base Rate Loans and shall not be entitled to be
converted
62
into LIBO Rate Loans. The proceeds of each U.S. Swing Line Loan shall be made
available by the U.S. Swing Line Lender, by its close of business on the
Business Day telephonic notice is received by it as provided in this CLAUSE
(a), to the U.S. Borrower by wire transfer to the account the U.S. Borrower
shall have specified in its notice therefor.
(b) If
(i) any U.S. Swing Line Loan shall be outstanding for more than
four Business Days;
(ii) any U.S. Swing Line Loan is or will be outstanding on a date
when the U.S. Borrower requests that a U.S. Revolving Loan be made; or
(iii) any Default shall occur and be continuing,
each U.S. RL Lender (other than the U.S. Swing Line Lender) irrevocably agrees
that it will, at the request of the U.S. Swing Line Lender, make a U.S.
Revolving Loan (which shall initially be funded as a U.S. Base Rate Loan) in an
amount equal to such U.S. RL Lender's U.S. Percentage of the aggregate principal
amount of all such U.S. Swing Line Loans then outstanding (such outstanding U.S.
Swing Line Loans hereinafter referred to as the "REFUNDED U.S. SWING LINE
LOANS"). On or before 11:00 a.m. (local time) on the first Business Day
following receipt by each U.S. RL Lender of a request to make U.S. Revolving
Loans as provided in the preceding sentence, each such U.S. RL Lender shall
deposit in an account specified by the U.S. Swing Line Lender the amount so
requested in same day funds and such funds shall be applied by the U.S. Swing
Line Lender to repay the Refunded U.S. Swing Line Loans. At the time the
aforementioned U.S. RL Lenders make the above referenced U.S. Revolving Loans,
the U.S. Swing Line Lender shall be deemed to have made, in consideration of the
making of the Refunded U.S. Swing Line Loans, U.S. Revolving Loans in an amount
equal to the U.S. Swing Line Lender's U.S. Percentage of the aggregate principal
amount of the Refunded U.S. Swing Line Loans. Upon the making (or deemed making,
in the case of the U.S. Swing Line Lender) of any U.S. Revolving Loans pursuant
to this CLAUSE (b), the amount so funded shall become outstanding under such
U.S. RL Lender's U.S. Revolving Note and shall no longer be owed under the U.S.
Swing Line Note. All interest payable with respect to any U.S. Revolving Loans
made (or deemed made, in the case of the U.S. Swing Line Lender) pursuant to
this CLAUSE (b) shall be appropriately adjusted to reflect the period of time
during which the U.S. Swing Line Lender had outstanding U.S. Swing Line Loans in
respect of which such U.S. Revolving Loans were made. Each U.S. RL Lender's
obligation to make the U.S. Revolving Loans referred to in this CLAUSE (b) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or other right
which such U.S. RL Lender may have against the U.S. Swing Line Lender, the U.S.
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of any Default; (iii) any adverse change in the condition (financial
or otherwise) of the U.S. Borrower; (iv) the acceleration or maturity of any
U.S. Loans or the termination of any U.S. Commitment after the making of any
U.S. Swing Line Loan; (v) any breach of this Agreement or any other Loan
Document by the U.S.
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Borrower or any U.S. RL Lender; or (vi) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering
a Continuation/ Conversion Notice to the U.S. Agent on or before 1:00 p.m.
(local time) on a Business Day, the U.S. Borrower may from time to time
irrevocably elect, on not less than one Business Day's notice in the case of
U.S. Base Rate Loans, or three Business Days' notice in the case of LIBO Rate
Loans, and in either case not more than five Business Days' notice, that all,
or any portion in an aggregate minimum amount of $1,000,000 and an integral
multiple of $1,000,000, in the case of LIBO Rate Loans, or an aggregate
minimum amount of $1,000,000 and an integral multiple of $250,000, in the
case of U.S. Base Rate Loans, be, in the case of U.S. Base Rate Loans,
converted into LIBO Rate Loans or be, in the case of LIBO Rate Loans,
converted into U.S. Base Rate Loans or continued as LIBO Rate Loans (in the
absence of delivery of a Continuation/Conversion Notice with respect to any
LIBO Rate Loan at least three Business Days (but not more than five Business
Days) before the last day of the then current Interest Period with respect
thereto, such LIBO Rate Loan shall, on such last day, automatically convert
to a U.S. Base Rate Loan); PROVIDED, HOWEVER, that (x) each such conversion
or continuation shall be pro rated among the applicable outstanding U.S.
Loans of all U.S. Lenders that have made such U.S. Loans, and (y) no portion
of the outstanding principal amount of any U.S. Loans may be continued as, or
be converted into, LIBO Rate Loans when any Default has occurred and is
continuing.
SECTION 2.5. FUNDING. Each U.S. Lender may, if it so elects, fulfill
its obligation to make, continue or convert LIBO Rate Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such U.S. Lender) to make or maintain such LIBO Rate Loan; PROVIDED,
HOWEVER, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such U.S. Lender, and the obligation of the U.S. Borrower to
repay such LIBO Rate Loan shall nevertheless be to such U.S. Lender for the
account of such foreign branch, Affiliate or international banking facility; and
PROVIDED, FURTHER, HOWEVER, that such U.S. Lender shall cause such foreign
branch, Affiliate or international banking facility to comply with the
applicable provisions of CLAUSE (b) of SECTION 6.6 with respect to such LIBO
Rate Loan. In addition, the U.S. Borrower hereby consents and agrees that, for
purposes of any determination to be made for purposes of SECTION 6.1, 6.2, 6.3
or 6.4, it shall be conclusively assumed that each U.S. Lender elected to fund
all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's
interbank eurodollar market.
SECTION 2.6. U.S. REGISTER; U.S. NOTES.
(a) Each U.S. Lender may maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the U.S.
Borrower to such U.S. Lender resulting from each U.S. Loan made by such
U.S. Lender, including the amounts of principal and interest payable and
paid to such U.S. Lender from time to time hereunder. In the case of a
U.S. Lender that does not request, pursuant to PARAGRAPH (b)(ii) below,
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execution and delivery of a Note evidencing the U.S. Loans made by such
U.S. Lender to the U.S. Borrower, such account or accounts shall, to the
extent not inconsistent with the notations made by the U.S. Agent in the
U.S. Register, be conclusive and binding on the U.S. Borrower absent
manifest error; PROVIDED, HOWEVER, that the failure of any U.S. Lender to
maintain such account or accounts shall not limit or otherwise affect any
Obligations of the U.S. Borrower or any other Obligor.
(b)(i) The U.S. Borrower hereby designates the U.S. Agent to serve as
the U.S. Borrower's agent, solely for the purpose of this CLAUSE (b), to
maintain a register (the "U.S. REGISTER") on which the U.S. Agent will
record each U.S. Lender's U.S. Commitment, the U.S. Loans made by each
U.S. Lender and each repayment in respect of the principal amount of the
U.S. Loans of each U.S. Lender and annexed to which the U.S. Agent shall
retain a copy of each Lender Assignment Agreement delivered to the U.S.
Agent pursuant to SECTION 12.11.1. Failure to make any recordation, or any
error in such recordation, shall not affect the U.S. Borrower's obligation
in respect of such U.S. Loans. The entries in the U.S. Register shall be
conclusive, in the absence of manifest error, and the U.S. Borrower, the
U.S. Agent and the U.S. Lenders shall treat each Person in whose name a
U.S. Loan (and as provided in CLAUSE (ii) the Note evidencing such U.S.
Loan, if any) is registered as the owner thereof for all purposes of this
Agreement, notwithstanding notice or any provision herein to the contrary.
A U.S. Lender's U.S. Commitment and the U.S. Loans made pursuant thereto
may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer in the U.S. Register. Any
assignment or transfer of a U.S. Lender's U.S. Commitment or the U.S.
Loans made pursuant thereto shall be registered in the U.S. Register only
upon delivery to the U.S. Agent of a Lender Assignment Agreement duly
executed by the assignor thereof. No assignment or transfer of a U.S.
Lender's U.S. Commitment or the U.S. Loans made pursuant thereto shall be
effective unless such assignment or transfer shall have been recorded in
the U.S. Register by the U.S. Agent as provided in this Section.
(ii) The U.S. Borrower agrees that, upon the request to the U.S.
Agent by any U.S. Lender, the U.S. Borrower will execute and deliver to
such U.S. Lender, as applicable, a U.S. Revolving Note, a Term B Note and
a Term C Note evidencing the U.S. Loans made by such U.S. Lender. The U.S.
Borrower hereby irrevocably authorizes each U.S. Lender to make (or cause
to be made) appropriate notations on the grid attached to such U.S.
Lender's Note (or on any continuation of such grid), which notations, if
made, shall evidence, INTER ALIA, the date of, the outstanding principal
of, and the interest rate and Interest Period applicable to the U.S. Loans
evidenced thereby. Such notations shall, to the extent not inconsistent
with the notations made by the U.S. Agent in the U.S. Register, be
conclusive and binding on the U.S. Borrower absent manifest error;
PROVIDED, HOWEVER, that the failure of any U.S. Lender to make any such
notations shall not limit or otherwise affect any Obligations of the U.S.
Borrower or any other Obligor. The Loans evidenced by any such Note and
interest thereon shall at all times (including after assignment pursuant
to SECTION 12.11.1) be represented by one or more Notes payable to
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the order of the payee named therein and its registered assigns. A Note
and the obligation evidenced thereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment
or transfer of such Note and the obligation evidenced thereby in the U.S.
Register (and each Note shall expressly so provide). Any assignment or
transfer of all or part of an obligation evidenced by a Note shall be
registered in the U.S. Register only upon surrender for registration of
assignment or transfer of the Note evidencing such obligation, accompanied
by a Lender Assignment Agreement duly executed by the assignor thereof,
and thereupon, if requested by the assignee, one or more new Notes shall
be issued to the designated assignee and the old Note shall be returned by
the U.S. Agent to the Borrower marked "exchanged". No assignment of a Note
and the obligation evidenced thereby shall be effective unless it shall
have been recorded in the U.S. Register by the U.S. Agent as provided in
this Section.
ARTICLE III
CANADIAN COMMITMENTS, BORROWING AND CANADIAN BAS
SECTION 3.1. CANADIAN COMMITMENTS. On the terms and subject to
the conditions of this Agreement (including SECTIONS 3.1.3, 3.1.4 and ARTICLE
VII),
(a) each Canadian Lender severally agrees to make Canadian Revolving
Loans (other than Canadian Swing Line Loans) pursuant to the Canadian
Commitments and the Canadian Swing Line Lender agrees to make Canadian
Swing Line Loans pursuant to the Canadian Swing Line Loan Commitment, in
each case as described in this SECTION 3.1, and each Canadian Lender
agrees to accept Canadian BAs in accordance with SECTION 3.5; and
(b) each Canadian Issuer severally agrees that it will issue
Canadian Letters of Credit pursuant to SECTION 3.1.2, and each Canadian
Lender severally agrees that it will purchase participation interests
in such Canadian Letters of Credit pursuant to SECTION 4.1.1.
Such agreements of each Canadian Lender are referred to collectively as its
"CANADIAN COMMITMENT", and all Canadian Commitments of Canadian Lenders are
referred to collectively as the "CANADIAN FACILITY".
SECTION 3.1.1. CANADIAN REVOLVING LOAN COMMITMENT AND CANADIAN SWING
LINE LOAN COMMITMENT. (a) From time to time on any Business Day occurring prior
to the Canadian Revolving Loan Commitment Termination Date, each Canadian Lender
will make revolving loans to or accept Canadian BAs of (relative to such Lender,
its "CANADIAN REVOLVING LOANS") the Canadian Borrower equal to such Canadian
Lender's Canadian Percentage of the aggregate amount of each Borrowing of the
Canadian Revolving Loans requested by the Canadian Borrower to be made on such
day. The Commitment of each such Canadian Lender described in this SECTION 3.1.1
is herein referred to as its "CANADIAN
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REVOLVING LOAN COMMITMENT". On the terms and subject to the conditions
hereof, the Canadian Borrower may from time to time borrow, prepay and
reborrow the Canadian Revolving Loans.
(b) From time to time on any Business Day occurring prior to the
Canadian Revolving Loan Commitment Termination Date, the Canadian Swing
Line Lender will make loans (relative to the Canadian Swing Line Lender,
its "CANADIAN SWING LINE LOANS") to the Canadian Borrower equal to the
principal amount of the Canadian Swing Line Loans requested by the
Canadian Borrower to be made on such day. The Commitment of the Canadian
Swing Line Lender described in this CLAUSE (b) is herein referred to as
its "CANADIAN SWING LINE LOAN COMMITMENT". On the terms and subject to the
conditions hereof, the Canadian Borrower may from time to time borrow,
prepay and reborrow Canadian Swing Line Loans.
SECTION 3.1.2. CANADIAN LETTER OF CREDIT COMMITMENT. From time
to time on any Business Day occurring prior to the Canadian Revolving Loan
Commitment Termination Date, the applicable Canadian Issuer will
(a) issue one or more standby or documentary letters of credit
(relative to such Canadian Issuer, its "CANADIAN LETTER OF CREDIT") for
the account of the Canadian Borrower (which may be for the benefit of a
Canadian Subsidiary that has delivered a Subsidiary Guaranty) in the
Stated Amount requested by the Canadian Borrower on such day; or
(b) extend the Stated Expiry Date of an existing standby Canadian
Letter of Credit previously issued hereunder to a date not later than
the earlier of (x) the Canadian Revolving Loan Commitment Termination
Date and (y) one year from the date of such extension.
SECTION 3.1.3. CANADIAN LENDERS NOT PERMITTED OR REQUIRED TO MAKE
LOANS. No Canadian Lender shall be permitted or required to make any
Canadian Loan if, after giving effect thereto, the aggregate outstanding
principal amount of
(a) all Canadian Revolving Loans
(i) of all Canadian Lenders and the outstanding principal amount
of all Canadian Swing Line Loans, together with the aggregate amount of
all Canadian Letter of Credit Outstandings, would exceed the then
existing Canadian Revolving Loan Commitment Amount; or
(ii) of such Canadian Lender, together with such Canadian Lender's
Canadian Percentage of the aggregate amount of all Canadian Letter of
Credit Outstandings and such Canadian Lender's Canadian Percentage of the
outstanding principal amount of all
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Canadian Swing Line Loans, would exceed such Canadian Lender's Canadian
Percentage of the then existing Canadian Revolving Loan Commitment
Amount; or
(b) (i) all Canadian Swing Line Loans would exceed the then existing
Canadian Swing Line Loan Commitment Amount or (ii) unless otherwise agreed
to by the Canadian Swing Line Lender, in its sole discretion, the sum of
all Canadian Swing Line Loans and Canadian Revolving Loans made by the
Canadian Swing Line Lender plus the Canadian Swing Line Lender's Canadian
Percentage multiplied by the aggregate amount of Canadian Letter of Credit
Outstandings would exceed the amount determined by multiplying the
Canadian Swing Line Lender's Canadian Percentage by the then existing
Canadian Revolving Loan Commitment Amount.
SECTION 3.1.4. CANADIAN ISSUER NOT PERMITTED OR REQUIRED TO ISSUE
CANADIAN LETTERS OF CREDIT. No Canadian Issuer shall be permitted or required to
issue any Canadian Letter of Credit if, after giving effect thereto, (a) the
aggregate amount of all Canadian Letter of Credit Outstandings would exceed the
Canadian Letter of Credit Commitment Amount or (b) the sum of the aggregate
amount of all Canadian Letter of Credit Outstandings plus the aggregate
principal amount of all Canadian Revolving Loans and Canadian Swing Line Loans
then outstanding would exceed the Canadian Revolving Loan Commitment Amount.
SECTION 3.2. REDUCTION OF THE CANADIAN COMMITMENT AMOUNTS;
REALLOCATION. The Canadian Commitment Amounts are subject to reduction from
time to time pursuant to SECTION 3.2.1, and to reallocation from time to time
pursuant to SECTION 3.2.2.
SECTION 3.2.1. OPTIONAL. The Canadian Borrower may, from time to time
on any Business Day occurring after the Effective Date, voluntarily reduce the
amount of the Canadian Revolving Loan Commitment Amount, the Canadian Swing Line
Loan Commitment Amount or the Canadian Letter of Credit Commitment Amount on the
Business Day so specified by the Canadian Borrower; PROVIDED, HOWEVER, that all
such reductions shall require at least one Business Day's prior notice to the
Canadian Agent and be permanent, and any partial reduction of any Canadian
Commitment Amount shall be in a minimum amount of Cdn $1,000,000 and in an
integral multiple of Cdn $500,000. Any reduction of the Canadian Revolving Loan
Commitment Amount which reduces the Canadian Revolving Loan Commitment Amount
below the then current amount of the Canadian Letter of Credit Commitment Amount
or the Canadian Swing Line Loan Commitment Amount, as the case may be, shall
result in an automatic and corresponding reduction of the Canadian Letter of
Credit Commitment Amount or the Canadian Swing Line Loan Commitment Amount, as
the case may be, to the amount of the Canadian Revolving Loan Commitment Amount,
as so reduced, without any further action on the part of any Canadian Lender,
any Canadian Issuer or the Canadian Swing Line Lender, as the case may be.
SECTION 3.2.2. REALLOCATION. At any time after the first anniversary
of the Effective Date and prior to the Canadian Revolving Loan Commitment
Termination Date, the Borrowers may, periodically after at least twelve months
have elapsed since the most recent
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reallocation made pursuant to this SECTION 3.2.2 or SECTION 2.2.3, upon five
Business Days' prior irrevocable written notice delivered to the Agents,
elect to reallocate the Cdn $ Equivalent of the unused U.S. Revolving Loan
Commitment Amount to the Canadian Revolving Loan Commitment Amount of the
Dual Lenders; PROVIDED, HOWEVER, that the Canadian Revolving Loan Commitment
Amount shall not at any time exceed the Cdn $ Equivalent of $20,000,000 (or
such lesser amount if the Canadian Revolving Loan Commitment Amount has been
permanently reduced in accordance with SECTION 3.2.1) as a result of such
reallocation. Any such reallocation will automatically reduce the U.S.
Revolving Loan Commitment Amount by a corresponding amount. Upon a
reallocation pursuant to this Section, the Canadian Lenders shall have the
same Canadian Percentage to make Canadian RL Loans as that which was in
effect on the Effective Date (as such Canadian Percentage to make Canadian RL
Loans many have been modified by way of a Lender Assignment Agreement
subsequent to the Effective Date).
SECTION 3.3. BORROWING PROCEDURES. Canadian Loans (other than
Canadian Swing Line Loans) shall be made by the Canadian Lenders in
accordance with SECTION 3.3.1, and Canadian Swing Line Loans shall be made by
the Canadian Swing Line Lender in accordance with SECTION 3.3.2.
SECTION 3.3.1. BORROWINGS OF OTHER THAN CANADIAN SWING LINE LOANS. In
the Case of other than Canadian Swing Line Loans, by delivering a Borrowing
Request to the Canadian Agent at or before 1:00 p.m. (local time) on a Business
Day, the Canadian Borrower may from time to time irrevocably request, on the
Business Day the proposed Borrowing is to be made in the case of Canadian Prime
Rate Loans (to the extent the aggregate outstanding principal amount of Canadian
Prime Rate Loans, including as a result of such requested Borrowing, does not
exceed Cdn $2,000,000) or on not less than one Business Day's notice (to the
extent the aggregate outstanding principal amount of Canadian Prime Rate Loans,
including as a result of such requested Borrowing, exceeds Cdn $2,000,000), or
three Business Days' notice in the case of Canadian BAs, and in any case not
more than five Business Days' notice, that a Borrowing be made, in the case of
Canadian Prime Rate Loans, in a minimum amount of Cdn $100,000 and an integral
multiple of Cdn $100,000, in the case of Canadian BAs, in a minimum amount of
Cdn $1,000,000 and an integral multiple of Cdn $100,000 or, in either case, in
the unused amount of the applicable Canadian Commitment; PROVIDED, HOWEVER, that
all initial Canadian Revolving Loans shall be made as Canadian Prime Rate Loans.
On the terms and subject to the conditions of this Agreement, each Borrowing
shall be comprised of the type of Canadian Revolving Loans, and shall be made on
the Business Day, specified in such Borrowing Request. On or before 11:00 a.m.
(local time) on such Business Day, each Canadian Lender that has a Canadian
Commitment to make the Canadian Revolving Loans being requested shall deposit
with the Canadian Agent same day funds in an amount equal to such Canadian
Lender's Canadian Percentage of the requested Borrowing. Such deposit will be
made to an account which the Canadian Agent shall specify from time to time by
notice to the Canadian Lenders. To the extent funds are received from the
Canadian Lenders, the Canadian Agent shall make such funds available to the
Canadian Borrower by wire transfer to the accounts the Canadian Borrower shall
have specified in its Borrowing Request. No
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Canadian Lender's obligation to make any Canadian Revolving Loan shall be
affected by any other Canadian Lender's failure to make any Canadian
Revolving Loan.
SECTION 3.3.2. CANADIAN SWING LINE LOANS. By telephonic notice,
promptly followed (within one Business Day) by the delivery of a confirming
Borrowing Request, to the Canadian Swing Line Lender on or before 1:00 p.m.
(local time) on the Business Day the proposed Canadian Swing Line Loan is to be
made, the Canadian Borrower may from time to time irrevocably request that
Canadian Swing Line Loans be made by the Canadian Swing Line Lender in an
aggregate minimum principal amount of Cdn $100,000 and an integral multiple of
Cdn $100,000. All Canadian Swing Line Loans shall be made as Canadian Prime Rate
Loans and shall not be entitled to be converted into Canadian BAs. The proceeds
of each Canadian Swing Line Loan shall be made available by the Canadian Swing
Line Lender, by its close of business on the Business Day telephonic notice is
received by it as provided in this Section, to the Canadian Borrower by wire
transfer to the account the Canadian Borrower shall have specified in its notice
therefor.
(a) If
(i) any Canadian Swing Line Loan shall be outstanding for more
than four Business Days;
(ii) any Canadian Swing Line Loan is or will be outstanding on a
date when the Canadian Borrower requests that a Canadian Revolving Loan
be made; or
(iii) any Default shall occur and be continuing,
each Canadian Lender (other than the Canadian Swing Line Lender) irrevocably
agrees that it will, at the request of the Canadian Swing Line Lender, make a
Canadian Revolving Loan (which shall initially be funded as a Canadian Prime
Rate Loan) in an amount equal to such Canadian Lender's Canadian Percentage of
the aggregate principal amount of all such Canadian Swing Line Loans then
outstanding (such outstanding Canadian Swing Line Loans hereinafter referred to
as the "REFUNDED CANADIAN SWING LINE LOANS"). On or before 11:00 a.m. (local
time) on the first Business Day following receipt by each Canadian Lender of a
request to make Canadian Revolving Loans as provided in the preceding sentence,
each such Canadian Lender shall deposit in an account specified by the Canadian
Swing Line Lender the amount so requested in same day funds and such funds shall
be applied by the Canadian Swing Line Lender to repay the Refunded Canadian
Swing Line Loans. At the time the aforementioned Canadian Lenders make the above
referenced Canadian Revolving Loans, the Canadian Swing Line Lender shall be
deemed to have made, in consideration of the making of the Refunded Canadian
Swing Line Loans, Canadian Revolving Loans in an amount equal to the Canadian
Swing Line Lender's Canadian Percentage of the aggregate principal amount of the
Refunded Canadian Swing Line Loans. Upon the making (or deemed making, in the
case of the Canadian Swing Line Lender) of any Canadian Revolving Loans pursuant
to this CLAUSE (b), the amount so funded shall become outstanding under such
Canadian Lender's Canadian
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Revolving Note and shall no longer be owed under the Canadian Swing Line
Note. All interest payable with respect to any Canadian Revolving Loans made
(or deemed made, in the case of the Canadian Swing Line Lender) pursuant to
this CLAUSE (b) shall be appropriately adjusted to reflect the period of time
during which the Canadian Swing Line Lender had outstanding Canadian Swing
Line Loans in respect of which such Canadian Revolving Loans were made. Each
Canadian Lender's obligation to make the Canadian Revolving Loans referred to
in this CLAUSE (b) shall be absolute and unconditional and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Canadian Lender may have
against the Canadian Swing Line Lender, the Canadian Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of any
Default; (iii) any adverse change in the condition (financial or otherwise)
of the Canadian Borrower; (iv) the acceleration or maturity of any Canadian
Loans or the termination of any Canadian Commitment after the making of any
Canadian Swing Line Loan; (v) any breach of this Agreement or any other Loan
Document by the Canadian Borrower or any Canadian Lender; or (vi) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
SECTION 3.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering
a Continuation/ Conversion Notice to the Canadian Agent on or before 1:00
p.m. (local time) on a Business Day, the Canadian Borrower may from time to
time irrevocably elect, on not less than one Business Day's notice in the
case of Canadian Prime Rate Loans, or three Business Days' notice in the case
of Canadian BAs, and in either case not more than five Business Days' notice,
that all, or any portion in an aggregate minimum amount of Cdn $100,000 and
an integral multiple of Cdn $100,000, in the case of Canadian Prime Rate
Loans, or an aggregate minimum amount of Cdn $1,000,000 and an integral
multiple of Cdn $100,000, in the case of Canadian BAs, be, in the case of
Canadian Prime Rate Loans, converted into Canadian BAs or be, in the case of
Canadian BAs, converted into Canadian Prime Rate Loans or rolled over as
Canadian BAs (in the absence of delivery of a Continuation/Conversion Notice
with respect to any Canadian BA at least three Business Days (but not more
than five Business Days) before the last day of the then current Interest
Period with respect thereto, such Canadian BA shall, on such last day,
automatically convert to a Canadian Prime Rate Loan); PROVIDED, HOWEVER, that
(x) each such conversion or continuation shall be pro rated among the
applicable outstanding Canadian Revolving Loans of all Canadian Lenders that
have made such Canadian Revolving Loans, and (y) no portion of the
outstanding principal amount of any Canadian Revolving Loans may be continued
as, or be converted into, Canadian BAs when any Default has occurred and is
continuing.
SECTION 3.4.1. CONVERTING CANADIAN PRIME RATE LOANS TO CANADIAN
BAS. Provided that the Canadian Borrower has, by giving notice to the
Canadian Agent in accordance with SECTION 3.4, requested the Canadian Lenders
to accept its drafts to replace all or a portion of an outstanding Canadian
Revolving Loan, then each Canadian Lender shall, on the date of conversion
and concurrent with the payment by the Canadian Borrower to the Canadian
Agent on behalf of the Canadian Lenders of the principal amount of such
outstanding Canadian Revolving Loan or the portion thereof which is being
converted less the Notional BA
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Proceeds with respect to the drafts to be accepted, accept the Canadian
Borrower's draft or drafts having an aggregate face amount equal to its
Canadian Percentage of the aggregate principal amount of such Canadian
Revolving Loan or the portion thereof which is being converted, such
acceptance to be in accordance with SECTION 3.5.1.
SECTION 3.4.2. CONVERTING CANADIAN BAS TO CANADIAN PRIME RATE
LOANS. Each Canadian Lender shall, at the end of an Interest Period with
respect to Canadian BAs which such Canadian Lender has accepted, pay to the
holder thereof the face amount of such Canadian BA. Provided that the
Canadian Borrower has, by giving notice to the Canadian Agent in accordance
with SECTION 3.4, requested the Canadian Lenders to convert all or a portion
of outstanding maturing Canadian BAs into a particular type of Canadian
Revolving Loan, each Canadian Lender shall, upon the end of an Interest
Period with respect to such Canadian BAs and the payment by such Canadian
Lender to the holders of such Canadian BAs of the aggregate face amount
thereof, make available to the Canadian Borrower the Canadian Revolving Loan
into which the matured Canadian BAs or a portion thereof are converted in the
aggregate principal amount equal to its Canadian Percentage of the aggregate
face amount of the matured Canadian BAs or the portion thereof which are
being converted.
SECTION 3.5. CANADIAN BAS. Not in limitation of any other
provision of this Agreement, but in furtherance thereof, the provisions of
this SECTION 3.5 shall further apply to the acceptance, rolling over and
conversion of Canadian BAs:
SECTION 3.5.1. FUNDING OF CANADIAN BAS. If the Canadian Agent
receives a Borrowing Request or a Continuation/Conversion Notice from the
Canadian Borrower requesting a Borrowing or a rollover of or a conversion
into a Canadian Revolving Loan by way of Canadian BAs, the Canadian Agent
shall notify each of the Canadian Lenders, prior to 11:00 a.m. (local time)
on the second Business Day prior to the date of such Credit Extension, of
such request and of each Canadian Lender's Canadian Percentage of such
Canadian Revolving Loan. Each Canadian Lender shall, not later than 11:30
a.m. (local time) on the date of each Canadian Revolving Loan by way of
Canadian BAs (whether in respect of the Credit Extension or pursuant to a
rollover or conversion), accept drafts of the Canadian Borrower which are
presented to it for acceptance and which have an aggregate face amount equal
to such Canadian Lender's Canadian Percentage of the total Credit Extension
being made available by way of Canadian BAs on such date. With respect to
each drawdown of, rollover of or conversion into Canadian BAs, each Canadian
Lender shall not be required to accept any draft which has a face amount
which is not in an integral multiple of Cdn $100,000. Each Canadian Lender
shall purchase its Canadian Percentage of any Canadian BAs. Concurrent with
the acceptance of drafts of the Canadian Borrower as aforesaid, each Canadian
Lender shall make available to the Canadian Agent its Canadian Percentage of
the Notional BA Proceeds with respect to such Credit Extension. The Canadian
Agent shall, upon fulfillment by the Canadian Borrower of the terms and
conditions set forth in ARTICLE VII, make such Notional BA Proceeds available
to the Canadian Borrower on the date of such Credit Extension by crediting
the designated account of the Canadian Borrower.
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SECTION 3.5.2. ACCEPTANCE FEES. With respect to each draft the
Canadian Borrower accepted pursuant hereto, the Canadian Borrower shall pay
to the Canadian Lenders, in advance, an acceptance fee calculated at the rate
per annum, on the basis of a year of 365 days or 366 days, as the case may
be, equal to the Applicable Canadian BA Stamping Fee on the face amount of
such Canadian BA for its term, being the actual number of days in the period
commencing on the date of acceptance of the Canadian Borrower's draft and
continuing to (but excluding) the maturity date of such Canadian BA. Such
acceptance fee shall be non-refundable and shall be fully earned when due.
Such acceptance fee shall be paid to the Canadian Lenders by deducting the
amount thereof from what would otherwise be Notional BA Proceeds (excluding
such fee) funded pursuant to SECTION 3.5.1.
SECTION 3.5.3. PRESIGNED DRAFT FORMS. To enable the Canadian
Lenders to accept Canadian BAs, the Canadian Borrower shall supply each
Canadian Lender with such number of drafts as such Canadian Lender may
reasonably request, duly endorsed and executed on behalf of the Canadian
Borrower. Each Canadian Lender agrees that, in respect of the safekeeping of
executed drafts of the Canadian Borrower which are delivered to it for
acceptance hereunder, it will exercise the same degree of care which it gives
to its own negotiable instruments; PROVIDED that such Canadian Lender shall
not be deemed to be an insurer thereof. Such Canadian Lender will, upon
request by the Canadian Borrower, promptly advise the Canadian Borrower of
the number and designations, if any, of the uncompleted drafts then held by
it. The signature of any duly authorized officer of the Canadian Borrower on
a draft may be mechanically reproduced in facsimile and drafts and Canadian
BAs bearing such facsimile signature shall be binding upon the Canadian
Borrower as if they had been manually signed by such officer. Notwithstanding
that any of the individuals whose manual or facsimile signature appears on
any draft as one of such officers may no longer hold office at the date
thereof or at the date of its acceptance by such Canadian Lender hereunder or
at any time thereafter, any draft or Canadian BA so signed shall be valid and
binding upon the Canadian Borrower. The receipt by the Canadian Agent of a
request for a Borrowing by way of Canadian BAs shall be each Canadian
Lender's sufficient authority to complete, and each Canadian Lender shall,
subject to the terms and conditions of this Agreement, complete the
pre-signed forms of drafts in accordance with such request and the advice of
the Canadian Agent as to the amount of the Canadian BAs to be accepted by
such Canadian Lender, and the drafts so completed shall thereupon be deemed
to have been presented for acceptance.
SECTION 3.5.4. BILL C-90. It is the intention of the parties that,
if the proposed Depository Bills and Notes Act is enacted in substantially
the terms of Bill C-90 to which first reading was given in the House of
Commons of Canada on March 13, 1997, all Canadian BAs accepted by Canadian
Lenders under this Agreement after the effective date of that Act and after
clearing services acceptable to the Canadian Borrower, the Canadian Lenders
and the Canadian Agent are available, shall be issued in the form of a
"depository bill" and deposited with a "clearing house," as those terms are
defined in Bill C-90. At that time, the Canadian Agent shall, in consultation
with the Canadian Borrower and the Canadian Lenders, establish and notify the
Canadian Borrower and the Canadian Lenders of such procedures, consistent
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with the terms of this Agreement and the requirements of the Act, as are
reasonably necessary to accomplish the parties' intention.
SECTION 3.6. SPECIAL PROVISIONS RELATING TO ACCEPTANCE NOTES. (a) The
Canadian Borrower and each Canadian Lender hereby acknowledges and agrees that
from time to time certain Canadian Lenders which are not Canadian chartered
banks or which are Canadian chartered banks listed on Schedule II of the Bank
Act (Canada) may not be authorized to or may, as a matter of general corporate
policy, elect not to accept Canadian BA drafts, and the Canadian Borrower and
each Canadian Lender agrees that any such Canadian Lender may purchase
Acceptance Notes of the Canadian Borrower in accordance with the provisions of
SECTION 3.6(B) in lieu of accepting Canadian BAs for its account.
(b) In the event that any Canadian Lender described in SECTION 3.6(A)
above is unable to, or elects as a matter of general corporate policy not
to, accept Canadian BAs hereunder, such Canadian Lender shall not accept
Canadian BAs hereunder, but rather, if the Canadian Borrower requests the
acceptance of such Canadian BAs, the Canadian Borrower shall deliver to
such Canadian Lender non-interest bearing promissory notes (each, an
"ACCEPTANCE NOTE") of the Canadian Borrower, substantially in the form of
EXHIBIT A-7 hereto, having the same maturity as the Canadian BAs to be
accepted and in an aggregate principal amount equal to the undiscounted
face amount of such Canadian BAs. Each such Canadian Lender hereby agrees
to purchase Acceptance Notes from the Canadian Borrower at a purchase
price equal to the Notional BA Proceeds which would have been applicable
if a Canadian BA draft had been accepted by such Canadian Lender and such
Acceptance Notes shall be governed by the provisions of this ARTICLE III
as if they were Canadian BAs.
SECTION 3.7. CANADIAN REGISTER; CANADIAN REVOLVING NOTES.
(a) Each Canadian Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the
Canadian Borrower to such Canadian Lender resulting from each Canadian
Loan made by such Canadian Lender, including the amounts of principal and
interest payable and paid to such Canadian Lender from time to time
hereunder. In the case of a Canadian Lender that does not request,
pursuant to PARAGRAPH (b)(ii) below, execution and delivery of a Note
evidencing the Canadian Revolving Loans made by such Canadian Lender to
the Canadian Borrower, such account or accounts shall, to the extent not
inconsistent with the notations made by the Canadian Agent in the Canadian
Register, be conclusive and binding on the Canadian Borrower absent
manifest error; PROVIDED, HOWEVER, that the failure of any Canadian Lender
to maintain such account or accounts shall not limit or otherwise affect
any Obligations of the Canadian Borrower or any other Obligor.
(b)(i) The Canadian Borrower hereby designates the Canadian Agent to
serve as the Canadian Borrower's agent, solely for the purpose of this
CLAUSE (b), to maintain a register (the "CANADIAN REGISTER") on which the
Canadian Agent will record each Canadian
74
Lender's Canadian Commitment, the Canadian Loans made by each Canadian
Lender and each repayment in respect of the principal amount of the
Canadian Loans of each Canadian Lender and annexed to which the
Canadian Agent shall retain a copy of each Lender Assignment Agreement
delivered to the Canadian Agent pursuant to SECTION 12.11.1. Failure to
make any recordation, or any error in such recordation, shall not
affect the Canadian Borrower's obligation in respect of such Canadian
Loans. The entries in the Canadian Register shall be conclusive, in the
absence of manifest error, and the Canadian Borrower, the Canadian
Agent and the Canadian Lenders shall treat each Person in whose name a
Canadian Loan (and as provided in CLAUSE (ii) the Note evidencing such
Canadian Loan, if any) is registered as the owner thereof for all
purposes of this Agreement, notwithstanding notice or any provision
herein to the contrary. A Canadian Lender's Canadian Commitment and the
Canadian Loans made pursuant thereto may be assigned or otherwise
transferred in whole or in part only by registration of such assignment
or transfer in the Canadian Register. Any assignment or transfer of a
Canadian Lender's Canadian Commitment or the Canadian Loans made
pursuant thereto shall be registered in the Canadian Register only upon
delivery to the Canadian Agent of a Lender Assignment Agreement duly
executed by the assignor thereof. No assignment or transfer of a
Canadian Lender's Canadian Commitment or the Canadian Loans made
pursuant thereto shall be effective unless such assignment or transfer
shall have been recorded in the Canadian Register by the Canadian Agent
as provided in this Section.
(ii) The Canadian Borrower agrees that, upon the request to the
Canadian Agent by any Canadian Lender, the Canadian Borrower will execute
and deliver to such Canadian Lender a Canadian Revolving Note evidencing
the Canadian Loans made by such Canadian Lender to the Canadian Borrower.
The Canadian Borrower hereby irrevocably authorizes each Canadian Lender
to make (or cause to be made) appropriate notations on the grid attached
to such Canadian Lender's Canadian Revolving Note (or on any continuation
of such grid), which notations, if made, shall evidence, INTER ALIA, the
date of, the outstanding principal of, and the interest rate and Interest
Period applicable to the Canadian Revolving Loans evidenced thereby. Such
notations shall, to the extent not inconsistent with the notations made by
the Canadian Agent in the Canadian Register, be conclusive and binding on
the Canadian Borrower that issued such note absent manifest error;
PROVIDED, HOWEVER, that the failure of any Canadian Lender to make any
such notations shall not limit or otherwise affect any Obligations of the
Canadian Borrower or any other Obligor. The Loans evidenced by any such
Note and interest thereon shall at all times (including after assignment
pursuant to SECTION 12.11.1) be represented by one or more Notes payable
to the order of the payee named therein and its registered assigns. A
Canadian Revolving Note and the obligation evidenced thereby may be
assigned or otherwise transferred in whole or in part only by registration
of such assignment or transfer of such Canadian Revolving Note and the
obligation evidenced thereby in the Canadian Register (and each Canadian
Revolving Note shall expressly so provide). Any assignment or transfer of
all or part of an obligation evidenced by a Canadian Revolving Note shall
be registered in the Canadian Register only upon surrender for
registration of assignment or transfer of the Canadian Revolving Note
evidencing such obligation,
75
accompanied by a Lender Assignment Agreement duly executed by the
assignor thereof, and thereupon, if requested by the assignee, one or
more new Canadian Revolving Notes shall be issued to the designated
assignee and the old Note shall be returned by the Canadian Agent to
the Canadian Borrower marked "exchanged". No assignment of a Canadian
Revolving Note and the obligation evidenced thereby shall be effective
unless it shall have been recorded in the Canadian Register by the
Canadian Agent as provided in this Section.
ARTICLE IV
U.S. AND CANADIAN LETTER OF CREDIT SUBFACILITIES
On the terms and subject to the conditions of this Agreement
(including ARTICLE VII), each Borrower, each Issuer and each Lender severally
agrees as follows:
SECTION 4.1. ISSUANCE PROCEDURES. By delivering an Issuance Request
to the Agent under either Facility on a local Business Day, at or before 1:00
p.m. (local time), the Borrower under such Facility may, from time to time
irrevocably request, on not less than three nor more than ten Business Days'
notice (or such other notice as may be acceptable in the sole discretion of the
applicable Issuer under such Facility), in the case of an initial issuance of a
Letter of Credit, and not less than three nor more than ten Business Days'
notice prior to the then existing Stated Expiry Date of a Letter of Credit
(unless a shorter or longer notice period is acceptable in the sole discretion
of the applicable Issuer under such Facility), in the case of a request for the
extension of the Stated Expiry Date of a Letter of Credit, that the applicable
Issuer under such Facility issue, or extend the Stated Expiry Date of, as the
case may be, an irrevocable Letter of Credit for such Borrower's account.
Notwithstanding anything to the contrary contained herein or in any separate
application for any Letter of Credit, each Borrower under each Facility hereby
acknowledges and agrees that (v) it shall be obligated to reimburse the
applicable Issuer under such Facility upon each Disbursement under a Letter of
Credit issued under such Facility and (w) it shall be deemed to be the obligor
for purposes of each Letter of Credit issued at its request under such Facility.
Upon receipt of an Issuance Request pursuant to either Facility, the Agent under
such Facility shall promptly provide notice thereof to each Issuer and each
Lender under such Facility. Each Letter of Credit shall by its terms be stated
to expire on a date (its "STATED EXPIRY DATE") no later than the earlier of (x)
the applicable scheduled Revolving Loan Commitment Termination Date or (y) one
year from the date of its issuance. The Issuer of each Letter of Credit will
make available to the beneficiary thereof the original of such Letter of Credit.
SECTION 4.1.1. OTHER LENDERS' PARTICIPATION. Upon the issuance of
each Letter of Credit pursuant to a Facility by an Issuer under such
Facility, and without further action, each RL Lender (other than such Issuer)
under such Facility shall be deemed to have irrevocably purchased from such
Issuer, to the extent of such Lender's Percentage of the Revolving Loan
76
Commitment Amount under such Facility, and such Issuer shall be deemed to
have irrevocably granted and sold to such Lender a participation interest in
such Letter of Credit (including the contingent liability and any
Reimbursement Obligation and all rights with respect thereto), and such
Lender shall, to the extent of its Percentage of the Revolving Loan
Commitment Amount under such Facility, as the case may be, be responsible for
reimbursing promptly (and in any event within one Business Day) such Issuer
for Reimbursement Obligations which have not been reimbursed in accordance
with SECTION 4.1.3 by the Borrower which requested the issuance of such
Letter of Credit. In addition, each RL Lender under each Facility shall, to
the extent of its Percentage of the Revolving Loan Commitment Amount under
such Facility, be entitled to receive a ratable portion of the Letter of
Credit fees payable pursuant to SECTION 5.3.2 with respect to each Letter of
Credit issued under such Facility and of interest payable pursuant to SECTION
5.2 with respect to any Reimbursement Obligation. To the extent that any
Lender under either Facility has reimbursed an Issuer for a Disbursement as
required by this Section, such Lender shall be entitled to receive a portion,
according to its Percentage of the Revolving Loan Commitment Amount under
such Facility, of any amounts subsequently received (from the Borrower which
requested the issuance of such Letter of Credit or otherwise) in respect of
such Disbursement.
SECTION 4.1.2. DISBURSEMENTS; CONVERSION TO LOANS. Each Issuer of
a Letter of Credit issued pursuant to either Facility will notify the
Borrower which requested the issuance of such Letter of Credit and the
applicable Agent promptly of the presentment for payment of such Letter of
Credit, together with notice of the date (the "DISBURSEMENT DATE") such
payment shall be made (each such payment, a "DISBURSEMENT"). Subject to the
terms and provisions of such Letter of Credit and this Agreement, such Issuer
shall make such payment to the beneficiary (or its designee) of such Letter
of Credit. On the first Business Day following the Disbursement Date (the
"REIMBURSEMENT DUE DATE") such Borrower will reimburse the applicable Agent
for the account of the Issuer of such Letter of Credit, for all amounts which
such Issuer has disbursed under such Letter of Credit, together with interest
thereon at the rate per annum otherwise applicable to Loans under such
Facility (which shall, in the case of the Canadian Facility, be Canadian
Prime Rate Loans and, in the case of the U.S. Facility, be U.S. Base Rate
Loans) from and including the Disbursement Date to but excluding the
Reimbursement Due Date and, thereafter (unless such Disbursement is converted
into Canadian Prime Rate Loans or U.S. Base Rate Loans, as appropriate, on
the Reimbursement Due Date), at a rate per annum equal to the rate per annum
then in effect with respect to such overdue Canadian Prime Rate Loans or U.S.
Base Rate Loans, as the case may be, pursuant to SECTION 5.2.2 for the period
from the Reimbursement Due Date through the date of such reimbursement;
PROVIDED, HOWEVER, that, if no Default shall have then occurred and be
continuing, unless such Borrower has notified the applicable Agent no later
than one Business Day prior to the Reimbursement Due Date that it will
reimburse such Issuer for such Disbursement, then the amount of the
Disbursement shall be deemed to be a Borrowing under such Facility (which
shall, in the case of the Canadian Facility, be Canadian Prime Rate Loans
and, in the case of the U.S. Facility, be U.S. Base Rate Loans) and following
the giving of notice thereof by the applicable Agent to the RL Lenders under
such Facility, each such RL Lender under such Facility (other than such
Issuer) will deliver to such Issuer on the
77
Reimbursement Due Date immediately available funds in an amount equal to such
Lender's Percentage of such Borrowing. Each conversion of Disbursement
amounts into a Borrowing shall constitute a representation and warranty by
such Borrower that on the date of such Borrowing all of the statements set
forth in SECTION 7.2.1 and 7.2.2 are true and correct.
SECTION 4.1.3. REIMBURSEMENT. If a Borrower shall fail to honor
its obligation (a "REIMBURSEMENT OBLIGATION") under SECTION 4.1.2 to
reimburse an Issuer with respect to a Disbursement (including interest
thereon) in respect of a Letter of Credit issued pursuant to either Facility
upon the request of such Borrower and such Disbursement is not converted into
a Borrowing pursuant to SECTION 4.1.2, then, upon notice thereof by the
applicable Agent to the RL Lenders under such Facility, each such Lender's
obligation under SECTION 4.1.1 to reimburse, according to its Percentage of
the Revolving Loan Commitment Amount under such Facility, such Issuer for
such Disbursement shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which such Borrower or such Lender, as the case may be, may have or
have had against such Issuer or any such Lender, including any defense based
upon the failure of any Disbursement to conform to the terms of the
applicable Letter of Credit (if, in such Issuer's good faith opinion, such
Disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such Letter of Credit;
PROVIDED, HOWEVER, that after paying in full its Reimbursement Obligation
hereunder, nothing herein shall adversely affect the right of such Borrower
or such Lender, as the case may be, to commence any proceeding against such
Issuer for any wrongful Disbursement made by such Issuer under a Letter of
Credit as a result of acts or omissions constituting gross negligence or
willful misconduct on the part of such Issuer.
SECTION 4.1.4. DEEMED DISBURSEMENTS. Upon the occurrence and
during the continuation of any Event of Default of the type described in
SECTION 10.1.9 or, with notice from the U.S. Agent acting at the direction of
the Required Lenders, upon the occurrence and during the continuation of any
other Event of Default,
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit outstanding under each Facility
shall, without demand upon or notice to any Borrower or any other Person,
be deemed to have been paid or disbursed by the Issuer of such Letters of
Credit (notwithstanding that such amount may not in fact have been so paid
or disbursed); and
(b) upon notification by the applicable Agent to such Borrower of
its obligations under this Section, such Borrower shall be immediately
obligated to reimburse such Issuer for the amount deemed to have been
so paid or disbursed by such Issuer.
Any amounts so payable by such Borrower pursuant to this Section shall be
deposited in cash with the applicable Agent and held as collateral security for
the Obligations of such Borrower in connection with such Letters of Credit
issued by such Issuer. At such time when the Events
78
of Default giving rise to the deemed disbursements hereunder shall have been
cured or waived, the applicable Agent shall return to such Borrower all
amounts then on deposit with the applicable Agent pursuant to this Section,
together with accrued interest at the U.S. Federal Funds Rate, which have not
been applied to the satisfaction of such Obligations.
SECTION 4.1.5. NATURE OF REIMBURSEMENT OBLIGATIONS. Each Borrower
requesting the issuance of a Letter of Credit and, to the extent set forth in
SECTION 4.1.1, each RL Lender under the Facility pursuant to which such Letter
of Credit is issued shall assume all risks of the acts, omissions or misuse of
such Letter of Credit by the beneficiary thereof. Each Issuer (except to the
extent of its own gross negligence or willful misconduct) shall not be
responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or the proceeds thereof in whole or in part, which may prove to be invalid
or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to any Issuer or any RL Lender. In furtherance and
extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by any Issuer of a Letter of Credit in good
faith (and not constituting gross negligence or willful misconduct) shall be
binding upon the Borrower requesting the issuance of such Letter of Credit, each
Obligor and each RL Lender under the Facility pursuant to which such Letter of
Credit is issued, and shall not put such Issuer under any resulting liability to
such Borrower, any Obligor or any such Lender, as the case may be.
79
ARTICLE V
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 5.1. REPAYMENTS AND PREPAYMENTS; APPLICATION.
SECTION 5.1.1. REPAYMENTS AND PREPAYMENTS. Each Borrower shall
repay (in U.S. Dollars with respect to U.S. Loans and in Canadian Dollars
with respect to Canadian Revolving Loans) in full the unpaid principal amount
of each Loan outstanding to it upon the applicable Stated Maturity Date
therefor. Prior thereto, payments and prepayments of Loans shall or may be
made as set forth below.
(a) From time to time on any Business Day, a Borrower may make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any
(i) Loans (other than Canadian BAs and Swing Line Loans)
outstanding to it under either Facility; PROVIDED, HOWEVER, that
(A) any such prepayment of the Term B Loans or Term C
Loans outstanding to it shall be made PRO RATA among Term B
Loans or Term C Loans, as applicable, outstanding to it under
such Facility of the same type and, if applicable, having the
same Interest Period of all Lenders under such Facility that
have made such Term B Loans or Term C Loans (with the amounts so
allocated to such Term B Loans or Term C Loans being applied to
the remaining amortization payments for such Term B Loans or
Term C Loans, as applicable, in such amounts as such Borrower
shall determine) and any such prepayment of Revolving Loans
outstanding to it shall be made PRO RATA among the Revolving
Loans outstanding to it under such Facility of the same type
and, if applicable, having the same Interest Period of all
Lenders under such Facility that have made such Revolving Loans;
(B) all such voluntary prepayments shall require at least
one but no more than five Business Days' prior written notice to
the Agent under such Facility; and
(C) all such voluntary partial prepayments shall be, in
the case of LIBO Rate Loans, in an aggregate minimum amount of
$1,000,000 and an integral multiple of $500,000, in the case of
U.S. Base Rate Loans, in an aggregate minimum amount of $200,000
and an integral multiple of $200,000, and, in the case of
Canadian Prime Rate Loans, in an aggregate minimum amount of Cdn
$500,000 and an integral multiple of Cdn $250,000; and
80
(ii) Swing Line Loans; PROVIDED that
(A) all such voluntary prepayments shall require prior
telephonic notice to the applicable Swing Line Lender on or
before 1:00 p.m. (local time) on the day of such prepayment
(such notice to be confirmed in writing within 24 hours
thereafter); and
(B) all such voluntary partial prepayments shall be, in
the case of U.S. Swing Line Loans, in an aggregate minimum
amount of $500,000 and an integral multiple of $250,000, and, in
the case of Canadian Swing Line Loans, in an aggregate minimum
amount of Cdn $100,000 and an integral multiple of Cdn $100,000.
(b) (i) On each date when the sum of (x) the aggregate outstanding
principal amount of all U.S. Revolving Loans and U.S. Swing Line Loans and
(y) the aggregate amount of all U.S. Letter of Credit Outstandings exceeds
the U.S. Revolving Loan Commitment Amount (as it may be reduced or
reallocated from time to time, including pursuant to SECTIONS 2.2 and
3.2), the U.S. Borrower shall make a mandatory prepayment of all U.S.
Revolving Loans or all U.S. Swing Line Loans (or both) in an aggregate
amount equal to such excess; and (ii) on each date when the sum of (x) the
aggregate outstanding principal amount of all Canadian Revolving Loans and
Canadian Swing Line Loans and (y) the aggregate amount of all Canadian
Letter of Credit Outstandings exceeds the Canadian Revolving Loan
Commitment Amount (as it may be reduced or reallocated from time to time,
including pursuant to SECTIONS 2.2 and 3.2), the Canadian Borrower shall
make a mandatory prepayment of all Canadian Revolving Loans or all
Canadian Swing Line Loans (or both) in an aggregate amount equal to such
excess.
(c) Concurrently with the receipt by the U.S. Borrower or any
Subsidiary of any Net Disposition Proceeds, the U.S. Borrower shall make a
mandatory prepayment of the Term Loans in an amount equal to 100% of such
Net Disposition Proceeds, to be applied as set forth in SECTION 5.1.2;
PROVIDED, HOWEVER, that to the extent any or all of the Net Disposition
Proceeds attributable to dispositions by non-U.S. Subsidiaries are
prohibited or delayed by applicable local law from being repatriated to
the United States, the portion of such Net Disposition Proceeds so
affected shall, so long as no Event of Default has occurred and is
continuing, to the extent permitted by CLAUSE (d)(ii) of SECTION 9.2.11,
not be required to be applied at the time provided above, and may be (but
shall not be required to be), at the election of the U.S. Borrower,
deposited in an escrow account maintained with a U.S. Lender and under the
sole dominion and control of the U.S. Agent (such account being referred
to as an "ESCROW ACCOUNT") pursuant to the terms of an escrow agreement
satisfactory in form and substance to the U.S. Agent, until such time as
the applicable local law will permit repatriation to the United States
(and the U.S. Borrower hereby agrees that it will, and will cause the
applicable Subsidiary to, promptly take all action required by the
applicable local law to permit such repatriation). If and when
repatriation of any of such affected Net Disposition Proceeds is permitted
under
81
the applicable local law, such repatriation shall be immediately
effected and such repatriated Net Disposition Proceeds will be applied in
the manner set forth in this Agreement; PROVIDED, FURTHER, HOWEVER, that,
to the extent the Board of Directors of the U.S. Borrower determines, in
good faith, that repatriation of any or all of the Net Disposition
Proceeds attributable to dispositions by non-U.S. Subsidiaries would have
a material adverse tax consequence, the Net Disposition Proceeds so
affected, to the extent permitted by CLAUSE (d)(ii) of SECTION 9.2.11,
shall not be required to be applied as so provided, and may be (but shall
not be required to be), at the election of the U.S. Borrower, deposited in
an Escrow Account and under the sole dominion and control of the U.S.
Agent pursuant to the terms of an escrow agreement satisfactory in form
and substance to the U.S. Agent for so long as such material adverse tax
consequence continues (and the U.S. Borrower hereby agrees to promptly
deliver to the U.S. Agent a certificate of an Authorized Officer as to
such determination, together with all documents and calculations
considered by the Board of Directors in reaching its conclusion as to the
presence of a material adverse tax consequence). Provided that the U.S.
Borrower shall have complied with its obligations under this Agreement (A)
in connection with any Permitted Disposition consisting of the sale of all
of the shares of stock of any Subsidiary that is a party to a Subsidiary
Guaranty, the obligations of such Subsidiary that is a party to a
Subsidiary Guaranty under its Subsidiary Guaranty shall automatically be
discharged and released without any further action by the Agents or any
Lender (and the Agents and the Lenders hereby agree, upon the request (and
at the expense) of the U.S. Borrower, to execute and deliver any
instrument or other document in a form acceptable to the Agents which may
reasonably be required to evidence such discharge and release) and (B) in
connection with the sale or other disposition of the Capital Stock of a
Subsidiary, the Agents shall release to the pledgor thereof, without
representation, warranty or recourse, express or implied, the Capital
Stock of such Subsidiary held by it as pledged stock, if any, under a
Pledge Agreement.
(d) On the Stated Maturity Date and on each Quarterly Payment Date
occurring during any period set forth below (or, if a Quarterly Payment
Date occurs on the next succeeding Business Day pursuant to the definition
of Quarterly Payment Date, then on such next succeeding Business Day), the
U.S. Borrower shall make a scheduled repayment of the outstanding
principal amount, if any, of all Term B Loans in an amount equal to the
amount set forth below opposite the Stated Maturity Date or such Quarterly
Payment Date, as applicable:
AMOUNT OF REQUIRED
PERIOD PRINCIPAL PAYMENT
------ ------------------
09/15/97 through (and
including) 06/15/03 $ 112,500
06/16/03 through (and
including) 06/15/04 $6,750,000
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06/16/04 through (and
including) 9/15/04 $7,650,000
Stated Maturity Date for
Term B Loans $7,650,000, or the then
outstanding principal amount
of all Term B Loans, if
different.
(e) On the Stated Maturity Date and on each Quarterly Payment Date
occurring during any period set forth below (or, if a Quarterly Payment
Date occurs on the next succeeding Business Day pursuant to the definition
of Quarterly Payment Date, then on such next succeeding Business Day), the
U.S. Borrower shall make a scheduled repayment of the outstanding
principal amount, if any, of all Term C Loans in an amount equal to the
amount set forth below opposite the Stated Maturity Date or such Quarterly
Payment Date, as applicable:
AMOUNT OF REQUIRED
PERIOD PRINCIPAL PAYMENT
------ ------------------
9/15/97 through (and
including) 06/15/04 $ 100,000
06/16/04 through (and
including) 06/15/05 $6,000,000
06/16/05 through (and
including) 9/15/05 $6,600,000
Stated Maturity Date for
Term C Loans $6,600,000, or the then
outstanding principal
amount of all Term C
Loans, if different.
(f) Concurrently with the receipt by Parent or LHPG of any Net
Equity Proceeds, the U.S. Borrower shall make, or cause to be made, a
mandatory prepayment of the Term Loans in an amount equal to 50% of such
Net Equity Proceeds, to be applied as set forth in SECTION 5.1.2.
(g) No later than 5 Business Days following the delivery of the U.S.
Borrower's annual audited consolidated financial statements required
pursuant to CLAUSE (b) of SECTION 9.1.1 (beginning with the annual audited
consolidated financial statements
83
delivered in respect of the Fiscal Year ended March 31, 1998) if the
U.S. Borrower's Leverage Ratio was greater than or equal to 3.50:1 for
the Fiscal Year to which such financial statements relate, the U.S.
Borrower shall deliver to the U.S. Agent a calculation of the Excess
Cash Flow for such Fiscal Year and, no later than 5 Business Days
following the delivery of such calculation, make a mandatory prepayment
of the Term Loans in an amount equal to 50% of the Excess Cash Flow (if
any) for such Fiscal Year, to be applied as set forth in SECTION 5.1.2.
(h) (i) On each date when any reduction in the U.S. Revolving Loan
Commitment Amount shall become effective, including pursuant to SECTION
2.2 or SECTION 5.1.2, the U.S. Borrower shall make a mandatory prepayment
of all U.S. Revolving Loans and U.S. Swing Line Loans, and, if required,
deliver cash collateral for U.S. Letter of Credit Outstandings, equal to
the excess, if any, of the aggregate outstanding principal amount of all
U.S. Revolving Loans, U.S. Swing Line Loans and U.S. Letter of Credit
Outstandings over the U.S. Revolving Loan Commitment Amount, as so
reduced; and (ii) on each date when any reduction in the Canadian
Revolving Loan Commitment Amount shall become effective, including
pursuant to SECTION 3.2 or SECTION 5.1.2, the Canadian Borrower shall make
a mandatory prepayment of all Canadian Revolving Loans and Canadian Swing
Line Loans, and, if required, deliver cash collateral for Canadian Letter
of Credit Outstandings, equal to the excess, if any, of the aggregate
outstanding principal amount of all Canadian Revolving Loans, Canadian
Swing Line Loans and Canadian Letter of Credit Outstandings over the
Canadian Revolving Loan Commitment Amount, as so reduced.
(i) Within one Business Day following the receipt of a notice from
the Canadian Agent that the then outstanding principal amount of Canadian
Revolving Loans is in excess of 110% of the Cdn $ Equivalent of the then
existing Canadian Revolving Loan Commitment Amount (based on a
determination made by the Canadian Agent in accordance with its customary
banking practice for determining currency exchange rates, which shall be
conclusive and binding on the Borrowers absent manifest error), the
Canadian Borrower shall make a repayment of the principal amount of the
Canadian Revolving Loans to the Canadian Agent in the amount necessary to
cause the outstanding principal amount of Canadian Revolving Loans to not
exceed the Cdn $ Equivalent of the then existing Canadian Revolving Loan
Commitment Amount. If immediate repayment is not possible because Canadian
BAs have not matured, the Canadian Borrower shall immediately pledge cash
to the Canadian Agent in the amount that would otherwise be payable, to be
held as security until the amount of the excess is paid in full.
(j) Immediately upon any acceleration of the Stated Maturity Date of
any Loans pursuant to SECTION 10.2 or SECTION 10.3, each Borrower shall
repay all the Loans outstanding to it, unless, pursuant to SECTION 10.3,
only a portion of all the Loans outstanding to it is so accelerated (in
which case the portion so accelerated shall be so prepaid).
84
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 6.4. If any such
prepayment or repayments described above relate to Canadian BAs which have not
matured, the Canadian Borrower shall at such time deposit in a cash collateral
account opened and maintained by the Canadian Agent, an amount equal to the
aggregate undiscounted face amount (or the portion thereof relating to the
portion of all Canadian Revolving Loans so accelerated, in the case of CLAUSE
(h)) of all such unmatured Canadian BAs and such amounts held in such cash
collateral account shall be applied by the Canadian Agent to the payment of
maturing Canadian BAs. No prepayment of principal of any Revolving Loans or
Swing Line Loans pursuant to CLAUSE (a) or (b) shall cause a reduction in either
Revolving Loan Commitment Amount or Swing Line Loan Commitment Amount, as the
case may be.
SECTION 5.1.2. APPLICATION. Amounts prepaid shall be applied as
set forth in this Section.
(a) Subject to CLAUSE (b), each prepayment or repayment of the
principal of the Loans shall be applied, to the extent of such prepayment
or repayment, FIRST, in the case of U.S. Loans, to the principal amount
thereof being maintained as U.S. Base Rate Loans, and, in the case of
Canadian Revolving Loans, to the principal amount thereof being maintained
as Canadian Prime Rate Loans, and SECOND, in the case of U.S. Loans, to
the principal amount thereof being maintained as LIBO Rate Loans, and, in
the case of Canadian Revolving Loans, to the principal amount thereof
being maintained as Canadian BAs; PROVIDED that mandatory prepayments of
LIBO Rate Loans made pursuant to CLAUSES (c), (f) and (g) of SECTION
5.1.1, if not made on the last day of the Interest Period with respect
thereto, shall, at the U.S. Borrower's option, so long as no Default has
occurred and is continuing, be prepaid subject to the provisions of
SECTION 6.4, or the amount required to be applied to the prepayment of
LIBO Rate Loans (after application to any U.S. Base Rate Loans) shall be
deposited with the U.S. Agent as cash collateral for such Loans on terms
reasonably satisfactory to the U.S. Agent and thereafter shall be applied
in the order of the Interest Periods next ending most closely to the date
of receipt of the proceeds in respect of which such prepayment is required
to be made and on the last day of each such Interest Period (together with
a payment of all interest that is due on the last day of each such
Interest Period pursuant to CLAUSE (d) of SECTION 5.2.3). After such
application, unless an Event of Default shall have occurred and be
continuing, any remaining interest earned on such cash collateral shall be
paid to the U.S. Borrower.
(b) Each prepayment of Term Loans made pursuant to CLAUSES (c), (f)
and (g) of SECTION 5.1.1 shall be applied (i) FIRST, PRO RATA to a
mandatory prepayment of the outstanding principal amount of all applicable
Term Loans (with the amount of such prepayment of such applicable Term
Loans being applied to the remaining applicable Term Loan amortization
payments, unless otherwise consented to by the Required Lenders, PRO RATA
in accordance with the amount of each such remaining Term Loan
amortization payment), until all such applicable Term Loans have been paid
in full, and (ii) SECOND, once all applicable Term Loans have been repaid
in full, to the repayment of
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any outstanding U.S. Revolving Loans and a reduction of the U.S.
Revolving Loan Commitment Amount in accordance with and subject to the
limitations set forth in SECTION 2.2.2.
SECTION 5.2. INTEREST PROVISIONS. Interest on the outstanding
principal amount of all Loans shall accrue and be payable in accordance with
this SECTION 5.2.
SECTION 5.2.1. RATES. Subject to SECTION 5.2.2, pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice,
each Borrower may elect that Loans comprising a Borrowing accrue interest at
a rate per annum:
(a) in the case of the U.S. Borrower,
(i) on that portion maintained from time to time as a U.S.
Base Rate Loan, equal to the sum of the U.S. Alternate Base Rate from
time to time in effect plus the Applicable Margin; PROVIDED that the
Applicable Margin for U.S. Swing Line Loans shall be the then effective
Applicable Margin for U.S. Revolving Loans maintained from time to time
as U.S. Base Rate Loans, and
(ii) on that portion maintained from time to time as a LIBO
Rate Loan, during each Interest Period applicable thereto, equal to the
sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus
the Applicable Margin; and
(b) in the case of the Canadian Borrower, on that portion maintained
from time to time as a Canadian Prime Rate Loan, equal to the sum of the
Canadian Prime Rate from time to time in effect plus the Applicable
Margin; PROVIDED that the Applicable Margin for Canadian Swing Line Loans
shall be the then effective Applicable Margin for Canadian Revolving Loans
maintained from time to time as Canadian Prime Rate Loans.
All LIBO Rate Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such LIBO
Rate Loan.
SECTION 5.2.2. POST-MATURITY RATES. After the date any principal
amount of any Loan or Reimbursement Obligation is due and payable (whether on
the Stated Maturity Date, upon acceleration or otherwise), or after any other
monetary Obligation of any Borrower shall have become due and payable, such
Borrower shall pay, but only to the extent permitted by law, interest (after as
well as before judgment) on such amounts at a rate per annum equal to, in the
case of overdue amounts relating to the U.S. Facility, the U.S. Alternate Base
Rate from time to time in effect plus a margin of 2-1/2% and, in the case of
overdue amounts relating to the Canadian Facility, the Canadian Prime Rate from
time to time in effect plus a margin of 2-1/2%.
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SECTION 5.2.3. PAYMENT DATES. Interest accrued on each Loan
shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Loan on the principal amount so
paid or prepaid;
(c) with respect to U.S. Base Rate Loans and Canadian Prime Rate
Loans, in arrears on each Quarterly Payment Date occurring after the
Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed 3
months, on the third month anniversary of such Interest Period);
(e) with respect to any U.S. Base Rate Loans converted into LIBO
Rate Loans or Canadian Prime Rate Loans converted into Canadian BAs on
a day when interest would not otherwise have been payable pursuant to
CLAUSE (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to SECTION 10.2 or SECTION 10.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 5.2.4. INTEREST ACT PROVISION.
(a) For the purposes of the Interest Act (Canada), whenever interest
payable pursuant to this Agreement is calculated with respect to any
monetary Obligation relating to the Canadian Facility on the basis of a
period other than a calendar year (the "CALCULATION PERIOD"), each rate of
interest determined pursuant to such calculation expressed as an annual
rate is equivalent to such rate as so determined, MULTIPLIED by the actual
number of days in the calendar year in which the same is to be ascertained
and DIVIDED by the number of days in the Calculation Period.
(b) The principal of deemed reinvestment of interest with respect
to any monetary Obligation relating to the Canadian Facility shall not
apply to any interest calculation under this Agreement.
(c) The rates of interest with respect to any monetary Obligation
relating to the Canadian Facility stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.
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SECTION 5.3. FEES. Each Borrower agrees to pay the fees
applicable to it set forth in this SECTION 5.3. All such fees shall be
non-refundable.
SECTION 5.3.1. COMMITMENT FEE. Each of the U.S. Borrower and the
Canadian Borrower agrees to pay to the Agent under its respective Facility
for the account of each Lender under such Facility, for the period (including
any portion thereof when any of its Commitments under such Facility are
suspended by reason of such Borrower's inability to satisfy any condition of
ARTICLE VII) commencing on the Effective Date and continuing through the
applicable Revolving Loan Commitment Termination Date, a commitment fee in an
amount equal to the Applicable Commitment Fee Margin, in each case on such
Lender's Percentage under such Facility of the sum of the average daily
unused portion of the applicable Commitment Amount (net of Letter of Credit
Outstandings, in the case of each Revolving Loan Commitment Amount, and net
of the average daily outstanding principal amount of Swing Line Loans, when
determining the commitment fee payable to a Swing Line Lender on its
Revolving Loan Commitment); PROVIDED, that notwithstanding anything to the
contrary contained in this Agreement, the Canadian Borrower shall not be
obligated to pay any such commitment fee that has accrued in respect of the
U.S. Revolving Loan Facility. All commitment fees payable pursuant to this
Section shall be calculated on a year comprised of 360 days and payable by
the Borrowers in arrears on each Quarterly Payment Date, commencing with the
first Quarterly Payment Date following the Effective Date, and on the
applicable Revolving Loan Commitment Termination Date. The making of Swing
Line Loans shall not constitute usage of a Revolving Loan Commitment with
respect to the calculation of commitment fees to be paid by the Borrowers to
the Lenders.
SECTION 5.3.2. AGENTS' FEES. Each Borrower severally and not
jointly agrees to pay to the Agent under its respective Facility, for such
Agent's own account, the fees in the amounts and on the dates set forth in
the Fee Letter (to the extent such Borrower is obligated to pay such fee
thereunder).
SECTION 5.3.3. LETTER OF CREDIT FEES. Each Borrower agrees to
pay to the Agent under its respective Facility, for the PRO RATA account of
the Issuers under such Facility and each other Lender that has a Revolving
Loan Commitment under such Facility, a Letter of Credit fee in an amount
equal to
(a) with respect to each standby Letter of Credit requested by
such Borrower, the then Applicable Margin for Revolving Loans
maintained as LIBO Rate Loans, multiplied by the Stated Amount of each
such Letter of Credit; and
(b) with respect to each documentary Letter of Credit requested
by such Borrower, 1.25% per annum multiplied by the Stated Amount of
each such Letter of Credit,
such fees being payable on the date of issuance of each Letter of Credit (for
the period from the date of issuance to the earlier of the expiration date of
the applicable Letter of Credit and the immediately succeeding Quarterly Payment
Date) and after such Quarterly Payment Date
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quarterly in arrears on each subsequent Quarterly Payment Date; PROVIDED,
that notwithstanding anything to the contrary contained in this Agreement,
the Canadian Borrower shall not be obligated to pay any such fees that have
accrued in respect of Letters of Credit issued under the U.S. Facility. Each
Borrower severally and not jointly further agrees to pay to the applicable
Issuer under such Facility on the date of issuance of each Letter of Credit
(for the period from the date of issuance to the earlier of the expiration
date of the applicable Letter of Credit and the immediately succeeding
Quarterly Payment Date, and after such Quarterly Payment Date quarterly in
arrears on each subsequent Quarterly Payment Date) an issuance fee as
specified in the Fee Letter (to the extent such Borrower is obligated to pay
such fee thereunder).
ARTICLE VI
CERTAIN LIBO RATE, CANADIAN BA AND OTHER PROVISIONS
SECTION 6.1. LIBO RATE LENDING UNLAWFUL. If any U.S. Lender shall
determine (which determination shall, upon notice thereof to the U.S.
Borrower and the U.S. Lenders, be conclusive and binding on the U.S.
Borrower) that the introduction of or any change in or in the interpretation
of any law makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such U.S. Lender to make, continue
or maintain any U.S. Loan as, or to convert any U.S. Loan into, a LIBO Rate
Loan, the obligations of such U.S. Lender to make, continue, maintain or
convert any such LIBO Rate Loan shall, upon such determination, forthwith be
suspended until such U.S. Lender shall notify the U.S. Agent that the
circumstances causing such suspension no longer exist, and all outstanding
LIBO Rate Loans shall automatically convert into U.S. Base Rate Loans at the
end of the then current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 6.2. DEPOSITS UNAVAILABLE; CIRCUMSTANCES MAKING CANADIAN
BAS UNAVAILABLE. (a) If the U.S. Agent shall have determined that
(i) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the U.S. Agent in its relevant
market; or
(ii) by reason of circumstances affecting the U.S. Agent's relevant
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans,
then, upon notice from the U.S. Agent to the U.S. Borrower and the U.S.
Lenders, the obligations of all U.S. Lenders under SECTION 2.3 and SECTION
2.4 to make or continue any U.S. Loans as, or to convert any U.S. Loans into,
LIBO Rate Loans shall forthwith be suspended until the U.S. Agent shall
notify the U.S. Borrower and the U.S. Lenders that the circumstances causing
such suspension no longer exist.
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(b) If the Canadian Agent shall have determined that by reason of
circumstances affecting the money market, there is no market for Canadian
BAs, then the right of the Canadian Borrower to request the acceptance of
Canadian BAs and the acceptance thereof shall be suspended until the
Canadian Agent determines that the circumstances causing such suspension
no longer exist and the Canadian Agent so notifies the Canadian Borrower.
SECTION 6.3. INCREASED LOAN COSTS, ETC. (a) The U.S. Borrower
agrees to reimburse each U.S. Lender for any increase in the cost to such
U.S. Lender of, or any reduction in the amount of any sum receivable by such
U.S. Lender in respect of, making, continuing or maintaining (or of its
obligation to make, continue or maintain) any U.S. Loans as, or of converting
(or of its obligation to convert) any U.S. Loans into, LIBO Rate Loans that
arise in connection with any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase-in after the date
hereof of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank,
regulator or other governmental authority, except for such changes with
respect to increased capital costs and taxes which are governed by SECTIONS
6.5 and 6.6, respectively. Such U.S. Lender shall promptly notify the U.S.
Agent and the U.S. Borrower in writing of the occurrence of any such event,
such notice to state, in reasonable detail, the reasons therefor and the
additional amount required to compensate fully such U.S. Lender for such
increased cost or reduced amount. Such additional amounts shall be payable by
the U.S. Borrower directly to such U.S. Lender within five days of its
receipt of such notice, and such notice shall, in the absence of manifest
error, be conclusive and binding on the U.S. Borrower.
Without limiting the foregoing, in the event that, as a result of
any such change, introduction, adoption or the like described above, the
LIBOR Reserve Percentage decreases for any U.S. Lender's LIBO Rate Loans,
such U.S. Lender shall give prompt notice thereof in writing to the U.S.
Agent and the U.S. Borrower. On the fifth day following delivery of such
notice, the LIBO Rate (Reserve Adjusted) attributable to such U.S. Lender's
LIBO Rate Loans shall be adjusted to give the U.S. Borrower the benefit of
such decrease (for so long as such decrease shall remain in effect).
(b) The Canadian Borrower agrees to reimburse each Canadian Lender
for any increase in the cost to such Canadian Lender of, or any reduction
in the amount of any sum receivable by such Canadian Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue
or maintain) any Canadian Revolving Loans to the Canadian Borrower as, or
of converting (or of its obligation to convert) any Canadian Revolving
Loans into, Canadian BAs that arise in connection with any change in, or
the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in after the date hereof of, any law or
regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority, except for such changes with respect to increased
capital costs and taxes which are governed by SECTIONS 6.5 and 6.6,
respectively. Such Canadian Lender shall promptly notify the Canadian
Agent and the Canadian Borrower in writing of the occurrence of any
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such event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate such
Canadian Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Canadian Borrower directly
to such Canadian Lender within five days of its receipt of such notice,
and such notice shall, in the absence of manifest error, be conclusive
and binding on the Canadian Borrower.
SECTION 6.4. FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan or a Canadian BA, as the case may be) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
SECTION 5.1, SECTION 6.11 or otherwise;
(b) any conversion, repayment or cash collateralization of any
Canadian BA on a date other than the scheduled maturity date applicable
thereto, whether pursuant to SECTION 5.1 or otherwise;
(c) any U.S. Loans not being made as LIBO Rate Loans or any
Canadian Revolving Loans not being made as Canadian BAs, in each case
in accordance with the Borrowing Request therefor; or
(d) any U.S. Loans not being continued as, or converted into,
LIBO Rate Loans or any Canadian Revolving Loans not being continued as,
or converted into, Canadian BAs, in each case in accordance with the
Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the applicable Borrower (with a
copy to the applicable Agent), such Borrower shall, within five days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
such Borrower.
SECTION 6.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in good faith but in its sole and
absolute discretion) that the rate of return on its or such controlling Person's
capital as a consequence of the Commitments, acceptance of or participation in
Canadian BAs or the Loans made, or the
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Letters of Credit participated in, by such Lender is reduced to a level below
that which such Lender or such controlling Person could have achieved but for
the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender to the applicable Borrower, such Borrower
shall immediately pay directly to such Lender additional amounts sufficient
to compensate such Lender or such controlling Person for such reduction in
rate of return. A statement of such Lender as to any such additional amount
or amounts (including calculations thereof in reasonable detail) shall, in
the absence of manifest error, be conclusive and binding on such Borrower. In
determining such amount, such Lender may use any method of averaging and
attribution that it (in its sole and absolute discretion) shall deem
applicable.
SECTION 6.6. TAXES. (a) Except as set forth in the next sentence,
all payments by each Borrower of principal of, and interest on, the Loans and
all other amounts payable hereunder (including in respect of fees and
Reimbursement Obligations) shall be made free and clear of and without
deduction for any present or future income, excise, sales, goods and
services, value added or stamp taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever levied or imposed with
respect to such payments, in the case of the U.S. Borrower, by the United
States (or any taxing authority or political subdivision thereof) and, in the
case of the Canadian Borrower, Canada (or any taxing authority or political
subdivision thereof), and, in the case of either Borrower, by any other
jurisdiction as a result of a connection between such Borrower and such
jurisdiction, but excluding franchise taxes and taxes imposed on or measured
by net income, net receipts or capital of the applicable Agent or any Lender
(such non-excluded items being "TAXES"). In the event that any withholding or
deduction from any payment to be made by such Borrower hereunder is required
in respect of any Taxes pursuant to any applicable law, rule or regulation,
then such Borrower shall, subject to CLAUSES (b) through (f) below, SECTION
6.10 and SECTION 6.11,
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the applicable Agent an official receipt
or other documentation reasonably satisfactory to the applicable Agent
evidencing such payment to such authority; and
(iii) pay to the applicable Agent for its account or the account of
the applicable Lenders, as the case may be, such additional amount or
amounts as necessary to ensure that the net amount actually received by
the applicable Agent or any such Lender, as the case may be, will equal
the full amount such Person would have received had no such withholding or
deduction been required.
Moreover, subject to CLAUSES (b) through (f) below, SECTION 6.10
and SECTION 6.11, if any Taxes are directly asserted against the applicable
Agent or any Lender with respect to any payment received by the applicable
Agent or such Lender hereunder, and such Taxes are then due and payable in
accordance with applicable law, and the applicable Agent or such Lender,
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as the case may be, shall pay such Taxes (and for purposes of this SECTION
6.6 and the rights of the applicable Agent and the Lenders hereunder, a
distribution by the applicable Agent or any Lender to or for the account of
the applicable Agent or any Lender shall be deemed a payment by or on behalf
of the applicable Borrower), such Borrower will promptly pay such additional
amounts (including any penalties, interest or expenses with respect to such
Taxes, together with interest on such Taxes at a rate per annum equal to the
highest rate per annum then in effect pursuant to SECTION 5.2 for the period
from the date such applicable Agent or such Lender paid such Taxes through
the date of reimbursement by such Borrower) as is necessary in order that the
total net amount received by such Person after the payment of such Taxes (and
any Taxes imposed on such additional amount) shall equal the amount such
Person would have received had no such Taxes been asserted.
If any Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the applicable Agent, for its account or
the account of the respective Lenders, as the case may be, the required receipts
or other required documentary evidence, such Borrower shall indemnify the
applicable Agent or such Lenders, as the case may be, for any incremental Taxes,
interest or penalties that may become payable by the applicable Agent or any
such Lender, as the case may be, as a result of any such failure.
(b) Each U.S. Lender and the U.S. Agent hereby severally (but not jointly)
represents that, under applicable law and treaties in effect as of the
date of the initial Credit Extensions in the case of the original
signatories to this Agreement and in effect as of the date of the
assignment or other transfer to or the appointment of a Person that
subsequently thereby becomes a U.S. Lender or the U.S. Agent, no United
States federal taxes will be required to be withheld by the U.S. Agent or
the U.S. Borrower with respect to any payments to be made to such Person
in respect of this Agreement. Each U.S. Lender that is an original
signatory hereto and the U.S. Agent agrees severally (but not jointly)
that, prior to the date of the initial Credit Extensions, and each Person
which becomes a U.S. Lender by assignment or transfer pursuant to SECTION
12.11 hereof or becomes the U.S. Agent by appointment pursuant to SECTION
11.4 hereof agrees that, prior to such assignment, transfer or
appointment, it will in each case deliver to the U.S. Borrower and the
U.S. Agent the following:
(i) in the case of a U.S. Lender that is a U.S. Person, two copies of
a statement certifying that such Person is a U.S. Person, which statement
shall contain the address of such Person's office or place of business in
the United States, and shall be signed by an authorized officer of such
Person, together with two duly completed copies of United States Internal
Revenue Service Form W-9 (or applicable successor form) (unless it
establishes to the reasonable satisfaction of such Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
applicable withholding tax), or
(ii) in the case of a U.S. Lender that is not a U.S. Person, either
(x) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or applicable successor form) certifying in each case
that such Person is entitled to receive
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payments under this Agreement and the Notes payable to it, without
deduction or withholding of any United States federal taxes or (y) in
the case of a U.S. Lender that is not a "bank" within the meaning of
section 881(c)(3)(A) of the Code that does not deliver Forms 1001 or
4224 pursuant to CLAUSE (i), two duly completed copies of United States
Internal Revenue Service Form W-8 and a certificate of a duly
authorized officer of such U.S. Lender to the effect that such U.S.
Lender (a) is not a "bank" within the meaning of section 881(c)(3)(A)
of the Code, (b) is a not a 10-percent shareholder of the U.S. Borrower
within the meaning of section 881(c)(3)(B) of the Code and (c) is not a
controlled foreign corporation receiving interest from a related person
within the meaning of Section 881(c)(3)(C) of the Code and in either
case, if reasonably requested by such Borrower, two duly completed
copies of United States Internal Revenue Service Form W-8 or Form W-9
(or applicable successor form) or such other forms or certificates as
are prescribed by law, regulation or administrative practice and that
are necessary to establish an exemption from U.S. federal withholding
tax or backup withholding tax.
Each Person who delivers to the U.S. Borrower and the U.S. Agent a Form W-8,
W-9, 1001 or 4224, or applicable successor form, pursuant to this CLAUSE (b),
further undertakes to deliver to the U.S. Borrower and the U.S. Agent two
further copies of said Form W-8, W-9, 1001, 4224, or applicable successor form,
or other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
U.S. Borrower, and such extensions or renewals thereof as may reasonably be
requested by the U.S. Borrower, certifying that such Person is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal taxes, unless in any such case any change in law, rule,
regulation, treaty or directive, or in the interpretation or application thereof
(a "LAW CHANGE"), has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such Person from duly completing and delivering any such form with
respect to it, in which event, promptly following such Law Change, but in any
event prior to the time the next payment under the Notes is due following such
Law Change, such Person shall advise the U.S. Borrower in writing that it is not
capable of receiving payments without any deduction or withholding of United
States federal tax.
(c) Each Canadian Lender and the Canadian Agent hereby severally (but not
jointly) represents that, under applicable law and treaties in effect as of the
date of the initial Credit Extensions in the case of the original signatories to
this Agreement and in effect as of the date of the assignment or other transfer
to or the appointment of a Person that subsequently thereby becomes a Canadian
Lender or the Canadian Agent, no Canadian federal taxes will be required to be
withheld by the Canadian Agent or the Canadian Borrower with respect to any
payments to be made to such Person in respect of this Agreement.
(d) If, as a result of a Law Change, the applicable Agent or any Lender
(i) is unable to furnish a Borrower with an Internal Revenue Service form (or
other similar form) otherwise required to be delivered by it pursuant to this
SECTION 6.6 or (ii) makes any payment of Taxes,
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or becomes liable to make any payment of Taxes, with respect to payments by a
Borrower hereunder, such Borrower's continuing obligation to make payments to
the applicable Agent or such Lender under the terms of CLAUSE (a) shall be
conditioned on the applicable Agent or such Lender, as the case may be, prior
to the time that the next payment under the Notes is due following such Law
Change (and thereafter as is required by applicable law), having furnished
such Borrower with any necessary certificate and having taken such other
steps as may be commercially reasonably available to it (but in no event
shall the applicable Agent or any such Lender be required to take any action
which is inconsistent with its internal policies or would be otherwise
adverse to the applicable Agent or such Lender or its Credit Extensions
hereunder) under applicable tax laws and any applicable tax treaty or
convention to obtain an exemption from, or reduction (to the lowest
applicable rate) of, such Taxes. Notwithstanding any provision of CLAUSE (a)
to the contrary, no Borrower shall have any obligation to pay any Taxes
(except to the extent reasonably believed by such Borrower to be required by
law in which event such Taxes may be paid by withholding from amounts
otherwise payable to a Lender or the applicable Agent) pursuant to CLAUSE
(a), or to pay any amount to the applicable Agent or any Lender pursuant to
CLAUSE (a), to the extent that such amount results from (i) the failure of
any Lender or the applicable Agent to comply with its obligations pursuant to
this SECTION 6.6, SECTION 2.5 or CLAUSE (iii) or (iv) of the second proviso
of the first sentence of SECTION 12.11.1, (ii) any representation or warranty
made or, pursuant to any certificate required to be delivered hereunder or
under any Lender Assignment Agreement, deemed to be made by any Lender or the
applicable Agent pursuant to this SECTION 6.6, SECTION 2.5 or CLAUSE (iii) or
(iv) of the second proviso of the first sentence of SECTION 12.11.1 proving
to have been incorrect when made or deemed to have been made in any material
respect or (iii) such Person being a "conduit entity" (a "CONDUIT ENTITY")
within the meaning of U.S. Treasury Regulation Section 1.881-3 or any
successor provision thereto. Each Lender agrees to indemnify and hold
harmless each Borrower and the applicable Agent from and against any taxes,
penalties, interest or other costs or losses (including reasonable attorneys'
fees and expenses) incurred or payable by such Borrower or the applicable
Agent as a result of the failure of such Borrower or the applicable Agent to
comply with its obligations to deduct or withhold any Taxes from any payments
made pursuant to this Agreement to such Lender or the applicable Agent which
failure resulted from (i) such Borrower's or the applicable Agent's reliance
on any form, statement, certificate or other information provided to it by,
or made by, such Lender pursuant to this SECTION 6.6 or SECTION 12.11.1 or
(ii) such Lender being a Conduit Entity.
(e) If any Agent or any Lender receives a refund in respect of Taxes paid
by a Borrower, such Agent or Lender shall promptly pay such refund, together
with any other amounts paid by such Borrower pursuant to CLAUSE (a) in
connection with such refunded Taxes, to such Borrower, PROVIDED, HOWEVER, that
such Borrower agrees to promptly return such refund to the applicable Agent or
the applicable Lender, as the case may be, after it receives notice from the
applicable Lender that such Lender is required to repay such refund.
(f) The agreements in this Section shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
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SECTION 6.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by any Borrower pursuant to this Agreement, the Notes,
each Letter of Credit or any other Loan Document shall be made by such Borrower
to the applicable Agent (or, in the case of amounts received as a result of the
exercise of remedies, by such Agent to the applicable Secured Parties), in each
case, for the PRO RATA account of the applicable Secured Parties entitled to
receive such payments. All such payments required to be made to the applicable
Agent shall be made, without setoff, deduction or counterclaim, not later than
2:00 p.m. (local time) on the date due, in same day or immediately available
funds, to such account as the applicable Agent shall specify from time to time
by notice to such Borrower. Funds received after that time shall be deemed to
have been received by the applicable Agent on the next succeeding Business Day.
The applicable Agent shall promptly remit in same day funds to each applicable
Secured Party its share, if any, of such payments received by the applicable
Agent for the account of such Secured Party. All interest (including interest on
LIBO Rate Loans) and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 360
days (or, in the case of interest on a U.S. Base Rate Loan (calculated at other
than the Federal Funds Rate) or a Canadian Prime Rate Loan, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by CLAUSE (e) of the definition of the term "INTEREST PERIOD") be made
on the next succeeding Business Day and such extension of time shall be included
in computing interest and fees, if any, in connection with such payment.
SECTION 6.8. SHARING OF PAYMENTS. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan or Reimbursement Obligation (other
than pursuant to the terms of SECTION 6.3, 6.4, 6.5 or 6.6) in excess of its PRO
RATA share of payments then or therewith obtained by all Lenders making Loans
under the same Facility, such Lender shall purchase from the other Lenders such
participations in Credit Extensions made by them as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; PROVIDED, HOWEVER, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
TO
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Each Borrower agrees that any Lender
so purchasing a participation
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from another Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
SECTION 6.9) with respect to such participation as fully as if such Lender
were the direct creditor of such Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section to share in the benefits of
any recovery on such secured claim.
SECTION 6.9. SETOFF. Each Lender shall, upon the occurrence and
during the continuance of any Default described in CLAUSES (a) through (d) of
SECTION 10.1.9 with respect to a Borrower or any Significant Subsidiary or,
with the consent of the Required Lenders, upon the occurrence and during the
continuance of any other Event of Default, have the right to appropriate and
apply to the payment of the Obligations owing to it (whether or not then
due), and (as security for such Obligations) each Borrower hereby grants to
each Lender a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of such Borrower then or thereafter maintained
with such Lender; PROVIDED, HOWEVER, that any such appropriation and
application shall be subject to the provisions of SECTION 6.8. Each Lender
agrees promptly to notify such Borrower and the applicable Agent after any
such setoff and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable
law or otherwise) which such Lender may have.
SECTION 6.10. LENDER'S DUTY TO MITIGATE. Each Lender agrees that
as promptly as practicable after it becomes aware of the occurrence of an
event or the existence of a condition that would cause it to be affected
under SECTION 6.1, 6.2, 6.5 or 6.6 or that would entitle such Lender to
receive payments under SECTION 6.3, such Lender will give notice thereof to
the applicable Borrower and, to the extent not inconsistent with such
Lender's internal policies (or, even if inconsistent with such internal
policies, if at such time or at a time reasonably near to such time such
Lender has taken action similar to the action contemplated by this Section
for the benefit of substantially all of its other similarly situated
commercial borrowers), such Lender shall use all commercially reasonable
efforts to make, fund or maintain its affected LIBO Rate Loans through
another lending office of such Lender if, as a result thereof, the additional
moneys which would otherwise be required to be paid to such Lender pursuant
to SECTION 6.2, 6.3, 6.5 or 6.6, as the case may be, would be materially
reduced, or the illegality or other adverse circumstances which would
otherwise require a conversion of such Loans pursuant to SECTION 6.1 would
cease to exist, and if, as determined by such Lender in its reasonable
discretion, the making, funding or maintaining of such Loans through such
other lending office would not otherwise materially adversely affect such
Loans or such Lender.
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SECTION 6.11. REPLACEMENT OF LENDERS. Each Lender hereby
severally agrees as set forth in this Section.
(a) If any Lender (a "SUBJECT LENDER") makes demand upon a Borrower
for (or if a Borrower is otherwise required to pay) amounts pursuant to
SECTION 6.2, 6.3, 6.5 or 6.6, or gives notice pursuant to SECTION 6.1
requiring a conversion of such Subject Lender's LIBO Rate Loans to U.S.
Base Rate Loans or Canadian BAs to Canadian Prime Rate Loans, the
applicable Borrower may, within 90 days of receipt by such Borrower of
such demand or notice (or the occurrence of such other event causing such
Borrower to be required to pay such compensation), as the case may be,
give notice (a " REPLACEMENT NOTICE") in writing to the applicable Agent
and such Subject Lender of its intention to replace such Subject Lender
with a financial institution designated in such Replacement Notice. If the
applicable Agent shall, in the exercise of its reasonable discretion and
within 30 days of its receipt of such Replacement Notice, notify such
Borrower and such Subject Lender in writing that the designated financial
institution is satisfactory to the applicable Agent, then such Subject
Lender shall, so long as no Default or Event of Default shall have
occurred and be continuing (and subject to the payment of any amounts due
pursuant to SECTION 6.4), assign, in accordance with SECTION 12.11.1, all
of its Commitments, Loans, Notes and other rights and obligations under
this Agreement and all other Loan Documents (including Reimbursement
Obligations) to such designated financial institution; PROVIDED, HOWEVER,
that (i) such assignment shall be without recourse, representation or
warranty (other than that such Lender owns the Commitments, Loans and
Notes being assigned, free and clear of any Liens) and shall be on terms
and conditions reasonably satisfactory to such Subject Lender and such
designated financial institution and (ii) the purchase price paid by such
designated financial institution shall be in the amount of such Subject
Lender's Loans and its Percentage of outstanding Reimbursement
Obligations, together with all accrued and unpaid interest and fees in
respect thereof, plus all other amounts (including the amounts demanded
and unreimbursed under SECTIONS 6.2, 6.3, 6.5 and 6.6), owing to such
Subject Lender hereunder.
(b) In the event that S&P or Moody's shall, after the date that any
Person becomes a Lender, downgrade the long-term certificate of deposit
ratings of such Lender, and the resulting ratings shall be below BBB- or
Baa3, respectively, or the equivalent, then the applicable Borrower and
each applicable Issuer shall each have the right, but not the obligation,
upon notice to such Lender and the applicable Agent, to replace such
Lender with a financial institution (a "REPLACEMENT LENDER") acceptable to
such Borrower and the applicable Agent (such consents not to be
unreasonably withheld or delayed; PROVIDED that no such consent shall be
required if the Replacement Lender is an existing Lender), and upon any
such downgrading of any Lender's long-term certificate of deposit rating,
each such Lender hereby agrees to transfer and assign (in accordance with
and subject to the restrictions contained in SECTION 12.11.1) its
Commitments, Loans, Notes and other rights and obligations under this
Agreement and all other Loan Documents (including Reimbursement
Obligations) to such Replacement Lender; PROVIDED, HOWEVER, that (i) such
assignment shall be without recourse, representation or warranty (other
than that such
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Lender owns the Commitments, Loans and Notes being assigned, free and
clear of any Liens) and (ii) the purchase price paid by the Replacement
Lender shall be in the amount of such Lender's Loans and its Percentage
of outstanding Reimbursement Obligations, together with all accrued and
unpaid interest and fees in respect thereof, plus all other amounts
(other than the amounts (if any) demanded and unreimbursed under
SECTIONS 6.2, 6.3, 6.5 and 6.6, which shall be paid by such Borrower),
owing to such Lender hereunder. Upon any such termination or
assignment, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of any provisions of this
Agreement which by their terms survive the termination of this
Agreement.
(c) Upon the effective date of an assignment described in CLAUSE (a)
or (b), the applicable Borrower shall issue a replacement Note or Notes,
as the case may be, to such designated financial institution or
Replacement Lender, as applicable, and such institution shall become a
"Lender" for all purposes under this Agreement and the other Loan
Documents. In the case of CLAUSE (a), the applicable Agent agrees to use
all commercially reasonable efforts to assist such Borrower in locating a
replacement financial institution to replace any Subject Lender; PROVIDED,
HOWEVER, that such Agent shall have no obligation to become a Replacement
Lender; PROVIDED, FURTHER, HOWEVER, that such Borrower agrees to pay all
reasonable costs and expenses incurred by the applicable Agent in
providing such assistance.
ARTICLE VII
CONDITIONS TO CREDIT EXTENSIONS
SECTION 7.1. INITIAL CREDIT EXTENSIONS. The obligations of each
Lender and each Issuer to fund the initial Credit Extensions shall be subject
to the prior or concurrent satisfaction of each of the conditions precedent
set forth in this SECTION 7.1.
SECTION 7.1.1. RESOLUTIONS, ETC. The Agents shall have received from
(i) each U.S. Obligor, as applicable, a copy of a good standing certificate or
similar certificate issued by the relevant jurisdiction, dated a date reasonably
close to the Effective Date, for each such Person and (ii) from each Obligor, a
certificate, dated the date of the initial Credit Extensions and with
counterparts for each Lender, duly executed and delivered by such Person's
Secretary or Assistant Secretary as to
(a) resolutions of each such Person's Board of Directors then in full
force and effect authorizing, to the extent relevant, all aspects of the
Transaction applicable to such Person and the execution, delivery and
performance of such of the Merger Agreement, any other Transaction
Document, this Agreement, the Notes and each other Loan Document to be
executed by such Person and the transactions contemplated hereby and
thereby;
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(b) the incumbency and signatures of those of its officers
authorized to act, if applicable, with respect to the Merger Agreement,
any other Transaction Document, this Agreement, the Notes and each
other Loan Document to be executed by such Person; and
(c) the full force and validity of each Organic Document of such
Person together with copies thereof,
upon which certificates each Lender, each Issuer and each Agent may conclusively
rely until it shall have received a further certificate of the Secretary or
Assistant Secretary of any such Person canceling or amending the prior
certificate of such Person.
SECTION 7.1.2. DELIVERY OF DOCUMENTS. The Agents shall have
received (with copies for each Lender (but (unless otherwise requested by a
Lender) excluding from such copies the disclosure schedules, copies of which
will be on file with the Agents) a fully executed copy of the Merger
Agreement, and, to the extent required by SECTION 7.1.3, all other
Transaction Documents that are required to be delivered pursuant to the terms
of the Merger Agreement. The Agents shall be satisfied with all material
amendments, waivers or other modifications of, or other forbearance to
exercise any material rights with respect to, any of the terms or provisions
of the Merger Agreement and the exhibits and schedules thereto.
SECTION 7.1.3. TRANSACTION CLOSING PAPERS. To the extent not
received pursuant to SECTION 7.1.2, the Agents shall have received a
certificate (which may be the U.S. Borrower Closing Date Certificate), dated
the date of the initial Credit Extensions, of an Authorized Officer of the
U.S. Borrower certifying as to a true and complete copy of the Merger
Agreement and, to the extent requested by the Agents, all other Transaction
Documents.
SECTION 7.1.4. CONSUMMATION OF TRANSACTION. The U.S. Agent shall
have received evidence reasonably (in the case of CLAUSE (b)) satisfactory to
it that (a) the Merger has been (or contemporaneously with the making of the
initial Credit Extensions, will be) consummated in accordance with the Merger
Agreement and (b) all other aspects of the Transaction have been or,
contemporaneously with the making of the initial Credit Extensions, will be
consummated.
SECTION 7.1.5. RECEIPT OF CAPITAL CONTRIBUTION, ETC. The U.S.
Agent shall have received evidence reasonably satisfactory to it that
(a) contemporaneously with the making of the initial Credit
Extensions, (i) North Castle will purchase LHPG Common Stock for a cash
amount of not less than $75,000,000, and the U.S. Borrower shall have
received a cash equity contribution of not less than $75,000,000, (ii)
certain current members of management and employees of, and consultants
to, LHPG and its Subsidiaries and C. Baird will hold or have the right to
receive shares of LHPG Common Stock with a value of at least $14,000,000
and such LHPG Common Stock, together with the shares thereof purchased by,
or contributed to, North Castle, will have a value of $99,000,000 based
upon the per share price so paid by
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North Castle, and (iii) members of the AEA Group and certain former
members of management and employees of LHPG and its Subsidiaries will
hold shares of LHPG Common Stock that will have a value of
approximately $11,000,000 based on such per share purchase price, in
each case in accordance with the Merger Agreement or otherwise on terms
and conditions reasonably satisfactory to the U.S. Agent, and the
Transaction shall be consummated for aggregate consideration not to
exceed $360,000,000 (including the refinancing of Indebtedness of the
U.S. Borrower and its Subsidiaries and transaction fees and expenses
other than Covered Expenses as defined in the Merger Agreement); and
(b) the aggregate amount of fees and expenses incurred by the U.S.
Borrower, Parent and LHPG in connection with the Transaction (excluding
management bonuses and fees and expenses incurred by existing Leiner
stockholders that are not paid or payable by LHPG or its Subsidiaries and
excluding "Covered Expenses", as defined and used in the Merger Agreement)
have not exceeded $19,000,000.
SECTION 7.1.6. SUBORDINATED DEBT. The Agents shall have received
evidence reasonably satisfactory to them that the U.S. Borrower has received
(or, contemporaneously with the making of the initial Credit Extensions will
receive), at least $85,000,000 in gross proceeds from the issuance of the
Subordinated Notes to the Subordinated Note Holders, which Subordinated Notes
and all other Subordinated Note Instruments shall be in form and substance
reasonably satisfactory to the Agents.
SECTION 7.1.7. DELIVERY OF NOTES. The Agents shall have received, (i)
for the account of each U.S. Lender that has requested a Note on or prior to
5:00 p.m., New York time, on June 27, 1997, such U.S. Lender's U.S. Notes duly
executed and delivered by an Authorized Officer of the U.S. Borrower, and (ii)
for the account of each Canadian Lender that has requested a Note on or prior to
5:00 p.m., New York time, on June 27, 1997, such Canadian Lender's Canadian
Revolving Notes duly executed and delivered by an Authorized Officer of the
Canadian Borrower.
SECTION 7.1.8. PLEDGE AGREEMENTS. The Agents shall have received,
with counterparts for each Lender,
(a) the U.S. Borrower Pledge Agreement, dated as of the date
hereof, duly executed and delivered by an Authorized Officer of the
U.S. Borrower, together with
(i) certificates evidencing 65% of the Capital Stock of
Canadian Holdings, which certificates shall in each case be
accompanied by undated stock powers duly executed in blank,
(ii) all Pledged Notes (as defined in the U.S. Borrower
Pledge Agreement), if any, evidencing Indebtedness payable to
the U.S. Borrower, duly endorsed to the order of the Agents, and
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(iii) UCC financing statements (or similar instruments) in
respect of such Pledged Notes executed by each payee of a Pledged
Note to be filed in such jurisdictions as the Agents may reasonably
request;
(b) the Parent Pledge Agreement, dated as of the date hereof, duly
executed and delivered by an Authorized Officer of Parent, together with
certificates evidencing all of the issued and outstanding Capital Stock of
the U.S. Borrower, which certificates shall be accompanied by undated
stock powers duly executed in blank;
(c) the Canadian Holdings Pledge Agreement, dated as of the date
hereof, duly executed and delivered by an Authorized Officer of Canadian
Holdings, together with
(i) certificates evidencing all of the issued and
outstanding Capital Stock of the Canadian Borrower, which
certificates shall be accompanied by undated stock powers duly
executed in blank,
(ii) all Pledged Notes (as defined in the Canadian Holdings
Pledge Agreement), if any, evidencing Indebtedness payable to
Canadian Holdings, duly endorsed to the order of the Canadian
Agent, and
(iii) PPSA financing statements (or similar instruments) in
respect of the Canadian Holdings Pledge Agreement to be filed in
such jurisdictions as the Canadian Agent may reasonably request;
(d) the Canadian Borrower Pledge Agreement, dated as of the date
hereof, duly executed and delivered by an Authorized Officer of the
Canadian Borrower, together with
(i) certificates evidencing all of the issued and
outstanding Capital Stock of 64804 Manitoba Ltd. and Westcan
Pharmaceuticals Ltd., which certificates shall be accompanied by
undated stock powers duly executed in blank,
(ii) all Pledged Notes (as defined in the Canadian Holdings
Pledge Agreement), if any, evidencing Indebtedness payable to the
Canadian Borrower, duly endorsed to the order of the Canadian
Agent, and
(iii) PPSA financing statements (or similar instruments) in
respect of the Canadian Borrower Pledge Agreement to be filed in
such jurisdictions as the Canadian Agent may reasonably request;
and
(e) the Agents and their counsel shall be reasonably satisfied
that
(i) the Lien granted to the applicable Agent, for the
benefit of the Secured Parties, in the collateral described above
is a first priority (or local equivalent thereof) security
interest; and
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(ii) no Lien exists on any of the collateral described above
other than the Lien created in favor of the applicable Agent, for
the benefit of the Secured Parties, pursuant to a Pledge Agreement.
SECTION 7.1.9. MANAGEMENT SERVICES AGREEMENT. The U.S. Agent shall
have received a copy of the Management Services Agreement, dated as of the date
hereof, executed and delivered by the parties thereto, and the Management
Services Agreement shall be in form and substance satisfactory to the U.S.
Agent.
SECTION 7.1.10. GUARANTIES. The Agents shall have received, with
counterparts for each Lender, the Parent Guaranty, the U.S. Borrower
Guaranty, the Canadian Holdings Guaranty and each Canadian Subsidiary
Guaranty.
SECTION 7.1.11. SECURITY AGREEMENTS. The Agents shall have received,
with counterparts for each Lender, executed counterparts of the U.S. Borrower
Security Agreement, the Canadian Borrower Debenture, the Canadian Holdings
Debenture and each Canadian Subsidiary Debenture, each dated as of the date
hereof, duly executed by the applicable grantor party thereto, together with
(a) executed copies of Uniform Commercial Code financing statements
(Form UCC-1) or PPSA financing statements, naming the applicable grantor
as a debtor and the applicable Agent as the secured party, or other
similar instruments or documents, to be filed under the Uniform Commercial
Code or PPSA, as the case may be, of all jurisdictions as may be necessary
or, in the reasonable opinion of the applicable Agent, desirable to
perfect the security interests of the applicable Agent pursuant to the
applicable Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements or similar PPSA instruments, if any, necessary
to release all Liens and other rights of any Person
(i) in any collateral described in such Security Agreement
previously granted by any Person, and
(ii) securing any of the Indebtedness identified in ITEM
9.2.2(B)(I) ("Indebtedness to be Paid") of the Disclosure Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements or similar PPSA instruments as the applicable Agent may reasonably
request; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11) or similar PPSA instruments, or a
similar search report certified by a party acceptable to the applicable
Agent, dated a date reasonably near to the date of the initial Credit
Extension, listing all effective financing statements which name the
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applicable grantor (under its present name and any previous names used by
it within four months prior to the Closing Date) as the debtor and which
are filed in the jurisdictions in which filings were made pursuant to
CLAUSE (A) above, together with copies of such financing statements (none
of which shall cover any collateral described in such Security Agreement).
SECTION 7.1.12. TRADEMARK SECURITY AGREEMENT. The Agents shall
have received a Trademark Security Agreement, dated as of the date of the
initial Credit Extension, duly executed and delivered by the U.S. Borrower.
SECTION 7.1.13. MORTGAGES. The Agents shall have received
counterparts of each Mortgage, dated as of the date hereof, duly executed by
each of the U.S. Borrower, the Canadian Borrower and each other Obligor that
owns Mortgaged Real Property, as applicable, together with
(a) with respect to other than the Mortgaged Real Property in
Michigan, satisfactory arrangements for the completion of all recordings
and filings of each such Mortgage as may be necessary or, in the
reasonable opinion of the Agents, desirable effectively to create a valid,
perfected first priority Lien against the properties purported to be
covered thereby;
(b) in the case of Mortgages delivered by the U.S. Borrower (for
other than Mortgaged Real Property in Michigan), mortgagee's title
insurance policies in favor of the U.S. Agent and the Lenders in amounts
and in form and substance and issued by insurers, reasonably satisfactory
to the Agents, with respect to the property purported to be covered by
each Mortgage on such real property, insuring that title to such property
is marketable and that the interests created by such Mortgage constitute
valid first Liens thereon free and clear of all defects and encumbrances
other than those Liens permitted pursuant to SECTION 9.2.3 and those Liens
as approved by the Agents, and such policies shall also include, to the
extent then available, a survey reading, and, if required by the Mortgagee
and if available, a revolving credit endorsement, a comprehensive
endorsement, a variable rate endorsement, access and utilities
endorsements, a mechanic's lien endorsement and such other endorsements as
the Agents shall reasonably request and shall be accompanied by evidence
of the payment in full of all premiums thereon; PROVIDED, that, in the
case of zoning endorsements, if any, no additional premiums will be
required in excess of $2,000 for each Mortgaged Real Property; and
(c) such other approvals, opinions, or documents as the Agents may
reasonably request including consents and estoppel agreements from
landlords, to the extent then available, a current survey of each property
purported to be covered by a Mortgage in form and substance reasonably
satisfactory to the Agents and the title insurer.
SECTION 7.1.14. CLOSING DATE CERTIFICATES. The Agents shall have
received, with counterparts for each Lender, the U.S. Borrower Closing Date
Certificate, the Canadian
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Borrower Closing Date Certificate and the Parent Closing Date Certificate,
each dated the date of the initial Credit Extensions and duly executed and
delivered by an Authorized Officer of the U.S. Borrower, the Canadian
Borrower and Parent, as the case may be, in which certificates the U.S.
Borrower, the Canadian Borrower and Parent, as the case may be, shall agree
and acknowledge that the statements made therein shall be deemed to be true
and correct representations and warranties of the U.S. Borrower, the Canadian
Borrower and Parent, as the case may be, made as of such date (and in the
case of the U.S. Borrower and the Canadian Borrower, under this Agreement),
and, at the time each such certificate is delivered, such statements shall in
fact be true and correct. All documents and agreements required to be
appended to such Closing Date Certificates shall be in form and substance
reasonably satisfactory to the Agents.
SECTION 7.1.15. COMPLIANCE CERTIFICATE. The Agents shall have
received, with counterparts for each Lender, an initial Compliance
Certificate on a consolidated pro forma basis as if the Transaction had been
consummated and the Credit Extensions to be made on the date of the initial
Credit Extensions had been made as of March 31, 1997 evidencing PRO FORMA
compliance with the financial covenants set forth in SECTION 9.2.4 as of June
30, 1997, and as to such items therein as the Agents reasonably request,
dated the date of the initial Credit Extensions, duly executed (and with all
schedules thereto duly completed) and delivered by the chief executive,
financial or accounting Authorized Officer of the U.S. Borrower.
SECTION 7.1.16. SOLVENCY, ETC. The Agents shall have received,
with counterparts for each Lender, an opinion from Houlihan Lokey Howard &
Zukin, dated the date of the initial Credit Extensions, with respect to the
solvency of the U.S. Borrower, in form and substance reasonably satisfactory
to the Agents.
SECTION 7.1.17. FINANCIAL INFORMATION, ETC. The Agents shall
have received, with counterparts for each Lender,
(a) audited financial statements of the U.S. Borrower as at March
31, 1997; and
(b) a PRO FORMA consolidated balance sheet of the U.S. Borrower and
its Subsidiaries, as of the date of the initial Credit Extensions (the
"PRO FORMA BALANCE SHEET"), certified by the chief financial or accounting
Authorized Officer of the U.S. Borrower, giving effect to the consummation
of the Transaction and all the transactions contemplated by this Agreement
and reflecting the proposed capital structure of the U.S. Borrower
consistent with the bank memorandum furnished to the Lenders and otherwise
reasonably satisfactory to the Agent.
SECTION 7.1.18. PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All
Indebtedness identified in ITEM 9.2.2(B)(I) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been (or,
contemporaneously with the making of the initial Credit Extensions, be) paid in
full from the proceeds of the initial Credit Extensions and the
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commitments in respect of such Indebtedness shall have been (or,
contemporaneously with the making of the initial Credit Extensions, be)
terminated, and all Liens securing payment of any such Indebtedness shall
have been (or, contemporaneously with the making of the initial Credit
Extensions, be) released and the Agents shall have received all UCC Form
UCC-3 termination statements (or comparable Canadian instruments) or other
instruments as may be suitable or appropriate in connection therewith. After
giving effect to the foregoing and to the Transaction, the U.S. Borrower and
its Subsidiaries shall have no more than $6,000,000 of funded Indebtedness in
respect of borrowed money other than pursuant to the Loan Documents and the
Subordinated Notes.
SECTION 7.1.19. CLOSING FEES, EXPENSES, ETC. The Agents shall
have received for their own account, or for the account of each Lender, as
the case may be, all fees, costs and expenses due and payable pursuant to
SECTIONS 5.3 and 12.3, if then invoiced.
SECTION 7.1.20. TAX SHARING AGREEMENT. The U.S. Agent shall have
received a copy of the Tax Sharing Agreement, dated as of the date hereof,
executed and delivered by the parties thereto, and the Tax Sharing Agreement
shall be in form and substance satisfactory to the U.S. Agent.
SECTION 7.1.21. RELIANCE LETTERS AND REPORTS. The Agents shall
have received, with copies for each Lender, copies of, unless the Agents
otherwise agree, reliance letters, dated the date of the making of the
initial Credit Extensions and addressed to each Lender and the Agents, in
respect of each of the legal opinions delivered in connection with the
Transaction from each of (i) Fried, Frank, Harris, Shriver & Jacobson and
(ii) Debevoise & Plimpton.
SECTION 7.1.22. OPINIONS OF COUNSEL. The Agents shall have
received opinions, dated the date of the initial Credit Extensions and
addressed to the Agents and all Lenders, from
(a) Debevoise & Plimpton, counsel to the Obligors, substantially
in the form of EXHIBIT L-1 hereto;
(b) Pitblado & Hoskin, Canadian counsel to the Obligors,
substantially in the form of EXHIBIT L-2 hereto; and
(c) Neal Gerber & Eisenberg, Illinois counsel to certain
Obligors, in form and substance satisfactory to the U.S. Agent;
(d) Jaffe, Raitt, Heyer, Weiss, Michigan counsel to certain
Obligors, in form and substance satisfactory to the U.S. Agent;
(e) Godfrey & Kahn, Wisconsin counsel to certain Obligors, in
form and substance satisfactory to the U.S. Agent;
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(f) Allen, Matkins, Leck, Gamble & Mallory LLP, California
counsel to certain Obligors, in form and substance satisfactory to the
U.S. Agent; and
(g) Benesch, Friedlander, Coplan & Aronoff, Ohio counsel to
certain Obligors, in form and substance satisfactory to the U.S. Agent.
SECTION 7.2. ALL CREDIT EXTENSIONS. The obligation of each Lender and
each Issuer to make any Credit Extension (including the initial Credit
Extensions) shall be subject to SECTIONS 2.1.4 and 2.1.5 or SECTIONS 3.1.3 and
3.1.4, as the case may be, and the satisfaction of each of the conditions
precedent set forth in this SECTION 7.2.
SECTION 7.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in SECTION 10.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true and
correct:
(a) the representations and warranties set forth in ARTICLE VIII
(excluding, however, those contained in SECTION 8.7) and in each other
Loan Document shall, in each case, be true and correct in all material
respects with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date);
(b) except as disclosed by the U.S. Borrower to the Agents and
the Lenders pursuant to SECTION 8.7,
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the U.S. Borrower, threatened against Parent or the U.S.
Borrower or any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect, or which would adversely
affect the legality, validity or enforceability of this Agreement,
the Notes or any other Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation or
proceeding disclosed pursuant to SECTION 8.7 which could reasonably
be expected to have a Material Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and
neither Parent nor the U.S. Borrower or any of its Subsidiaries shall be
in material violation of any law or governmental regulation or court order
or decree, which violation would, individually or in the aggregate, have a
Material Adverse Effect.
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SECTION 7.2.2. CREDIT EXTENSION REQUEST, ETC. Subject to SECTION
2.3 and 3.3, as the case may be, the applicable Agent shall have received a
Borrowing Request if Loans are being requested, or an Issuance Request if a
Letter of Credit is being requested or extended. Each of the delivery of a
Borrowing Request or Issuance Request and the acceptance by a Borrower of the
proceeds of such Credit Extension shall constitute a representation and
warranty by such Borrower that on the date of such Credit Extension (both
immediately before and after giving effect to such Credit Extension and the
application of the proceeds thereof) the statements made in SECTION 7.2.1 are
true and correct in all material respects.
SECTION 7.2.3. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the U.S. Borrower or any of its
Subsidiaries or any other Obligors shall be reasonably satisfactory in form
and substance to the Agents and its counsel; the Agents and their counsel
shall have received all information, approvals, opinions, documents or
instruments as the Agents or their counsel may reasonably request.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, each Issuer and the Agents to
enter into this Agreement and to make Credit Extensions hereunder, each
Borrower represents and warrants (as applicable) unto the Agents, each Issuer
and each Lender as set forth in this ARTICLE VIII.
SECTION 8.1. ORGANIZATION, ETC. Each Borrower and each of its
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the state or jurisdiction of its incorporation, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business requires
such qualification (except where the failure to so qualify would not,
individually or in the aggregate, have a Material Adverse Effect), and has
full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform the Transaction
Documents to which it is a party and its Obligations under this Agreement,
the Notes and each other Loan Document to which it is a party (except to the
extent the failure to have any such license, permit or other approval would
not have a Material Adverse Effect or adversely affect the ability of any
Borrower or any Obligor to own and hold under lease its property and to
conduct its business substantially as currently conducted by it).
SECTION 8.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The
execution, delivery and performance by each Borrower of this Agreement, the
Notes and each other Loan Document executed or to be executed by it, the
execution, delivery and performance by each other Obligor of each Loan
Document executed or to be executed by it, each Borrower's, each of their
Subsidiaries, Canadian Holding's, Parent's and each such other Obligor's
participation in the consummation of all aspects of the Transaction, the
execution, delivery and performance by LHPG of the Merger Agreement and the
other agreements executed and delivered in
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connection with the Transaction and the performance by the U.S. Borrower of
the Assumption are in each case within each such Person's corporate powers,
have been duly authorized by all necessary corporate action, and do not
(a) contravene any such Person's Organic Documents;
(b) contravene any contractual restriction (except for such
contraventions that (x) would not, singly or in the aggregate, have a
Material Adverse Effect, (y) would not result in the creation of any Lien
(except as expressly permitted by this Agreement) or (z) would not subject
either Agent, any Issuer or any Lender to any liability) binding on or
affecting any such Person;
(c) contravene (i) any court decree or order binding on or affecting
any such Person or (ii) any law or governmental regulation binding on or
affecting any such Person (other than, in the case of each Obligor's
participation in the consummation of the Transaction and the execution,
delivery and performance by LHPG of the Merger Agreement and the other
agreements executed and delivered in connection with the Transaction,
contravention of an immaterial nature); or
(d) result in, or require the creation or imposition of, any Lien
on any of such Person's properties (except as expressly permitted by
this Agreement).
SECTION 8.3. GOVERNMENT APPROVAL, REGULATION, ETC. No
authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other Person (other
than (i) those that have been, or on the Effective Date will be, duly
obtained or made and which are, or on the Effective Date will be, in full
force and effect, (ii) following the date of the initial Credit Extensions,
routine filings with and notices to governmental authorities, regulatory
bodies or other Persons and (iii) those the failure of which to be obtained
could not reasonably be expected individually or in the aggregate to have a
Material Adverse Effect) is required for the consummation of the Transaction
and the due execution, delivery or performance by each Borrower of this
Agreement or the Notes or by any Borrower or any other Obligor of any other
Loan Document to which it is a party, or for the due execution, delivery
and/or performance of the Merger Agreement, in each case by the parties
thereto or the consummation of the Transaction. Neither Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
SECTION 8.4. VALIDITY, ETC. This Agreement constitutes, and the
Notes and each other Loan Document executed by a Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of such Borrower, enforceable against such Borrower in accordance
with their respective terms; and each other Loan Document executed pursuant
hereto by each other Obligor will, on the due execution and delivery thereof
by such
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Obligor, constitute the legal, valid and binding obligation of such Obligor
enforceable against such Obligor in accordance with its terms (except, in any
case above, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and by principles of equity).
SECTION 8.5. FINANCIAL INFORMATION. Subject to the last sentence
of SECTION 8.15, the financial statements of the U.S. Borrower and its
Subsidiaries furnished to the U.S. Agent and each Lender pursuant to SECTION
7.1.17 have been prepared in accordance with GAAP consistently applied, and
present fairly the consolidated financial condition of the corporations
covered thereby as at the dates thereof and the results of their operations
for the periods then ended. All balance sheets, all statements of operations,
shareholders' equity and cash flow and all other financial information of
each of the U.S. Borrower and its Subsidiaries furnished pursuant to SECTION
9.1.1 have been and will for periods following the Effective Date be prepared
in accordance with GAAP consistently applied, and do or will present fairly
the consolidated financial condition of the corporations covered thereby as
at the dates thereof and the results of their operations for the periods then
ended, except that quarterly financial statements need not include footnote
disclosure and may be subject to ordinary year-end adjustment.
SECTION 8.6. NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the consolidated financial condition, results of
operations, assets, business or properties or, as of the date of the initial
Credit Extensions, prospects, of the U.S. Borrower and its Subsidiaries taken
as a whole since March 31, 1997, except to the extent that the incurrence of
Indebtedness pursuant to this Agreement and/or the Subordinated Debt, or the
repayment of any Indebtedness of Leiner and its Subsidiaries on the Effective
Date or payments to stockholders of the U.S. Borrower and the Canadian
Borrower, or of management bonuses and transaction costs and expenses, would
individually or in the aggregate be deemed such a material adverse change.
SECTION 8.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no
pending or, to the knowledge of the U.S. Borrower, threatened litigation,
action, proceeding, or labor controversy (i) affecting the U.S. Borrower or
any of its Subsidiaries, or any of their respective properties, businesses,
assets or revenues, which would reasonably be expected to have a Material
Adverse Effect, except as disclosed in ITEM 8.7 ("Litigation") of the
Disclosure Schedule or (ii) which would adversely affect the legality,
validity or enforceability of this Agreement, the Notes, any other Loan
Document, the Merger Agreement or the Transaction.
SECTION 8.8. SUBSIDIARIES. The U.S. Borrower has no
Subsidiaries, except those Subsidiaries
(a) which are identified in ITEM 8.8 ("Existing Subsidiaries") of
the Disclosure Schedule; or
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(b) which are permitted to have been organized or acquired in
accordance with SECTION 9.2.5 or 9.2.10.
SECTION 8.9. OWNERSHIP OF PROPERTIES. Except as disclosed in ITEM
8.9 ("Plant Sites and Property Matters") of the Disclosure Schedule, or as
permitted pursuant to SECTION 8.13 or SECTION 9.2.3, the U.S. Borrower and
each of its Subsidiaries owns (except where the failure to own such property
as provided in this SECTION 8.9 would not reasonably be expected to have a
Material Adverse Effect) (i) in the case of owned Real Property, good and
marketable fee title to, and (ii) in the case of owned personal property,
good and valid title to, or, in the case of leased real or personal property,
valid and enforceable leasehold interests (as the case may be) in, all of its
properties and assets, real and personal, tangible and intangible, of any
nature whatsoever, free and clear in each case of all Liens or claims.
SECTION 8.10. TAXES. The U.S. Borrower and each of its
Subsidiaries has filed all material tax returns and reports required by law
to have been filed by it and has paid all taxes and governmental charges
thereby shown to be due and owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on
its books.
SECTION 8.11. PENSION AND WELFARE PLANS. (a) During the
twelve-consecutive-month period prior to the date of the initial Credit
Extensions and prior to the date of any Credit Extension hereunder, no formal
steps have been taken to terminate any Pension Plan other than in a standard
termination under Section 4041(b) of ERISA, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA in either case which would reasonably be
expected to have a Material Adverse Effect. No condition exists or event or
transaction has occurred with respect to any Pension Plan which (i) could
reasonably be expected to result in the incurrence by the U.S. Borrower or
any Subsidiary of any liability, fine or penalty which would have a Material
Adverse Effect, or (ii) could reasonably be expected to result in the
incurrence by a member of the U.S. Borrower's Controlled Group (other than
the U.S. Borrower or the U.S. Borrower and its Subsidiaries) of any material
liability, fine or penalty which would have a Material Adverse Effect.
(b) Except for liabilities (if any) arising under the terms and
conditions, as in effect on the date of the initial Credit Extensions, of
the Plans disclosed in ITEM 8.11 ("Employee Benefit Plan") of the
Disclosure Schedule, neither the U.S. Borrower nor any Subsidiary has any
contingent liability with respect to any post-retirement benefit under a
Welfare Plan in either case which would reasonably be expected to have a
Material Adverse Effect, other than (i) liability for continuation
coverage described in Part 6 of Title I of ERISA and in Section 4980B of
the Code, (ii) liability for any Plan required by law to be extended to
employees outside of the U.S., or (iii) a modification of, or addition to,
the retiree benefit obligations disclosed in ITEM 8.11 ("Employee Benefit
Plan") of the Disclosure Schedule which when taken together with any other
addition or modification
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since the initial Credit Extensions do not materially increase the U.S.
Borrower's and its Subsidiaries' annual cost of providing such benefits.
SECTION 8.12. ENVIRONMENTAL WARRANTIES. Except as set forth in
ITEM 8.12 ("Environmental Matters") of the Disclosure Schedule:
(a) to the best knowledge of the U.S. Borrower, all facilities
and property owned or leased by the U.S. Borrower or any of its
Subsidiaries are in compliance with all Environmental Laws the
violation of which would reasonably be expected to have a Material
Adverse Effect;
(b) there are no pending or, to the best knowledge of the U.S.
Borrower, threatened
(i) claims, complaints, notices or requests for information
received by the U.S. Borrower or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the U.S. Borrower
or any of its Subsidiaries regarding potential liability under any
Environmental Law
that, in the case of CLAUSES (b)(i) and (b)(ii), singly or in the
aggregate, would have a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials (other than
pursuant to permits, licenses, approvals or other governmental consents or
authorization for any such Releases) at, on or under any property now or
previously owned or leased by the U.S. Borrower or any of its Subsidiaries
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect;
(d) to the best knowledge of the U.S. Borrower, the U.S. Borrower and
its Subsidiaries have been issued and are in material compliance with all
permits, certificates, approvals, licenses and other authorizations
relating to environmental matters and necessary for their businesses,
except for those permits, certificates, approvals, licenses and
authorizations the failure to obtain which or the failure to comply with
which would not reasonably be expected to have a Material Adverse Effect;
(e) no property now or, to the best knowledge of the U.S. Borrower,
previously owned or leased by the U.S. Borrower or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List pursuant
to CERCLA, or, to the best knowledge of the U.S. Borrower, on the CERCLIS
or on any similar state list of sites requiring investigation or clean-up;
(f) to the best knowledge of the U.S. Borrower, there are no
underground storage tanks, active or abandoned, including petroleum
storage tanks, on or under any property
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now or previously owned or leased by the U.S. Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or may reasonably
be expected to have, a Material Adverse Effect;
(g) to the best knowledge of the U.S. Borrower, neither the U.S.
Borrower, nor any Subsidiary has directly transported or directly arranged
for the transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may reasonably be expected to lead to claims against
the U.S. Borrower or such Subsidiary thereof for any remedial work, damage
to natural resources or personal injury, including claims under CERCLA,
which, singly or in the aggregate, have had, or may reasonably be expected
to have, a Material Adverse Effect;
(h) to the best knowledge of the U.S. Borrower, there are no
polychlorinated biphenyls or friable asbestos present at any property now
or previously owned or leased by the U.S. Borrower or any Subsidiary that,
singly or in the aggregate, have had, or may reasonably be expected to
have, a Material Adverse Effect; and
(i) to the best knowledge of the U.S. Borrower, no generation,
manufacture, storage, treatment, transportation or disposal of Hazardous
Material has occurred or is occurring on or from any property owned by the
U.S. Borrower or any of its Subsidiaries that, in either case above,
singly or in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect.
SECTION 8.13. INTELLECTUAL PROPERTY. Each of the U.S. Borrower and
its Subsidiaries owns and possesses or licenses (as the case may be) all such
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, service marks, service mark rights and copyrights as the U.S. Borrower
considers necessary for the conduct of the businesses of the U.S. Borrower and
its Subsidiaries as now conducted without, individually or in the aggregate, any
infringement upon rights of other Persons, in each case except as could not
reasonably be expected to result in a Material Adverse Effect, and there is no
individual patent, patent right, trademark, trademark right, trade name, trade
name right, service mark, service mark right or copyright the loss of which
would result in a Material Adverse Effect, except as may be disclosed in ITEM
8.13 ("Intellectual Property") of the Disclosure Schedule.
SECTION 8.14. REGULATIONS G, U AND X. Neither the U.S. Borrower nor
any of its Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, and no proceeds of any Credit
Extensions will be used for a purpose which violates, or would be inconsistent
with, F.R.S. Board Regulation G, U or X. Terms for which meanings are provided
in F.R.S. Board Regulation G, U or X or any regulations substituted therefor, as
from time to time in effect, are used in this Section with such meanings.
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SECTION 8.15. ACCURACY OF INFORMATION. None of the factual
information heretofore or contemporaneously furnished by or on behalf of the
U.S. Borrower or any of its Subsidiaries in writing to the Agents, any Issuer or
any Lender for purposes of or in connection with this Agreement or any
transaction contemplated hereby or with respect to the Transaction, contains any
untrue statement of a material fact, and none of the other factual information
hereafter furnished in connection with this Agreement or any other Loan Document
by the U.S. Borrower or any other Obligor to the Agents, any Issuer or any
Lender will contain any untrue statement of a material fact on the date as of
which such information is dated or certified and, as of the date of the
execution and delivery of this Agreement by the Agents and each Lender, the
information delivered prior to the date of execution and delivery of this
Agreement (unless such information specifically relates to a prior date) does
not, and the factual information hereafter furnished shall not on the date as of
which such information is dated or certified, omit to state any material fact
necessary to make any information not misleading. Notwithstanding the foregoing,
all projections, including forecasts, budgets, pro formas and forward-looking
statements (the "PROJECTIONS"), prepared or to be prepared by or on behalf of
the U.S. Borrower or any other Obligor contained in any documents or materials
furnished by the U.S. Borrower or any other Obligor to the Agents, any Issuer or
any Lender (including the Projections included in (i) the bank memorandum
furnished to the Lenders with respect to the U.S. Borrower and the PRO FORMA
balance sheet furnished pursuant to CLAUSE (b) of SECTION 7.1.17, (ii) the PRO
FORMA Compliance Certificate furnished pursuant to SECTION 7.1.12 and (iii) the
budgets to be furnished pursuant to CLAUSE (i) of SECTION 9.1.1) have been or
will be prepared on the basis of assumptions believed by the U.S. Borrower to be
reasonable as of the date of preparation of such memorandum, PRO FORMA balance
sheet, PRO FORMA Compliance Certificate, or budgets (and the foregoing sentence
shall not apply to such Projections), it being acknowledged and agreed, however,
that such Projections as to future events should not be viewed as facts and that
the U.S. Borrower makes no representation or warranty that such Projections will
be realized.
SECTION 8.16. SENIOR INDEBTEDNESS, ETC. The U.S. Borrower has the
power and authority to incur the Indebtedness evidenced by the Subordinated
Notes as provided for under the Subordinated Indenture and has duly authorized,
executed and delivered the Subordinated Indenture. All Subordinated Notes have
been (and following the Effective Date, will be) issued by the U.S. Borrower
pursuant to due authorization. The Subordinated Indenture constitutes and (upon
issuance) the Subordinated Notes will constitute, the legal, valid and binding
obligation of the U.S. Borrower enforceable against the U.S. Borrower in
accordance with its terms, subject, as to enforcement, only to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and general equitable principles.
The subordination provisions of the Subordinated Notes and contained in the
Subordinated Indenture continue to be enforceable against the Subordinated Note
Holders by the holder of any Bank Debt (as defined in the Subordinated
Indenture) which has not effectively waived the benefits thereof. All
Obligations, including those to pay principal of and interest (including
post-petition interest) on the Loans and Reimbursement Obligations, and fees and
expenses in connection therewith, constitute Bank Debt (as defined in the
Subordinated Indenture) and all such Obligations are entitled to the benefits of
the
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subordination created by the Subordinated Indenture. The U.S. Borrower
acknowledges that the Agents, the Issuers and each Lender is entering into this
Agreement, and is extending its Commitments, in reliance upon the subordination
provisions of the Subordinated Indenture, the Subordinated Notes and this
Section.
ARTICLE IX
COVENANTS
SECTION 9.1. AFFIRMATIVE COVENANTS. Each Borrower agrees with each
Agent, each Issuer and each Lender that, until all Commitments have
terminated and all Obligations then due and owing have been paid and
performed in full, each Borrower will perform or cause to be performed the
obligations set forth in this SECTION 9.1 that are applicable to such
Borrower.
SECTION 9.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
U.S. Borrower will furnish, or will cause to be furnished, to each Lender,
each Issuer and each Agent copies of the following financial statements,
reports, notices and information:
(a) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of the
U.S. Borrower, consolidated and, if requested by the U.S. Agent,
consolidating balance sheets of the U.S. Borrower and its Subsidiaries as
of the end of such Fiscal Quarter and consolidated and, if requested by
the U.S. Agent, consolidating statements of earnings and cash flow of the
U.S. Borrower and its consolidated Subsidiaries for such Fiscal Quarter
and for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter and, in addition, commencing
with the consolidated and, if requested by the U.S. Agent, consolidating
balance sheets to be delivered hereunder for the Fiscal Quarter ending
December 31, 1998, the consolidated and, if requested by the U.S. Agent,
consolidating statement of earnings to be delivered hereunder for the
Fiscal Quarter ending December 31, 1998, and the consolidated and, if
requested by the U.S. Agent, consolidating statement of cash flow to be
delivered hereunder for the Fiscal Quarter ending December 31, 1998,
comparable information adjusted to reflect any changes at the close of and
for the corresponding Fiscal Quarter for the prior Fiscal Year and for the
corresponding portion of such Fiscal Year, in each case certified as
complete and correct by the chief financial Authorized Officer of the U.S.
Borrower; PROVIDED, HOWEVER, that for the period from the Effective Date
through the date of delivery of the financial information for the Fiscal
Quarter ending September 30, 1998, the U.S. Borrower will furnish
consolidating statements of operating income for the U.S. Borrower and its
Subsidiaries and for the Canadian Borrower, in each case for the
corresponding Fiscal Quarter for the prior Fiscal Year and for the
corresponding portion of such Fiscal Year;
(b) as soon as available and in any event within 90 days after the
end of each Fiscal Year of the U.S. Borrower, a copy of the annual audited
financial statements for such
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Fiscal Year for the U.S. Borrower and its consolidated Subsidiaries,
including therein consolidated and, if requested by the U.S. Agent,
consolidating, balance sheets of the U.S. Borrower and its consolidated
Subsidiaries as of the end of such Fiscal Year and consolidated and, if
requested by the U.S. Agent, consolidating, statements of earnings and
cash flow of the U.S. Borrower and its consolidated Subsidiaries for
such Fiscal Year, in the case of such consolidated (but not
consolidating) statements as audited (without any Impermissible
Qualification) by independent public accountants acceptable to the U.S.
Agent, together with a certificate from such accountants to the effect
that, in making the examination necessary for the signing of such
annual report by such accountants, they have not become aware of any
Default or Event of Default that has occurred and is continuing with
respect to the provisions of SECTIONS 9.2.4, 9.2.8, 9.2.10, 10.1.5 and
10.1.7 (limited, in the case of SECTIONS 10.1.5 and 10.1.7, to
reviewing the minutes of the board of directors of the U.S. Borrower
and its Subsidiaries), or, if they have become aware of such Default or
Event of Default, describing such Default or Event of Default;
(c) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of the
U.S. Borrower and within 90 days after the end of the Fiscal Year of the
U.S. Borrower, a Compliance Certificate, executed by the chief executive,
financial or accounting Authorized Officer of the U.S. Borrower, showing
(in reasonable detail and with appropriate calculations and computations
in all respects reasonably satisfactory to the U.S. Agent) compliance with
the financial covenants set forth in ARTICLE IX;
(d) as soon as possible and in any event within five Business Days
after the U.S. Borrower or any of its Subsidiaries obtains knowledge of
the occurrence of each Default, a statement of the chief executive,
financial or accounting Authorized Officer of the U.S. Borrower setting
forth details of such Default and the action which the U.S. Borrower has
taken and proposes to take with respect thereto;
(e) as soon as possible and in any event within five Business Days
after the U.S. Borrower or any of its Subsidiaries obtains knowledge of
(x) the occurrence of any material adverse development with respect to any
litigation, action, proceeding or labor controversy of the type and
materiality described in ITEM 8.7 ("Litigation") of the Disclosure
Schedule or (y) the commencement of any litigation, action, proceeding or
labor controversy of the type and materiality described in ITEM 8.7,
("Litigation") of the Disclosure Schedule, notice thereof and, to the
extent the U.S. Agent reasonably requests, copies of all documentation
relating thereto (to the extent that such disclosure would not violate
attorney-client privilege or the work product doctrine);
(f) promptly after the sending or filing thereof, copies of all
reports and registration statements which the U.S. Borrower or any of
its Subsidiaries files with the SEC or any national securities exchange;
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(g) immediately upon becoming aware of (i) the institution of any
steps by the U.S. Borrower, any of its Subsidiaries or any other Person to
terminate any Pension Plan, other than a standard termination, (ii) the
failure to make a required contribution to any U.S. Pension Plan if such
failure is sufficient to give rise to a Lien under Section 302(f) of ERISA
and if such failure continues for at least 30 days, (iii) the taking of
any action with respect to a U.S. Pension Plan which could result in the
requirement that the U.S. Borrower or any of its Subsidiaries furnish a
bond or other security to the PBGC or such U.S. Pension Plan, (iv) the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the U.S. Borrower or any of its Subsidiaries
of any liability (other than a liability for the routine cost of
maintaining such Pension Plan), fine or penalty, or (v) any material
increase in the contingent liability of the U.S. Borrower or any of its
Subsidiaries (including the incurrence of any liability described in
CLAUSE (b)(ii) of SECTION 8.11) with respect to any post-retirement
Welfare Plan benefit, to the extent the effect of the action, occurrence
or event described in CLAUSE (g)(i), (g)(iv), or (g)(v) would reasonably
be expected to have a Material Adverse Effect, notice thereof and copies
of all documentation relating thereto;
(h) promptly upon receipt thereof, copies of all detailed
management letters submitted to the U.S. Borrower by the independent
public accountants referred to in CLAUSE (b) in connection with each
audit made by such accountants of the books of the U.S. Borrower or any
Subsidiary;
(i) promptly when available and in any event within 15 Business Days
after the last day of each Fiscal Year of the U.S. Borrower (commencing
after the Effective Date), a budget for the then current Fiscal Year of
the U.S. Borrower, which budget shall be prepared on a Fiscal Quarter
basis and shall contain a projected, consolidated balance sheet and
statement of earnings and cash flow of the U.S. Borrower and its
Subsidiaries for the then current Fiscal Year, prepared in reasonable
detail by the chief accounting, financial or executive Authorized Officer
of the U.S. Borrower;
(j) promptly following the delivery or receipt, as the case may
be, of any material written notice or communication pursuant to or in
connection with the Subordinated Indenture, a copy of such notice or
communication; and
(k) such other information respecting the condition or operations,
financial or otherwise, of Parent or the U.S. Borrower or any of its
Subsidiaries as any Lender or any Issuer through the U.S. Agent may from
time to time reasonably request (including information and reports from
the chief accounting, financial or executive Authorized Officer of the
U.S. Borrower, in such detail as the U.S. Agent or any Lender or Issuer
through the U.S. Agent may reasonably request, with respect to the terms
of and information provided pursuant to the Compliance Certificate).
SECTION 9.1.2. COMPLIANCE WITH LAWS, ETC. Each Borrower will,
and will cause each of its Subsidiaries to, comply in all material respects
with all applicable laws, rules,
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regulations and orders the noncompliance with which would be reasonably
expected to have a Material Adverse Effect, such compliance to include
(without limitation):
(a) the maintenance and preservation of each Borrower's and its
Subsidiaries' corporate existence and qualification as foreign
corporations in all jurisdictions in which the failure to be so qualified
would be reasonably expected to have a Material Adverse Effect; PROVIDED,
HOWEVER, that the Subsidiaries of the U.S. Borrower may be liquidated,
dissolved or merged as contemplated by SECTION 9.2.10 or disposed of if
permitted by SECTION 9.2.11; and, PROVIDED, FURTHER, HOWEVER, that nothing
in this SECTION 9.1.2 shall require the preservation of the corporate
existence of any Subsidiary (other than the Canadian Borrower for so long
as the Canadian Facility is outstanding) if the board of directors of the
U.S. Borrower determines in good faith that the failure to so preserve
such corporate existence would not reasonably be expected to have a
Material Adverse Effect; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves, if any, in
accordance with GAAP shall have been set aside on its books.
SECTION 9.1.3. MAINTENANCE OF PROPERTIES. Each Borrower will and
will cause each of its Subsidiaries to, maintain, preserve, protect and keep
its properties in good repair, working order and condition (ordinary wear and
tear excepted), and make necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times unless such Borrower determines in good faith
that the continued maintenance of any of its properties is no longer
economically desirable, it being understood that any failure to comply with
the foregoing shall not result in a Default hereunder unless such failure to
comply would reasonably be expected to have a Material Adverse Effect.
SECTION 9.1.4. INSURANCE. The U.S. Borrower shall maintain, or
shall cause to be maintained, for the benefit of the U.S. Borrower and its
Subsidiaries:
(a) products liability insurance with respect to all the products
manufactured, produced, sold or otherwise distributed by the U.S.
Borrower or any of its Subsidiaries in an amount not less than
$40,000,000 per annum;
(b) physical damage insurance on all real and personal property on an
all-risk basis (including loss in transit insurance) and public liability
insurance against claims for personal injury, death or property damage
suffered by others upon, in or about any premises occupied by it or
occurring as a result of its ownership, maintenance or operation of any
airplanes, automobiles, trucks or other vehicles or other facilities
(including, but not limited to, any machinery used therein or thereupon)
or as the result of the use of products manufactured, constructed or sold
by it or services rendered by it in an amount
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as is usually carried by Persons of comparable size engaged in the same
or a similar business and similarly situated;
(c) such other types of insurance with respect to its business as
are usually carried by Persons of comparable size engaged in the same
or a similar business and similarly situated; and
(d) all worker's compensation or similar insurance as may be
required under the laws of any state or jurisdiction in which it may be
engaged in business.
All products liability insurance shall be provided (i) by insurers authorized
by Lloyds of London to underwrite such risks, (ii) by insurers having an A.M.
Best policyholders rating of not less than A- (except with respect to
insurers providing insurance of the type described in CLAUSE (d), in which
case such insurers shall have an A.M. Best policyholders rating of not less
than B+) or (iii) by such other insurers as the Agents may approve in
writing; PROVIDED that if the rating of any of the U.S. Borrower's products
liability insurers is downgraded, the U.S. Borrower and each of its
Subsidiaries, as the case may be, shall only be required to obtain
replacement insurance with an insurer satisfying the requirements of this
clause at the stated expiration of the insurance policy maintained with the
insurer whose rating was so downgraded.
SECTION 9.1.5. BOOKS AND RECORDS. Each Borrower will, and will
cause each of its Subsidiaries to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the Agents
and each Lender or any of their respective representatives, at reasonable
times and intervals, during normal business hours and upon reasonable notice,
and at the Agents' or such Lender's expense, to visit all of such Borrower's
and such Subsidiaries' offices, to discuss such Borrower's and such
Subsidiaries' financial matters with such Borrower's and such Subsidiaries'
officers and independent public accountant (and each Borrower hereby
authorizes such independent public accountant to discuss such Borrower's or
such Subsidiaries' financial matters with the Agents and each Lender or any
of their respective representatives whether or not any representative of such
Borrower is present, but provided that an officer of such Borrower or such
Subsidiary shall be afforded a reasonable opportunity to be present at any
such discussion) and to examine (and, at the expense of such Borrower,
photocopy extracts from) any of such Borrower's and its Subsidiaries' books
or other corporate records. Each Borrower shall pay any fees of such
independent public accountant incurred in connection with the Agents' or any
Lender's exercise of its rights pursuant to this Section.
SECTION 9.1.6. ENVIRONMENTAL COVENANT. Each Borrower will, and
will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with
all
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applicable Environmental Laws, except for those permits, approvals,
certificates, licenses and authorizations the failure to keep in effect
would not, or the failure to comply with which would not, or for such
Environmental Laws the failure of which to comply with which would not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(b) promptly notify the Agents and provide copies upon receipt of all
written claims, complaints, notices or inquiries relating to the condition
of its facilities and properties in respect of, or as to compliance with,
Environmental Laws which individually or in the aggregate would have a
Material Adverse Effect, and shall promptly resolve any non-compliance
with Environmental Laws and keep its property free of any Lien imposed by
any Environmental Law which, in either case, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect;
and
(c) provide such information and certifications which the Agents
may reasonably request from time to time to evidence compliance with
this SECTION 9.1.6.
SECTION 9.1.7. FUTURE SUBSIDIARIES. Upon any Person becoming,
after the Effective Date, either a direct or indirect Subsidiary of a
Borrower, or upon an Obligor directly or indirectly acquiring additional
Capital Stock of any existing Subsidiary (other than any Receivables Co.)
having voting rights or contingent voting rights, the U.S. Borrower shall
notify the Agents of such acquisition and, unless otherwise agreed to among
the U.S. Borrower, the Agents and the Required Lenders,
(a) (i) such Person shall, unless it is a Restricted Subsidiary,
execute and deliver to the Agents a Subsidiary Guaranty, (ii) to the
extent such Person or such Obligor is required to pledge stock of a
Subsidiary pursuant to CLAUSE (b) of this SECTION 9.1.7, such Person or
such Obligor shall execute and deliver a Subsidiary Pledge Agreement
(or, if applicable, a supplement to an existing Pledge Agreement),
(iii) such Person shall, unless it is a Restricted Subsidiary, execute
and deliver to the Agents a Subsidiary Security Agreement and (iv) such
Person shall, unless it is a Restricted Subsidiary, execute and deliver
to the Agents a Mortgage on any Real Property the value of which
(together with improvements located thereon) exceeds $2,000,000 it
being agreed by the Lenders and the Agents that, subject to the last
sentence of this Section, non-U.S. Subsidiaries shall not be required
to deliver a guaranty of the Obligations of the U.S. Borrower or any
U.S. Subsidiary, or grant a Lien on any of their assets to secure the
Obligations of the U.S. Borrower or any U.S. Subsidiary;
(b) subject to the last sentence of this Section, (i) the U.S.
Borrower and each U.S. Subsidiary (other than a Restricted Subsidiary)
shall, pursuant to a Pledge Agreement (as supplemented, if necessary, by a
Foreign Pledge Agreement), pledge to the Agents, for their benefit and
that of the Secured Parties (as defined in such Pledge Agreement), (x) all
of the outstanding shares of Capital Stock of each Person that has become
a direct Subsidiary of the U.S. Borrower or such U.S. Subsidiary and (y)
all additional shares of
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Capital Stock of an existing Subsidiary owned directly by the U.S.
Borrower or such U.S. Subsidiary (PROVIDED that, for purposes of each
of the immediately preceding clauses (x) and (y), subject to the last
sentence of this Section, not more than 65% of the Capital Stock of any
non-U.S. Subsidiary shall be so pledged to the Agents to secure the
Obligations of the U.S. Borrower) and (ii) Canadian Holdings, the
Canadian Borrower and each Canadian Subsidiary and, to the extent not
prohibited by any applicable law, each other non-U.S. Subsidiary (other
than a Restricted Subsidiary) shall, pursuant to a Pledge Agreement (as
supplemented, if necessary, by a Foreign Pledge Agreement), pledge to
the Canadian Agent, for its benefit and that of the Secured Parties (as
defined in such Pledge Agreement), (x) all of the outstanding shares of
Capital Stock of each Person that has become a direct Subsidiary of
Canadian Holdings, the Canadian Borrower or such Canadian Subsidiary
or, in the case of any other non-U.S. Subsidiary that is not a
Restricted Subsidiary, all of the outstanding shares of Capital Stock
acquired by such non-U.S. Subsidiary and (y) all additional shares of
Capital Stock of an existing Subsidiary owned directly by Canadian
Holdings, the Canadian Borrower, any such Canadian Subsidiary or such
non-U.S. Subsidiary (other than a Restricted Subsidiary) (it being
understood and agreed that all of the Capital Stock pledged pursuant to
this CLAUSE (b)(ii) shall only secure the Obligations in respect of the
Canadian Facility), in the case of each of CLAUSES (i) and (ii),
together with undated stock powers for such certificates, executed in
blank (or, if any such shares of Capital Stock are uncertificated,
confirmation and evidence satisfactory to such Agent that the security
interest in such uncertificated securities has been transferred to and
perfected by such Agent, for the benefit of the Secured Parties, in
accordance with Section 8-313 and Section 8-321 of the UCC or any other
similar or local or foreign law which may be applicable); and
(c) subject to the last sentence of this Section, (i) the U.S.
Borrower and each U.S. Subsidiary shall, pursuant to a Pledge Agreement,
pledge to the Agents, for their benefit and that of the Secured Parties
(as defined in such Pledge Agreement), all intercompany notes (which
shall, unless the Agents shall otherwise agree, be in the form of Exhibit
A to such Pledge Agreement) issued to such Person pursuant to CLAUSE
(e)(i) of SECTION 9.2.2 and evidencing Indebtedness in favor of the U.S.
Borrower or such U.S. Subsidiary, as the case may be, to secure the
Obligations, (ii) Canadian Holdings, the Canadian Borrower and each
Canadian Subsidiary shall, pursuant to a Pledge Agreement, pledge to the
Canadian Agent, for its benefit and that of the Secured Parties (as
defined in such Pledge Agreement), all intercompany notes (which shall,
unless the Canadian Agent shall otherwise agree, be in the form of Exhibit
A to such Pledge Agreement) issued to such Person pursuant to CLAUSE
(e)(i) of SECTION 9.2.2 and evidencing Indebtedness in favor of Canadian
Holdings, the Canadian Borrower or such Canadian Subsidiary, as the case
may be, to secure the Obligations in respect of the Canadian Facility;
together, in each case, with such opinions of legal counsel for the Borrowers
(which may be in-house counsel to the U.S. Borrower and shall otherwise be from
counsel reasonably satisfactory to the Agents) relating thereto, which legal
opinions shall be in form and substance reasonably satisfactory to the Agents.
The U.S. Borrower agrees that if, as a result of a
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change in law after the date hereof, (i) a non-U.S. Subsidiary of the U.S.
Borrower is permitted to execute and deliver a U.S. Subsidiary Guaranty, a
U.S. Subsidiary Pledge Agreement or a U.S. Subsidiary Security Agreement or
(ii) the U.S. Borrower or any U.S. Subsidiary is permitted to pledge more
than 66 2/3% of the Capital Stock of any non-U.S. Subsidiary or any
intercompany Indebtedness owing to any direct or indirect non-U.S. Subsidiary
of the U.S. Borrower evidenced by a note or other instrument to secure the
Obligations of the U.S. Borrower, in any such case without material adverse
tax consequences to the U.S. Borrower or such Subsidiary, then the provisions
of CLAUSE (a) of this SECTION 9.1.7 shall thereafter apply to any non-U.S.
Subsidiary and/or (as the case may be) the provisions of CLAUSE (b) of this
SECTION 9.1.7 shall thereafter apply to 100% of the Capital Stock of such
non-U.S. Subsidiary (or such lesser amount that can be pledged without
material adverse tax consequences).
SECTION 9.1.8. PROCESS AGENT. Within 5 Business Days following the
Effective Date, the U.S. Agent shall have received letters from each Process
Agent accepting its appointment as agent for service of process for the Canadian
Borrower and certain other Obligors, as contemplated in SECTION 12.14 (and
similar provisions in the applicable Loan Documents).
SECTION 9.1.9. USE OF PROCEEDS. The Borrowers agree to apply the
proceeds of Credit Extensions as set forth below.
(a) The U.S. Borrower shall apply the proceeds of
(i) the U.S. Revolving Loans and the U.S. Letters of Credit to
(a) finance the Recapitalization and (b) provide for the general corporate
and working capital needs of the U.S. Borrower and its Subsidiaries; and
(ii) the Term Loans to (a) in part refinance certain existing
Indebtedness of the U.S. Borrower and (b) pay fees and expenses in
connection with the Recapitalization; and
(b) the Canadian Borrower shall apply the proceeds of the Canadian
Revolving Loans and the Canadian Letters of Credit to (i) refinance
certain existing Indebtedness and, to the extent required, redeem
Preferred Stock of the Canadian Borrower and (ii) provide for the general
corporate and working capital needs of the Canadian Borrower and its
Subsidiaries;
PROVIDED, that the aggregate amount of fees and expenses incurred by the U.S.
Borrower, Parent and LHPG in connection with the Transaction (excluding
management bonuses and fees and expenses incurred by existing Leiner
stockholders not paid or payable by LHPG or its Subsidiaries and excluding
"Covered Expenses" as defined in the Merger Agreement) shall not exceed
$19,000,000.
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SECTION 9.1.10. RATE PROTECTION AGREEMENTS. Within 180 days
following the Effective Date, the U.S. Borrower will enter into interest rate
protection agreements in such amounts and upon terms as the Agents and the
U.S. Borrower shall mutually agree.
SECTION 9.1.11. ASSUMPTION AGREEMENT. The U.S. Borrower agrees
that it shall deliver to the U.S. Agent, immediately following the making of
the initial Loans, the Assumption Agreement with copies for each Lender,
dated as of the date hereof, duly executed and delivered by an Authorized
Officer of LHPG and Leiner, in form and substance satisfactory to the U.S.
Agent.
SECTION 9.1.12. APPRAISAL. Within 30 days following the date of
the initial Credit Extension, the U.S. Borrower shall deliver to the U.S.
Agent
(a) a real estate appraisal for each Mortgaged Real Property
located in the U.S. prepared in accordance with the requirements of the
Financial Institutions Reform Recovery and Enforcement Act of 1989 and
the regulations promulgated thereunder, and otherwise in form and
substance reasonably satisfactory to the U.S. Agent; and
(b) to the extent not previously delivered pursuant to SECTION
7.1.13, current surveys of the Mortgaged Real Property located in
Illinois, Garden Grove, California and Wisconsin, in form and substance
reasonably satisfactory to the U.S. Agent and the title isurer.
SECTION 9.1.13. KALAMAZOO, MICHIGAN PROPERTY. To the extent not
previously delivered pursuant to Section to 7.1.13 hereof, the Borrower agrees
to use its reasonable best efforts to deliver (and in any event agrees to
deliver no later than 180 days following the Effective Date) to the U.S. Agent
with respect to the real property known as 3380 Covington, Kalamazoo, Michigan
("Kalamozoo Property"),
(a) evidence satisfactory to the U.S. Agent that title to the
Kalamazoo Property is in the U.S. Borrower and that arrangements for the
recording and filing of the Mortgage covering the Kalamazoo Property as
maybe necessary or, in the reasonable opinion of the U.S. Agent, desirable
effectively to create a valid, perfected first priority lien against the
Kalamazoo Property;
(b) a mortgagee title insurance policy in favor of the U.S. Agent and
the Lenders in amounts and in form and substance and issued by insurers,
reasonably satisfactory to the U.S. Agent with respect to the Kalamazoo
Property, insuring that title to such property is vested in the U.S.
Borrower and marketable and that the interests created by the Mortgage
constitutes a valid first lien thereon free and clear of all defects and
encumbrances other than those Liens permitted pursuant to SECTION 9.2.3
and those Liens as approved by the U.S. Agent, and such policy shall also
include a Current ALTA survey reading, and , if required by the mortgagee
and if available, a revolving credit endorsement, a comprehensive
endorsement, a variable rate endorsement, access and utility endorsements,
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a mechanics Lien endorsement and such other endorsements as the U.S. Agent
shall reasonably request and shall be accompanied by evidence of the
payment in full of all premiums thereon; provided, that, in the case of
zoning endorsements, if any, no additional premiums will be required in
excess of $2,000.00 for the Kalamazoo Property;
(c) a current ALTA survey of the Kalamazoo Property in form and
substance reasonably satisfactory to the U.S. Agent and the title
insurer.
SECTION 9.2. NEGATIVE COVENANTS. Each Borrower agrees with each
Agent, each Issuer and each Lender that, until all Commitments have terminated
and all Obligations then due and owing have been paid and performed in full,
each Borrower will perform the obligations set forth in this SECTION 9.2 that
are applicable to such Borrower.
SECTION 9.2.1. BUSINESS ACTIVITIES. The U.S. Borrower will not,
and will not permit any of its Subsidiaries to, engage in any business
activity, except those described in the FIRST RECITAL and such activities as
are reasonably incidental, reasonably similar or reasonably related thereto.
SECTION 9.2.2. INDEBTEDNESS. The U.S. Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist or otherwise become or be liable in respect of any Indebtedness,
other than, without duplication, the following:
(a) Indebtedness in respect of (i) the Credit Extensions and other
Obligations and (ii) Hedging Obligations incurred in the ordinary course
of business of any Borrower and any Subsidiary (which shall exclude
Hedging Obligations incurred under agreements entered into for speculative
purposes or as an arbitrage of rates);
(b) (i) until the date of the initial Credit Extensions,
Indebtedness identified in ITEM 9.2.2(b)(i) ("Indebtedness to be Paid")
of the Disclosure Schedule and (ii) Indebtedness identified in ITEM
9.2.2(B)(II) ("Ongoing Indebtedness") of the Disclosure Schedule;
(c) Indebtedness incurred in the ordinary course of business of the
U.S. Borrower and its Subsidiaries (including open accounts extended by
suppliers on normal trade terms in connection with purchases of goods and
services, accrued liabilities and deferred income taxes, and including
Indebtedness in respect of performance, surety or appeal bonds provided in
the ordinary course of business, but excluding Indebtedness incurred
through the borrowing of money or Contingent Liabilities in respect
thereof);
(d) so long as such amounts are permitted under the terms of
Subordinated Debt, Indebtedness in respect of (i) Capitalized Lease
Liabilities, (ii) purchase money mortgages (iii) industrial revenue bond
issues and (iv) other Indebtedness that is unsecured or incurred by
non-U.S. Subsidiaries (other than Canadian Holdings and its Subsidiaries);
PROVIDED, that the aggregate amount of all Indebtedness outstanding
pursuant to this clause at the time any of the same is created, assumed or
incurred (together with the then
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outstanding principal amount of all other Indebtedness permitted under
this CLAUSE (d)) shall not at any time exceed 3.75% of Total Adjusted
Capital at such time after giving effect thereto and to any concurrent
repayment of other Indebtedness outstanding pursuant to this clause;
PROVIDED, FURTHER, that such non-U.S. Subsidiaries may not incur or be
liable for any such Indebtedness in an aggregate amount at any time
outstanding in excess of (x) $5,000,000 (for so long as the Leverage
Ratio is greater than or equal to 4:1, as indicated in the most
recently delivered Compliance Certificate) and (y) 1.875% of Total
Adjusted Capital (for the period subsequent to the Leverage Ratio being
less than 4:1, as indicated in the most recently delivered Compliance
Certificate) at such time; PROVIDED, FURTHER, that for purposes of the
calculation of the Leverage Ratio for this clause only, in the case
where a Borrower or a Subsidiary is incurring such Indebtedness to
consummate an acquisition of the capital stock of another Person that
will thereafter become a Subsidiary as a result, the Total Debt and
EBITDA of such Person shall be included on a PRO FORMA basis in the
calculation of the Leverage Ratio (as if the acquisition had occurred
on the first day of the applicable period during which the Leverage
Ratio is to be calculated);
(e) Indebtedness of any Subsidiary (other than a Restricted
Subsidiary and any Receivables Co.) owing to a Borrower or any other
Subsidiary, which Indebtedness
(i) shall (except in the case of Indebtedness owing by a
non-U.S. Subsidiary to the U.S. Borrower or any U.S. Subsidiary that
individually or in the aggregate does not exceed $1,000,000) be
evidenced by one or more promissory notes (such promissory note to
be, unless otherwise agreed to by the U.S. Agent, in substantially
the form of Exhibit A to the U.S. Borrower Pledge Agreement) duly
executed and, if the payee of such promissory note is a Borrower or a
U.S. Subsidiary, delivered in pledge pursuant to a Pledge Agreement
to the applicable Agent; and
(ii) shall not be forgiven or otherwise discharged for any
consideration other than payment in full or in part (PROVIDED, that
only the amount repaid in part shall be discharged) in cash unless
the U.S. Agent otherwise consents, such consent not to be
unreasonably withheld;
(f) intercompany Indebtedness (not evidenced by a note or other
instrument) of a Borrower owing to a Subsidiary that has previously
executed and delivered to the applicable Agent the Master Subordination
Agreement, in an aggregate outstanding principal amount not to exceed
$10,000,000 at any time;
(g) Indebtedness of a Person existing at the time such Person
became a Subsidiary of a Borrower to the extent such Indebtedness was
not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary, in an amount not to exceed $3,500,000;
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(h) Indebtedness of a Borrower incurred for the purpose of renewing,
extending or refinancing Indebtedness permitted by CLAUSE (b)(ii), (d),
(g), (j) or (k); PROVIDED, HOWEVER, that the principal amount of such
Indebtedness may not exceed the principal amount of the Indebtedness being
renewed or refinanced and, in the case of unsecured Subordinated Debt
permitted by CLAUSE (j), any such renewal or refinancing is upon terms and
provisions which are, in the reasonable judgment of the Required Lenders,
no less favorable to the U.S. Borrower in the aggregate than such
Indebtedness being so renewed or refinanced; PROVIDED, that in any event
in the case of any Indebtedness that renews, extends or refinances the
Subordinated Notes, such Indebtedness shall be subordinated to the Bank
Debt (as defined in the Subordinated Indenture) to the same extent and
degree as the Subordinated Notes;
(i) Indebtedness of any Receivables Co. incurred in connection with
the Permitted Receivables Transaction (i) Indebtedness in an aggregate
amount at any time not to exceed $125,000,000 and (ii) other Indebtedness
owing by a Receivables Co. to a Borrower or another Subsidiary on terms
satisfactory to the U.S. Agent; PROVIDED, that (as applicable), in the
case of CLAUSE (i)(i), the provisions of CLAUSE (b) of SECTION 2.2.2 are
complied with or, if no U.S. Revolving Loan Commitment is then in effect,
no Replacement Indebtedness is (or after giving effect to the consummation
of the Permitted Receivables Transaction, will be) outstanding in an
amount which, when added to the Indebtedness of such Receivables Co.,
would exceed $125,000,000;
(j) unsecured Subordinated Debt of the U.S. Borrower owing to the
Subordinated Note Holders under the Subordinated Indenture; PROVIDED,
HOWEVER, that the aggregate outstanding principal amount of such
Indebtedness shall not exceed $85,000,000;
(k) Indebtedness of the U.S. Borrower and the Canadian Borrower
(including by way of a reallocation of Indebtedness similar to the
reallocation contemplated by SECTION 3.2.2) in an aggregate principal
amount that does not, when aggregated with any Indebtedness incurred under
a Permitted Receivables Transaction, exceed $125,000,000 (the "REPLACEMENT
INDEBTEDNESS") (PROVIDED, that Indebtedness of the Canadian Borrower shall
not exceed the Candian $ Equivalent of $20,000,000) in the form of
revolving loans and/or letters of credit, and the guaranty of such
Indebtedness by Subsidiaries of the U.S. Borrower (but only to the extent
such Subsidiaries also guaranty the Obligations of the U.S. Borrower on a
PARI PASSU basis); provided, that the Replacement Indebtedness shall only
be incurred
(i) on terms and conditions reasonably satisfactory to the U.S.
Term Loan Lenders holding at least 51% of the then outstanding
principal amount of Term Loans;
(ii) if all Revolving Loans, Swing Line Loans and Letter of
Credit Outstandings shall have been repaid, or will simultaneously be
repaid, in cash in full and each of the Revolving Loan Commitment,
Swing Line Loan Commitment and Letter of Credit Commitment have been
permanently terminated (or have expired); and
126
(iii) no Default would result from the incurrence of the
Replacement Indebtedness; and
(l) unsecured Indebtedness of the U.S. Borrower consisting of
Contingent Liabilities in respect of (i) up to an aggregate principal
amount of $2,000,000 of borrowings by Management Investors in connection
with the purchase of Capital Stock of LHPG by such Management Investors
and (ii) loans or advances of a type described in CLAUSE (h) of SECTION
9.2.5;
PROVIDED, HOWEVER, that no Indebtedness otherwise permitted by CLAUSE (d), (g),
(h), or (l) shall be permitted to be incurred if such incurrence would result in
a Default hereunder.
SECTION 9.2.3. LIENS. The U.S. Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant
to any Loan Document;
(b) until the date of the initial Credit Extensions, Liens
securing payment of Indebtedness of the type permitted and described in
CLAUSE (b)(i) of SECTION 9.2.2;
(c) Liens securing
(i) Indebtedness of the type permitted and described in any
of CLAUSES (d)(i) through (d)(iii) of SECTION 9.2.2; and
(ii) Indebtedness of non-U.S. Subsidiaries permitted and
described in CLAUSE (d)(iv) of SECTION 9.2.2 to the extent that
such Liens encumber assets of non-U.S. Subsidiaries (other than
Canadian Holdings and its Subsidiaries);
and renewals, extensions and refinancings of such Indebtedness; PROVIDED
that the Liens permitted by this clause with respect to CLAUSE (d)(i)
through (iii) of SECTION 9.2.2 shall only cover the same assets which
originally secured the Indebtedness renewed, extended or refinanced
pursuant to such clause;
(d) Liens existing as of the Effective Date and disclosed in ITEM
9.2.3(D) ("Ongoing Liens") of the Disclosure Schedule and Liens securing
any extension, renewal or replacement of any obligations secured by any
such Lien; PROVIDED, HOWEVER, that such Lien shall only cover the same
assets which originally secured the obligations being extended, renewed or
replaced;
(e) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good
127
faith by appropriate proceedings and for which adequate reserves,
if any, in accordance with GAAP shall have been set aside on its books;
(f) Liens of carriers, warehousemen, mechanics, materialmen and
landlords and similar Liens incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves, if any, in
accordance with GAAP shall have been set aside on its books;
(g) Liens incurred or deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment insurance
or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory and regulatory obligations, bids, leases
and contracts or other similar obligations (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations
on surety, appeal, judgment, performance, return-of-money or similar
bonds;
(h) judgment Liens in existence less than 45 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies or which do not
otherwise result in an Event of Default under SECTION 10.1.6;
(i) easements, rights-of-way, municipal and zoning ordinances or
similar restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect
with the ordinary conduct of the business of the U.S. Borrower or its
Subsidiaries or the value or utility of the property to which such Lien is
attached;
(j) any interest or title of a lessor under any lease of property
to, or of any consignor of goods consigned to, or of any creditor of
any consignee in goods consigned to such consignee by, the U.S.
Borrower or any Subsidiary;
(k) Liens in favor of the U.S. Borrower or any Subsidiary (other
than, in the case of any Subsidiary (and notwithstanding any other
provision of this Agreement (including SECTION 9.2.2) to the contrary),
any Lien on any assets of the U.S. Borrower);
(l) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the U.S. Borrower and
its Subsidiaries, taken as a whole;
(m) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payments of customs duties in connection with
the importation of goods;
(n) Liens on the property of, or securing Indebtedness to the extent
permitted by CLAUSE (g) of SECTION 9.2.2 of, any Person which becomes a
Subsidiary after the date hereof; PROVIDED that such Liens exist at the
time such Person becomes a Subsidiary and
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are not created in anticipation thereof and such Liens attach only to a
specific tangible asset of such Person and not assets of such Person
generally;
(o) Liens on documents of title and the property covered thereby
securing Indebtedness in respect of letters of credit which are
commercial letters of credit;
(p) Liens on Accounts or other related assets of any Receivables
Co. created in connection with the Permitted Receivables Transaction;
and
(q) Liens on the assets of the U.S. Borrower and its Subsidiaries in
favor of the Lenders of the Replacement Indebtedness, but only to the
extent that such Liens (i) rank PARI PASSU (or are subordinate) to the
Liens granted in favor of the Secured Parties pursuant to the Loan
Documents and encumber only those assets in which the Secured Parties also
have been granted a Lien pursuant to the Loan Documents and (ii) are
spread between the Obligations and obligations in respect of the
Replacement Indebtedness on a PARI PASSU basis and are subject to an
intercreditor agreement reflecting the foregoing and reasonably
satisfactory to the U.S. Agent and the Lenders holding 51% or more of the
then outstanding principal amount of the Term Loans.
SECTION 9.2.4. FINANCIAL CONDITION AND OPERATIONS. The U.S.
Borrower will not permit to occur any of the events set forth below.
(a) ADJUSTED NET WORTH. The U.S. Borrower will not permit Adjusted
Net Worth at any time to be less than the sum of (i) $101,000,000 PLUS
(ii) 45% of cumulative Net Income (in excess of zero) from (and including)
July 1, 1997 to the date of determination of Adjusted Net Worth PLUS (iii)
45% of cumulative cash equity contributions received after the Effective
Date by the U.S. Borrower other than from Management Investors, as
contemplated by CLAUSE (iii) of SECTION 9.2.6.
(b) INTEREST COVERAGE RATIO. The U.S. Borrower will not permit
the Interest Coverage Ratio as of the end of any Fiscal Quarter during
any period set forth below, to be less than the ratio set forth
opposite such period:
INTEREST COVERAGE
PERIOD RATIO
------ -----------------
Closing Date
through 03/30/98 1.60:1
03/31/98--03/30/99 1.80:1
03/31/99--03/30/00 2.00:1
03/31/00--03/30/01 2.20:1
03/31/01--03/30/02 2.50:1
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INTEREST COVERAGE
PERIOD RATIO
------ -----------------
03/31/02--03/30/03 2.75:1
03/31/03--03/30/04 3.00:1
03/31/04--03/30/05 3.25:1
03/31/05--03/30/06 3.25:1
03/31/06--03/30/07 3.25:1
(c) LEVERAGE RATIO. The U.S. Borrower will not permit the
Leverage Ratio as of the end of any Fiscal Quarter occurring during any
period set forth below to be greater than the ratio set forth opposite
such period:
LEVERAGE
PERIOD RATIO
------ --------
Closing Date
through 03/30/98 6.50:1
03/31/98--03/30/99 6.00:1
03/31/99--03/30/00 5.50:1
03/31/00--03/30/01 4.75:1
03/31/01--03/30/02 4.25:1
03/31/02--03/30/03 3.75:1
03/31/03--03/30/04 3.50:1
03/31/04--03/30/05 3.25:1
03/31/05--03/30/06 3.25:1
03/31/06--03/30/07 3.25:1
(d) CASH FLOW COVERAGE RATIO. The U.S. Borrower will not permit
the Cash Flow Coverage Ratio as of the end of any Fiscal Quarter
occurring during any period set forth below to be less than the ratio
set forth opposite such period:
CASH FLOW
PERIOD COVERAGE RATIO
------ --------------
Closing Date
through 03/30/98 1.10:1
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CASH FLOW
PERIOD COVERAGE RATIO
------ --------------
03/31/98--03/30/99 1.10:1
03/31/99--03/30/00 1.15:1
03/31/00--03/30/01 1.15:1
03/31/01--03/30/02 1.20:1
03/31/02--03/30/03 1.20:1
03/31/03--03/30/04 1.20:1
03/31/04--03/30/05 1.05:1
03/31/05--03/30/06 1.00:1
03/31/06--03/30/07 1.00:1
SECTION 9.2.5. INVESTMENTS. The U.S. Borrower will not, and will
not permit any of its Subsidiaries to, make, incur, assume or suffer to exist
any Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified in
ITEM 9.2.5(A) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, (i) Investments to the extent permitted
as Indebtedness pursuant to SECTION 9.2.2, (ii) to the extent that any
Receivables Co. is not a Subsidiary of the U.S. Borrower, Investments
in such Receivables Co. in connection with the Permitted Receivables
Transaction made by the U.S. Borrower and its Subsidiaries on terms
satisfactory to the Agents, and (iii) Investments permitted as Capital
Expenditures pursuant to SECTION 9.2.16;
(d) Investments by way of contributions to capital or purchases of
equity (i) by the U.S. Borrower in any of its Subsidiaries (other than a
Restricted Subsidiary) or by such Subsidiary in any of its Subsidiaries
(other than a Restricted Subsidiary), or (ii) by any such Subsidiary in
the U.S. Borrower; PROVIDED, that such Investments in any Receivables Co.
shall only be made in connection with the Permitted Receivables
Transaction on terms satisfactory to the Agents;
(e) Investments constituting (i) accounts receivable arising, (ii)
trade debt granted or (iii) deposits made in connection with the purchase
price of goods or services, in each case in the ordinary course of
business (PROVIDED, that nothing in this clause shall prevent the
131
U.S. Borrower or any Subsidiary from offering such concessionary trade
terms, or from receiving such Investments in connection with the
bankruptcy or reorganization of their respective suppliers or customers or
the settlement of disputes with such customers or suppliers arising in the
ordinary course of business, as officers of the U.S. Borrower deem
reasonable in the circumstances);
(f) Investments constituting Permitted Acquisitions not in excess of
$35,000,000 in any single transaction; PROVIDED, that the aggregate amount
of Investments permitted under the terms of this Agreement shall not
exceed $85,000,000; PROVIDED, FURTHER, that (i) such Investments shall (if
Capital Stock is being acquired), result in the acquisition of a
"Subsidiary" of the U.S. Borrower (but not result in a Restricted
Subsidiary, which shall be exclusively governed by CLAUSE (i)) and (ii)
upon making such Investments, the provisions of SECTION 9.1.7 are complied
with;
(g) Investments made in connection with Permitted Dispositions
pursuant to CLAUSE (d) of SECTION 9.2.11; PROVIDED, that to the extent the
amount or value (as determined by the Board of Directors of the U.S.
Borrower in good faith) of any such Investment exceeds $1,000,000, the
U.S. Borrower shall use its best efforts to (x) cause such Investment to
be made in such a form that such Investment can be pledged to the
applicable Agent for the ratable benefit of each Secured Party, and (y) if
such Investment is in such form, to pledge such Investment to the
applicable Agent for the ratable benefit of each Secured Party, on terms
reasonably satisfactory to the applicable Agent;
(h) Investments constituting payroll advances and travel and
entertainment advances and relocation loans to officers and employees of
the U.S. Borrower or any of its Subsidiaries in the ordinary course of
business in an amount (in the case of relocation loans) not to exceed
$1,000,000 at any time outstanding;
(i) Investments made by the U.S. Borrower in an amount, when
aggregated with any Investments made pursuant to CLAUSE (j) below and the
fair market value of any assets sold, transferred, leased, contributed or
otherwise conveyed pursuant to CLAUSE (f) of SECTION 9.2.11, not to exceed
$5,000,000 in the aggregate over the term of this Agreement in a Person
that, after giving effect to such Investment, becomes a non-wholly-owned
Subsidiary or a wholly-owned non-U.S. Subsidiary (if such Subsidiary is
unable to execute a Subsidiary Guaranty in respect of the U.S. Borrower's
Obligations without material adverse tax consequences) and on or prior to
the date of such Investment is designated as a "Restricted Subsidiary" by
the U.S. Borrower to the U.S. Agent; and
(j) Investments made by the U.S. Borrower in joint ventures in an
amount, when aggregated with any Investments made pursuant to CLAUSE (i)
above and the fair market value of any assets sold, transferred, leased,
contributed or otherwise conveyed pursuant to CLAUSE (f) of SECTION
9.2.11, not to exceed $5,000,000 over the term of this Agreement;
132
PROVIDED, HOWEVER, that
(k) any Investment which when made complies with the requirements
of CLAUSE (a), (b) or (c) of the definition of the term "Cash
Equivalent Investment" may continue to be held notwithstanding that
such Investment if made thereafter would not comply with such
requirements; and
(l) no Investment otherwise permitted by CLAUSE (f), (i) or (j)
shall be permitted to be made if, immediately before or after giving
effect thereto, any Default shall have occurred and be continuing.
SECTION 9.2.6. RESTRICTED PAYMENTS, ETC. Except as otherwise
permitted pursuant to SECTION 9.2.13, on and at all times after the Effective
Date:
(a) the U.S. Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class
of Capital Stock (now or hereafter outstanding) of the U.S. Borrower or on
any warrants, options or other rights with respect to any shares of any
class of Capital Stock (now or hereafter outstanding) of the U.S. Borrower
(other than dividends or distributions payable solely in its common stock
or warrants to purchase its common stock or splitups or reclassifications
of its stock into additional or other shares of its common stock, but then
only to the extent such stock or warrants, if received in respect of stock
pledged under the Parent Pledge Agreement, are pledged to the U.S. Agent
for the benefit of the Lenders pursuant to the Parent Pledge Agreement in
a manner satisfactory to the U.S. Agent) or apply, or permit any of its
Subsidiaries to apply, any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of, or agree or
permit any of its Subsidiaries to purchase or redeem, any shares of any
class of Capital Stock (now or hereafter outstanding) of the U.S. Borrower
or Parent, or warrants, options or other rights with respect to any shares
of any class of Capital Stock (now or hereafter outstanding) of the U.S.
Borrower or Parent;
(b) the U.S. Borrower will not, and will not permit any of its
Subsidiaries to, pay, prepay or repay any principal of, or redeem,
purchase or defease any principal in respect of, any Subordinated
Notes; and
(c) the U.S. Borrower will not, and will not permit any of its
Subsidiaries to, make any deposit for any of the foregoing purposes;
PROVIDED, HOWEVER, this SECTION 9.2.6 shall not prohibit:
(i) the U.S. Borrower from paying dividends to Parent in an
amount sufficient to enable Parent to pay reasonable and customary regular
fees to directors of Parent and LHPG;
133
(ii) the U.S. Borrower from paying dividends or other payments to
Parent or LHPG to the extent (a) permitted or required under the Tax
Sharing Agreement or (b) in respect of payments permitted pursuant to
CLAUSE (g) of SECTION 9.2.13; and
(iii) the redemption or repurchase or other acquisition for value of
the preferred stock of the Canadian Borrower outstanding on the Effective
Date in an amount so expended not to exceed Cdn $6,400,000, or so long as
no Default has occurred and is continuing or would result therefrom, the
purchase, redemption, acquisition, cancellation or other retirement for
value of shares of Capital Stock of the U.S. Borrower, the Canadian
Borrower, Parent or LHPG, or any of their respective Subsidiaries, or
warrants or options on any such shares or related stock appreciation
rights or similar securities owned by officers or employees (or their
estates or beneficiaries under their estates), or other Management
Investors in all cases only upon death, disability, retirement,
termination of employment or pursuant to the terms of such stock option
plan or any other agreement under which such shares of Capital Stock,
options, related rights or similar securities were issued or under which
they may be put or called, or the payment of dividends to Parent in an
amount sufficient to enable Parent or LHPG to effect such purchase,
redemption, acquisition, cancellation or other retirement for value by
Parent or LHPG; PROVIDED that the aggregate cash consideration paid for
such purchase, redemption, acquisition, cancellation or other retirement
for value of such shares of Capital Stock, options, related rights or
similar securities shall not exceed (a) $4,000,000 over the term of this
Agreement (the "AGGREGATE LIMIT") and (b) $2,000,000 during any Fiscal
Year; PROVIDED, FURTHER, that the Aggregate Limit on the purchase,
redemption, acquisition, cancellation or other retirement for value set
forth in the immediately preceding proviso shall be increased by the cash
proceeds of any sale to any Management Investors of Capital Stock,
options, related rights or similar securities of the U.S. Borrower or LHPG
to the extent such cash proceeds are contributed to the capital of the
U.S. Borrower, as notified in a certificate delivered by an Authorized
Officer of the U.S. Borrower to the U.S. Agent.
SECTION 9.2.7. STOCK OF SUBSIDIARIES. The U.S. Borrower will not
permit any Subsidiary (other than a Restricted Subsidiary) to issue any
Capital Stock (whether for value or otherwise) to any Person other than the
U.S. Borrower or another wholly-owned Subsidiary.
SECTION 9.2.8. RENTAL OBLIGATIONS. The U.S. Borrower will not, and
will not permit any of its Subsidiaries to, enter into at any time any
arrangement which does not create a Capitalized Lease Liability and which
involves the leasing by the U.S. Borrower or any of its Subsidiaries from any
lessor of any real or personal property (or any interest therein), except
arrangements which, together with all other such arrangements which shall
then be in effect, will not require the payment of an aggregate amount in any
year of Rentals by the U.S. Borrower and its Subsidiaries in excess of 7.5%
of Total Adjusted Capital of the immediately preceding Fiscal Year.
SECTION 9.2.9. TAKE OR PAY CONTRACTS. The U.S. Borrower will not, and
will not permit any of its Subsidiaries to, enter into or be a party to any
arrangement for the purchase of materials, supplies, other property or services
if such arrangement by its express terms requires that payment be made by the
U.S. Borrower or such Subsidiary regardless of whether such materials, supplies,
other property or services are in fact or can be required to be delivered or
furnished to it.
134
SECTION 9.2.10. CONSOLIDATION, MERGER, ETC. The U.S. Borrower
will not, and will not permit any of its Subsidiaries to, liquidate or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division thereof) except
(a) any such Subsidiary (other than any Receivables Co.) may
liquidate or dissolve voluntarily into, and may merge with and into, the
U.S. Borrower or any other Subsidiary (other than a Restricted Subsidiary
or any Receivables Co.), and the assets or stock of any Subsidiary may be
purchased or otherwise acquired by the U.S. Borrower or any other
Subsidiary (other than a Restricted Subsidiary or any Receivables Co.);
PROVIDED, HOWEVER, that in no event shall any Pledged Subsidiary merge
with and into any Subsidiary other than another Pledged Subsidiary unless
(i) the Required Lenders shall have given their prior written consent
thereto, or (ii) after giving effect thereto, the applicable Agent shall
have a perfected pledge of, and security interest in and to, all (or, in
the case of a direct, non-U.S. Subsidiary (and subject to the last
sentence of SECTION 9.1.7), 65%) of the issued and outstanding shares of
Capital Stock of the surviving Person in form and substance satisfactory
to such Agent and its counsel, pursuant to such documentation and opinions
as shall be necessary and appropriate in the opinion of such Agent and its
counsel to create, perfect or maintain the collateral position of such
Agent and the Lenders therein as contemplated by this Agreement; PROVIDED,
FURTHER, that neither Canadian Holdings or any of its Subsidiaries may
merge or consolidate with the U.S. Borrower or any non-Canadian Subsidiary
of the U.S. Borrower; PROVIDED, FURTHER, that notwithstanding any of the
foregoing, the Canadian Borrower may merge or amalgamate with or liquidate
into Canadian Holdings (provided that Canadian Holdings assumes the
Obligations of the Canadian Borrower);
(b) so long as no Default has occurred and is continuing or would
occur after giving effect thereto, the U.S. Borrower or any of its
Subsidiaries may (to the extent permitted by CLAUSE (f) of SECTION 9.2.5)
purchase all or substantially all of the assets or stock of any Person (or
any division thereof), or acquire such Person by merger;
(c) the U.S. Borrower may merge with another Person (x) in the Merger
or (y) so long as (i) the U.S. Borrower is the surviving corporation of
such merger, (ii) after giving effect to such merger, the U.S. Borrower is
organized under the laws of a State of the United States, (iii)
immediately prior to such merger the Investment (if not accomplished by
way of such merger) would have been permitted under this Agreement; and
(iv) no Default shall exist before and after giving effect to such merger;
and
135
(d) any such Subsidiary may liquidate or dissolve voluntarily into,
and may merge with and into, any corporation which is not a Subsidiary of
the U.S. Borrower; PROVIDED that (i) such transaction is a Permitted
Disposition or (ii) the following conditions are satisfied: (a) the
surviving corporation shall be a Subsidiary of the U.S. Borrower, (b) the
U.S. Borrower shall own at least the same percentage of the outstanding
voting stock of the surviving corporation as the U.S. Borrower owned of
such Subsidiary prior to such merger, liquidation or consolidation, (c)
after giving effect thereto, no Default would occur or be continuing and
(d) the surviving corporation complies with the provisions of SECTION
9.1.7.
SECTION 9.2.11. PERMITTED DISPOSITIONS. The U.S. Borrower will not,
and will not permit any of its Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey (including by way of merger), or grant options,
warrants or other rights with respect to, all or any part of the U.S. Borrower's
or such Subsidiaries' assets (including accounts receivable or Capital Stock of
Subsidiaries (by way of the sale or issuance in an initial public offering,
private placement or other conveyance of such Capital Stock)) to any Person
unless,
(a) such disposition is either (i) in the ordinary course of its
business or (ii) permitted by SECTION 9.2.10;
(b) such disposition is made by (i) a U.S. Subsidiary to either the
U.S. Borrower or another U.S. Subsidiary (other than any Receivables Co.,
which shall be governed by CLAUSE (g), or a Restricted Subsidiary) or (ii)
a Canadian Subsidiary to the Canadian Borrower or another Canadian
Subsidiary (other than any Receivables Co., which shall be governed by
CLAUSE (g) or a Restricted Subsidiary);
(c) such disposition is in respect of assets acquired within six
months of such disposition pursuant to or as a result of a Permitted
Acquisition;
(d) after giving effect to such disposition,
(i) the aggregate of all Disposition Percentages (as defined
below) in respect of all dispositions of Net Tangible Assets (and for
purposes of this clause, "Net Tangible Assets" shall include the fair
market value of Capital Stock of Subsidiaries that is issued, sold or
otherwise conveyed in an initial public offering, private placement
or otherwise), other than pursuant to CLAUSE (a), (b), (c), (e), (f)
or (g), (A) since the Effective Date would not exceed 15% and (B)
during any Fiscal Year would not exceed 10%; and
(ii) the aggregate amount of Net Unrepatriated Disposition
Proceeds (including any Net Unrepatriated Disposition Proceeds that
arise as a result of such disposition) does not exceed 6% of Net
Tangible Assets at the time of such disposition,
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and for purposes of dispositions pursuant to this clause, "Disposition
Percentage" shall mean for any disposition a fraction (expressed as a
percentage), the numerator of which shall be the amount of Net Tangible
Assets subject to such disposition (determined as of the date of such
disposition) and the denominator of which shall be Net Tangible Assets
(determined as of the date of such disposition);
(e) such disposition is in respect of the issuance or sale (by way of
an initial public offering, private placement or otherwise) of the Capital
Stock of one or more Subsidiaries in an aggregate amount not to exceed
$5,000,000 over the term of this Agreement; PROVIDED that after such
issuance or sale, the U.S. Borrower shall continue to own, directly or
indirectly, 50% or more (on a fully diluted basis) of each such non-U.S.
Subsidiary (and each of its Subsidiaries);
(f) such disposition (and any prior dispositions pursuant to this
clause) is in respect of a joint venture and the fair market value of the
assets being sold, transferred, leased, contributed or otherwise conveyed,
when aggregated with any Investments made pursuant to CLAUSES (i) and (j)
of SECTION 9.2.5, does not exceed $5,000,000 over the term of this
Agreement; or
(g) such disposition is in respect of Accounts or other related
assets and ancillary rights in property pursuant to the Permitted
Receivables Transaction.
SECTION 9.2.12. MODIFICATION OF CERTAIN AGREEMENTS. The U.S.
Borrower will not, and will not permit any of its Subsidiaries to,
(a) consent to any amendment, supplement, amendment and restatement,
waiver or other modification of any of, or enter into any forbearance from
exercising any rights with respect to, the terms or provisions contained
in, or applicable to, the Management Services Agreement, the Tax Sharing
Agreement, or the Merger Agreement or any schedules, exhibits or
agreements related thereto, in each case which amendment, supplement,
amendment and restatement, waiver, modification, or forbearance would
adversely affect any Borrower's ability to perform hereunder or which
would increase the purchase price with respect to the Transaction or which
would increase any Borrower's or any Subsidiary's obligations or
liabilities, contingent or otherwise (other than adjustments made pursuant
to the terms of the Merger Agreement), except for such amendments,
supplements, amendments and restatements, waivers, modifications or acts
of forbearance which would not cause any Borrower or any Subsidiary to
breach any of their obligations set forth herein or in any other Loan
Document or which, in the reasonable judgment of the Required Lenders,
would not be likely to detrimentally and materially affect Parent or any
Borrower and any Subsidiary, or the rights, benefits or interests of any
Secured Party;
(b) consent to any amendment, supplement, amendment and restatement,
waiver or other modification of, or forbearance from exercising rights
with respect to, any of the terms or provisions contained in or applicable
to the Subordinated Indenture or the
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Subordinated Notes, except for such amendments, supplements, amendments
and restatements, waivers, modifications or acts of forbearance (i) which,
in the reasonable judgment of the Required Lenders, would not be likely to
detrimentally and materially affect the rights, benefits or interests of
the Agents, any Issuer or the Lenders or (ii) to comply with the
requirements of the SEC in order to effect or maintain the qualification
of the Subordinated Indenture under the Trust Indenture Act of 1939; and
(c) without the prior written consent of the Agents, (i) optionally
terminate the Permitted Receivables Transaction, or (ii) consent to any
amendment, supplement, or other modification to any of the terms of the
documents, instruments and agreements delivered in connection with the
Permitted Receivables Transaction, other than any such amendment,
modification or change which (a) would extend the maturity thereof or (b)
does not in any way adversely affect the interests of the Agents, the
Lenders or the Issuers hereunder or under the Loan Documents or (c) is of
a technical or clarifying nature).
SECTION 9.2.13. TRANSACTIONS WITH AFFILIATES. The U.S. Borrower will
not, and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is on fair and reasonable terms
and is an arrangement or contract of the kind which would be entered into by a
prudent Person in the position of the U.S. Borrower or such Subsidiary with a
Person which is not one of its Affiliates; PROVIDED, HOWEVER, that the foregoing
shall not prohibit
(a) transactions between the U.S. Borrower and any of its
Subsidiaries, or between such Subsidiaries, otherwise not prohibited
herein;
(b) the U.S. Borrower or its Subsidiaries from entering into and
performing the Management Services Agreement, including, so long as no
Default of any payment Obligations shall have occurred and be continuing,
and no other Event of Default shall have occurred and be continuing or
shall result therefrom, paying to North Castle, North Castle Partners or
any Affiliate thereof management and consulting fees in an aggregate
amount not to exceed $1,500,000 per annum plus reasonable expenses in an
amount not to exceed $100,000 per year;
(c) the cash capitalization of, or transfer of assets to, a joint
venture to the extent permitted by CLAUSES (i) and (j) of SECTION 9.2.5
and CLAUSE (f) of SECTION 9.2.11;
(d) the U.S. Borrower or any of its Subsidiaries (including the
Canadian Borrower and its Subsidiaries) from entering into and performing
the Tax Sharing Agreement, including paying to LHPG or Parent, pursuant
to the Tax Sharing Agreement, amounts due and payable thereunder;
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(e) loans or advances made to Management Investors, or Contingent
Liabilities in respect thereof or otherwise made on their behalf
(including any payments thereunder), to the extent permitted under
CLAUSE (i) of SECTION 9.2.2 or CLAUSE (h) of SECTION 9.2.5;
(f) the Recapitalization and all related transactions (including
but not limited to the financing thereof), including the incurrence and
payment of all fees and expenses in connection therewith;
(g) dividends, distributions or payments to Parent or LHPG not to
exceed an amount necessary to permit Parent or LHPG to (i) pay costs
incurred to comply with reporting obligations under federal or state
securities or other laws, (ii) make payments in respect of indemnification
obligations under the Management Services Agreement or any of its Organic
Documents, (iii) pay all reasonable fees and expenses incurred by it in
connection with the Recapitalization and related transactions (including
the financing thereof) in amounts not to exceed those identified to the
U.S. Agent on or prior to the Effective Date, or (iv) pay its other
operational expenses (other than taxes) incurred in the ordinary course of
business and not exceeding $500,000 in the aggregate in any Fiscal Year;
and
(h) any transaction in the ordinary course of business or approved by
a majority of the independent directors of the U.S. Borrower between the
U.S. Borrower or any Subsidiary and any Affiliate of the U.S. Borrower
controlled by the U.S. Borrower that is a joint venture or similar entity
primarily engaged in a business related to any business of the U.S.
Borrower or any of its Subsidiaries, but only if such transaction is
otherwise permitted by the terms of this Agreement.
SECTION 9.2.14. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
U.S. Borrower will not, and will not permit any of its Subsidiaries to, enter
into any agreement (excluding (i) this Agreement and any other Loan Document,
(ii) any agreement governing any Indebtedness permitted by CLAUSE (b) of SECTION
9.2.2 as in effect on the Effective Date, (iii) in the case of CLAUSE (a) below,
any agreement governing any Indebtedness permitted by CLAUSE (d) of SECTION
9.2.2 as to the assets financed with the proceeds of such Indebtedness, or
governing the Indebtedness permitted by CLAUSE (d)(iv) of SECTION 9.2.2, or (iv)
in the case of CLAUSE (a) or (c) below, restrictions on any Receivables Co.
contained in documentation delivered for the Permitted Receivables Transaction)
prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, to the extent
that any such negative pledge would effectively prohibit the creation or
first priority perfection of any Liens of the type described in CLAUSE (a)
of SECTION 9.2.3;
(b) the ability of the U.S. Borrower or any other Obligor to
amend or otherwise modify this Agreement or any other Loan Document; or
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(c) the ability of any Subsidiary to make any payments, directly
or indirectly, to the U.S. Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments.
SECTION 9.2.15. SALE AND LEASEBACK. The U.S. Borrower will not, and
will not permit any of its Subsidiaries to, enter into any agreement or
arrangement with any other Person providing for the leasing by the U.S. Borrower
or any of its Subsidiaries of real or personal property of the U.S. Borrower or
any of its Subsidiaries owned as of the date of the initial Credit Extensions
which has been or is to be sold or transferred by the U.S. Borrower or any of
its Subsidiaries to such other Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property or
rental obligations of the U.S. Borrower or any of its Subsidiaries.
SECTION 9.2.16. CAPITAL EXPENDITURES. The U.S. Borrower will
not, and will not permit any of its Subsidiaries to, make or commit to make
Capital Expenditures in any Fiscal Year, except
(a) Capital Expenditures which do not aggregate in excess of the
greater of (i) 4.50% of the net sales of the U. S. Borrower and its
Subsidiaries for the previous Fiscal Year as certified to the Agent by
an Authorized Officer of the U.S. Borrower and (ii) the amount set
forth below opposite such Fiscal Year:
Maximum Capital
FISCAL YEAR EXPENDITURES
----------- ---------------
1998 $17,000,000
1999 $18,000,000
2000 $19,500,000
2001 $21,250,000
2002 $23,000,000
2003 $24,500,000
2004 $27,000,000
2005 $29,500,000
2006 $32,500,000
2007 $35,750,000
PROVIDED, that
(i) to the extent Capital Expenditures are made or committed to
be made in any Fiscal Year in an amount less than the maximum amount
permitted for such Fiscal Year as provided in this clause, the
Capital Expenditures that the U.S. Borrower or any of its
Subsidiaries may make or commit to make in the next following Fiscal
Year shall be increased by 50% of the amount of the permitted Capital
Expenditures not so
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made or committed to be made in the immediately preceding Fiscal year
(the "CARRY-FORWARD AMOUNT");
(ii) if all or a part of the Carry-Forward Amount is not used in
full in the immediately succeeding Fiscal Year, up to 25% of such
original Carry-Forward Amount may be carried forward to the second
immediately succeeding Fiscal Year, but no further carry forward of
such CarryForward Amount to any other succeeding Fiscal Year shall be
permitted; and
(iii) no portion of any Carry-Forward Amount shall be used
in any Fiscal Year until the entire amount of the Capital
Expenditures permitted to be made or committed to be made in such
Fiscal Year as provided in this CLAUSE (a) shall have been used; and
(b) Capitalized Lease Liabilities to the extent permitted as
Indebtedness pursuant to CLAUSE (d) of SECTION 9.2.2.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1. LISTING OF EVENTS OF DEFAULT. Each of the
following events or occurrences described in this SECTION 10.1 shall
constitute an "EVENT OF DEFAULT".
SECTION 10.1.1. NON-PAYMENT OF OBLIGATIONS. Any Borrower shall
default in the payment or prepayment when due of
(a) any Reimbursement Obligation or any deposit of cash for
collateral purposes pursuant to SECTION 4.1.2 or SECTION 4.1.4, as the
case may be;
(b) any principal of or interest on any Loan, except that, with
respect to any Default in the payment of interest, such Default may
continue unremedied for a period of two Business Days before an Event
of Default shall exist hereunder as a result thereof; or
(c) of any fee described in ARTICLE V or of any other Obligation
and such default shall continue unremedied for a period of five days.
SECTION 10.1.2. BREACH OF WARRANTY. Any representation or warranty of
any Borrower, Parent, any Subsidiary Guarantor or any other Obligor made or
deemed to be made hereunder or in any other Loan Document executed by it or any
other writing or certificate furnished by or on behalf of a Borrower or any
other Obligor to either Agent, any Issuer or any Lender for the purposes of or
in connection with this Agreement or any such other Loan
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Document (including any certificates delivered pursuant to ARTICLE VII), is
or shall be incorrect when made or deemed to have been made in any material
respect.
SECTION 10.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND
OBLIGATIONS. Any Borrower shall default in the due performance and observance
of any of its obligations under SECTION 9.2 other than (x) CLAUSE (a) or (c)
of SECTION 9.2.4 or (y) SECTION 9.2.5; or any Borrower shall default, and
such default shall continue unremedied for a period of 30 days or more, in
the due performance or observance of any of its obligations under CLAUSE (a)
or (c) of SECTION 9.2.4 or SECTION 9.2.5.
SECTION 10.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND
OBLIGATIONS. Any Borrower or any other Obligor shall default in the due
performance and observance of any other agreement contained herein or in any
other Loan Document executed by it, and such default shall continue
unremedied for a period of 30 days after notice thereof shall have been given
to such Borrower by either Agent or any Lender.
SECTION 10.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall
occur in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any Indebtedness (other than
Indebtedness described in SECTION 10.1.1) of any Borrower or any Subsidiary
having a principal amount, individually or in the aggregate, in excess of
$1,000,000, or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness (subject to any
applicable grace period) if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue unremedied
for any applicable period of time sufficient to permit the holder or holders
of such Indebtedness, or any trustee or agent for such holders, to cause or
declare such Indebtedness to become due and payable or to require such
Indebtedness to be prepaid, redeemed, purchased or defeased, or to cause an
offer to purchase or defease such Indebtedness to be required to be made,
prior to its expressed maturity.
SECTION 10.1.6. JUDGMENTS. Any judgment or order for the payment
of money in excess of $1,000,000 (exclusive of any amounts fully covered by
insurance (less any applicable deductible) or indemnification and as to which
the insurer or the indemnifying party, as the case may be, has acknowledged
its responsibility to cover such judgment or order) shall be rendered against
any Borrower or any Subsidiary and such judgment shall not have been vacated
or discharged or stayed or bonded pending appeal within 45 days after the
entry thereof.
SECTION 10.1.7. PENSION PLANS. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by a Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as a
result of such termination, such Borrower or any such member could be
required to make a contribution to such Pension
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Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any U.S.
Pension Plan sufficient to give rise to a Lien under section 302(f) of
ERISA.
SECTION 10.1.8. CHANGE IN CONTROL. Any Change in Control shall
occur.
SECTION 10.1.9. BANKRUPTCY, INSOLVENCY, ETC. Any Borrower, any
Subsidiary (which, either singly is or in the aggregate, would be a
Significant Subsidiary) or Parent shall
(a) become insolvent or generally fail to pay, or admit in writing
its inability or unwillingness generally to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for any substantial
part of the property of any thereof, or make a general assignment for
the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for a substantial part of the property of
any thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days, provided that each Borrower, each
such Subsidiary and Parent hereby expressly authorizes each Agent and each
Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under this
Agreement and the other Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect thereof, and, if any such case or
proceeding is not commenced by any Borrower, any such Subsidiary or
Parent, such case or proceeding shall be consented to or acquiesced in by
such Borrower, such Subsidiary or Parent, as the case may be, or shall
result in the entry of an order for relief or shall remain for 60 days
undismissed, provided that each Borrower, each Subsidiary and Parent
hereby expressly authorizes each Agent and each Lender to appear in any
court conducting any such case or proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION 10.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document,
or any Lien granted thereunder, shall (except in accordance with its terms),
in whole or in part, terminate, cease to be effective or cease to be the
legally valid, binding and enforceable obligation of any Obligor party
thereto; any Borrower, any other Obligor or any other party shall, directly
or
143
indirectly, contest in any manner such effectiveness, validity, binding
nature or enforceability; or, except as permitted under any Loan Document,
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien.
SECTION 10.1.11. SUBORDINATED NOTES. The subordination provisions
relating to the Subordinated Indenture or any other Subordinated Debt
Instrument (the "SUBORDINATION PROVISIONS") shall fail to be enforceable by
the Lenders (to the extent they have not effectively waived in writing the
benefits thereof) in accordance with the terms thereof, or the principal or
interest on any Loan, Reimbursement Obligation or other Obligations shall
fail to constitute Bank Debt (as defined in the Subordinated Indenture (or
similar term in any other Subordinated Debt Instrument); or the U.S. Borrower
or any of its Subsidiaries shall, directly or indirectly, disavow or contest
in any manner (i) the effectiveness, validity or enforceability of any of the
Subordination Provisions, (ii) that any of such Subordination Provisions
exist for the benefit of the Agents, each Issuer and the Lenders or (iii)
that all payments of principal or interest with respect to any such
Subordinated Debt Instrument made by the U.S. Borrower or its Subsidiaries,
or realized from the liquidation of any property of the U.S. Borrower or its
Subsidiaries, shall be subject to any of such Subordination Provisions.
SECTION 10.1.12. REDEMPTION. Any event shall occur which, under
the terms of or any Subordinated Debt Instrument, shall require the U.S.
Borrower or any of its Subsidiaries to purchase, redeem or otherwise acquire
or offer to purchase, redeem or otherwise acquire all or any portion of the
principal amount of any such Subordinated Debt prior to its final stated
maturity date.
SECTION 10.1.13. TERMINATION OF RECEIVABLES FACILITY. Any event or
circumstance shall occur which permits or requires the Persons purchasing, or
financing the purchase of, Accounts under the Permitted Receivables
Transaction to stop so purchasing or financing such Accounts, other than by
reason of the occurrence of the stated expiry date of the Permitted
Receivables Transaction or the voluntary termination thereof by the U.S.
Borrower; PROVIDED, that any notices or cure periods that are conditions to
the rights of such Persons to stop purchasing, or financing the purchase of,
such Accounts have been given or have expired, as the case may be.
SECTION 10.2. ACTION IF BANKRUPTCY. If any Event of Default
described in CLAUSES (a) through (d) of SECTION 10.1.9 shall occur, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 10.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of
Default (other than any Event of Default described in CLAUSES (a) through (d)
of SECTION 10.1.9) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the U.S. Agent, upon the direction of the
Required Lenders, shall by notice to Borrowers declare all or any portion of
the outstanding principal amount of the Loans and other Obligations to be due
and payable
144
and/or the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which
shall be so declared due and payable shall be and become immediately due and
payable, without further notice, demand or presentment, and/or, as the case
may be, the Commitments shall terminate; PROVIDED that (i) if less than the
total principal amount of all Loans and other Obligations are declared to be
due and payable, the amount so declared due and payable shall be PRO RATA
between the Facilities and (ii) the termination of a Commitment under a
Facility will automatically result in the corresponding termination of the
Commitment under the other Facility.
ARTICLE XI
THE AGENTS
SECTION 11.1. ACTIONS. Each Lender hereby appoints Scotiabank as
its U.S. Agent, as its Canadian Agent and/or (in each case) as its collateral
agent, as the case may be, under and for purposes of this Agreement, the
Notes and each other Loan Document. Each Lender authorizes the applicable
Agent to act on behalf of such Lender under this Agreement, the Notes and
each other Loan Document and, in the absence of other written instructions
from the Required Lenders received from time to time by such Agent (with
respect to which such Agent agrees that it will comply, except as otherwise
provided in this Section or as otherwise advised by counsel in order to avoid
contravention of applicable law), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of such Agent by the
terms hereof and thereof, together with such powers as may be reasonably
incidental thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) each Agent, PRO RATA according to
such Lender's percentage of the Total Exposure Amount, from and against any
and all liabilities, obligations, losses, damages, claims, costs or expenses
of any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, either Agent in any way relating to or
arising out of this Agreement, the Notes and any other Loan Document,
including reasonable attorneys' fees, and as to which such Agent is not
reimbursed by a Borrower; PROVIDED, HOWEVER, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from
such Agent's gross negligence or wilful misconduct. Neither Agent shall be
required to take any action hereunder, under the Notes or under any other
Loan Document, or to prosecute or defend any suit in respect of this
Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Agents shall
be or become, in either Agent's determination, inadequate, such Agent may
call for additional indemnification from the Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.
SECTION 11.2. FUNDING RELIANCE, ETC. Unless the applicable Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
5:00 p.m. (local time) on the Business Day prior to a Borrowing that such
Lender will not make available the amount which
145
would constitute its Percentage of such Borrowing on the date specified
therefor, such Agent may assume that such Lender has made such amount
available to such Agent and, in reliance upon such assumption, make available
to the applicable Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to such Agent, such
Lender and such Borrower severally agree to repay such Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such Agent made such amount available to such Borrower to the
date such amount is repaid to such Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing (in the case of a Borrower) and
(in the case of a Lender), at the Federal Funds Rate (for the first two
Business Days after which such amount has not been repaid), and thereafter at
the interest rate applicable to Loans comprising such Borrowing.
SECTION 11.3. EXCULPATION. Neither Agent nor any of their
respective directors, officers, employees or agents shall be liable to any
Secured Party for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own wilful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any Liens purported
to be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security,
nor to make any inquiry respecting the performance by any Borrower of its
obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by either Agent shall not obligate it to make any further
inquiry or to take any action. Each Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which such Agent believes to be genuine and
to have been presented by a proper Person.
SECTION 11.4. SUCCESSOR. Either Agent may resign as such at any
time upon at least 30 days' prior notice to the Borrowers and all Lenders. If
either Agent at any time shall resign, the Required Lenders may, with the
consent of the U.S. Borrower (such consent not to be unreasonably withheld
and, if the U.S. Borrower withholds its consent, stating the reasons therefor
in reasonable detail), appoint another Lender as a successor Agent which
shall thereupon become the applicable Agent in place of the retiring Agent
hereunder. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the retiring Agent may,
with the consent of the U.S. Borrower (such consent not to be unreasonably
withheld and, if the U.S. Borrower withholds its consent, stating the reasons
therefor in reasonable detail) and on behalf of the Secured Parties, appoint
a successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of (in the case of the U.S. Facility)
the U.S. (or any State thereof) or a U.S. branch or agency of a commercial
banking institution, and (in the case of the Canadian Facility) listed on
Schedule I of the Bank Act (Canada) and (in each case) having (x) a combined
capital and surplus of at least $250,000,000 and (y) (if such successor Agent
is so rated) a credit rating of AA or better by Moody's or a comparable
rating by S&P; PROVIDED, HOWEVER, that if, after
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expending all reasonable commercial efforts, such retiring Agent is unable to
find a commercial banking institution which is willing to accept such
appointment and which meets the qualifications set forth in CLAUSE (y) above,
such retiring Agent shall be permitted to appoint as its successor from all
available commercial banking institutions willing to accept such appointment
such institution having the highest credit rating of all such available and
willing institutions. Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the retiring Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to
and become vested with all rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as an Agent, the provisions of
(a) this ARTICLE XI shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) SECTION 12.3 and SECTION 12.4 shall continue to inure to its
benefit.
SECTION 11.5. LOANS BY THE AGENTS. Each Agent shall have the same
rights and powers with respect to (x) the Credit Extensions made by it or any
of its Affiliates, and (y) the Notes held by it or any of its Affiliates as
any other Secured Party and may exercise the same as if it were not an Agent.
Each Agent and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with any Borrower or any Subsidiary
or Affiliate of any Borrower as if such Agent were not an Agent hereunder.
SECTION 11.6. CREDIT DECISIONS. Each Secured Party acknowledges
that it has, independently of the Agents and each other Lender, and based on
such Lender's review of the financial information of the Borrowers, this
Agreement, the other Loan Documents (the terms and provisions of which being
satisfactory to such Secured Party) and such other documents, information and
investigations as such Secured Party has deemed appropriate, made its own
credit decision to extend its Commitments. Each Secured Party also
acknowledges that it will, independently of the Agents and each other Secured
Party, and based on such other documents, information and investigations as
it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 11.7. COPIES, ETC. The Agents shall give prompt notice to
each Secured Party of each notice or request required or permitted to be
given to the Agents by the Borrowers pursuant to the terms of this Agreement
(unless concurrently delivered to the Secured Parties by the Borrowers). The
Agents will distribute to each Secured Party each document or instrument
received for its account and copies of all other communications received by
the Agents from the Borrowers for distribution to the Secured Parties by the
Agents in accordance with the terms of this Agreement or any other Loan
Document.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. WAIVERS, AMENDMENTS, ETC. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by the Borrowers and the Required Lenders; PROVIDED,
HOWEVER, that no such amendment, modification or waiver shall:
(a) extend any Commitment Termination Date or any interest
payment date or the date fees are payable under either Facility without
the consent of all adversely affected Lenders under that Facility or
modify this SECTION 12.1 without the consent of all Lenders;
(b) increase any Lender's Percentage of any Commitment Amount (in the
case of other than an increase in a Lender's applicable Percentage
resulting from a reallocation in accordance with SECTIONS 2.2.3 and
3.2.2), increase the aggregate amount of any Credit Extensions required to
be made by a Lender pursuant to its Commitments or reduce any fees
described in ARTICLE V payable to any Lender without the consent of such
Lender;
(c) extend the Stated Maturity Date for any Lender's Loan, or reduce
the principal amount of or rate of interest on any Lender's Loan, without
the consent of such Lender (it being understood and agreed, however, that
any vote to rescind any acceleration made pursuant to SECTION 10.2 and
SECTION 10.3 of amounts owing with respect to the Loans and other
Obligations shall only require the vote of the Required Lenders);
(d) change the definition of "Required Lenders" or any
requirement hereunder that any particular action be taken by all
Lenders without the consent of all Lenders;
(e) increase the Stated Amount of any Letter of Credit unless
consented to by each Issuer;
(f) release any of (i) the guarantees of any Guarantor or (ii) the
collateral (including any Pledged Notes (except as provided in CLAUSE
(e)(ii) of SECTION 9.2.2) or Pledged Shares, as such terms are defined in
the Pledge Agreements) (except the sale or transfer of Accounts and other
related assets in accordance with the Permitted Receivables Transaction),
in either case without the consent of all Lenders as expressly provided
herein or therein (it being understood that no consent of the Lenders is
required for a release in connection with a Permitted Disposition);
(g) change any of the terms of (i) CLAUSE (c) of SECTION 2.1.4 or
SECTION 2.3.2 without the consent of the U.S. Swing Line Lender or (ii)
CLAUSE (c) of SECTION 3.1.3 or SECTION 3.3.2 without the consent of the
Canadian Swing Line Lender;
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(h) affect adversely the interests, rights or obligations of
either Agent in its capacity as an Agent, or any Issuer, unless
consented to by such Agent or such Issuer, as the case may be; or
(i) modify CLAUSES (c), (d), (e) or (f) of SECTION 5.1.1 (other
than as to the Stated Maturity Date) without the consent of Lenders
holding at least 66 2/3% of the Total Exposure Amount.
No failure or delay on the part of either Agent, any Issuer or any Lender in
exercising any power or right under this Agreement or any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power or right preclude any other or further exercise thereof or
the exercise of any other power or right. No notice to or demand on any
Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by either Agent, any Issuer or any
Lender under this Agreement or any other Loan Document shall, except as may
be otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 12.2. NOTICES. All notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by facsimile and addressed, delivered or transmitted
to such party at its address or facsimile number set forth below its
signature hereto (in the case of the Borrowers) and set forth in SCHEDULE II
(in the case of the Agents and the Lenders) or set forth in the Lender
Assignment Agreement or at such other address or facsimile number as may be
designated by such party in a notice to the other parties given in accordance
herewith. Any notice, if mailed and properly addressed with postage prepaid
or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when the confirmation of transmission thereof is received by the
transmitter.
SECTION 12.3. PAYMENT OF COSTS AND EXPENSES. Each Borrower
agrees to pay on demand all reasonable expenses of the Agents (including the
reasonable fees and out-of-pocket expenses of New York and Canadian counsel
to either Agent and of local counsel, if any, who may be retained by counsel
to either Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated; and
(b) the filing, recording, refiling or rerecording of any Loan
Document and/or any UCC financing statements relating thereto and all
amendments, supplements, amendments and restatements and other
modifications to any thereof and any and all other documents
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or instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or the terms of any Loan
Document; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Each Borrower further agrees to pay, and to save each Agent, each Issuer and
the Lenders harmless from all liability for, any stamp, registration,
documentation, issuance or other similar taxes which may be payable in
connection with the execution or delivery of this Agreement, the Credit
Extensions hereunder, or the issuance of the Notes, Letters of Credit or any
other Loan Documents. Each Borrower also agrees to reimburse each Agent, each
Issuer and each Lender upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses of counsel to either
Agent, any Issuer and the Lenders, and, based upon the written advice of
legal counsel, a copy of which shall be provided to the Borrowers, that in
such counsel's judgment having a common counsel for either Agent, any Issuer
and the Lenders would present such counsel with a conflict of interest, of
one other counsel selected by the Required Lenders (other than the Agents))
incurred by either Agent, any Issuer or such Lenders in connection with (x)
the negotiation of any restructuring or "work-out" with any Borrower, whether
or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 12.4. INDEMNIFICATION. In consideration of the execution
and delivery of this Agreement by each Lender, Issuer and Agent and the
extension of the Commitments, each Borrower hereby indemnifies, exonerates
and holds each Agent, each Issuer and each Lender and each of their
respective officers, directors, employees and agents (collectively, the
"INDEMNIFIED PARTIES") free and harmless from and against any and all
actions, causes of action, suits, losses, costs, liabilities and damages, and
expenses incurred in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements,
whether incurred in connection with actions between or among the parties
hereto or the parties hereto and third parties (collectively, the
"INDEMNIFIED LIABILITIES"), incurred by the Indemnified Parties or any of
them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension, including all Indemnified Liabilities arising in connection
with (i) the Merger and (ii) the other aspects of the Transaction;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action
brought by or on behalf of any Borrower as the result of any determination
by the Required Lenders pursuant to ARTICLE VII not to fund any Credit
Extension), provided that any such action is resolved in favor of such
Indemnified Party;
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(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Borrower or any Subsidiary
of all or any portion of the stock or assets of any Person, whether or
not either Agent, any Issuer or any Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by any Borrower or any
Subsidiary of any Hazardous Material;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control
of, such Borrower or such Subsidiary; or
(f) each Lender's Environmental Liability (the indemnification herein
shall survive repayment of the Notes and any transfer of the property of
any Borrower or any Subsidiary by foreclosure or by a deed in lieu of
foreclosure for any Lender's Environmental Liability, regardless of
whether caused by, or within the control of, such Borrower or such
Subsidiary);
except for any such Indemnified Liabilities resulting from the gross
negligence or wilful misconduct of any such Indemnified Party, or arising out
of or in connection with any claims made or proceedings commenced against any
such Indemnified Party by any securityholder or creditor of such Indemnified
Party arising out of and based upon rights afforded any such securityholder
or creditor solely in its capacity as such. Each Borrower and its successors
and assigns hereby waive, release and agree not to make any claim or bring
any cost recovery action against, either Agent, any Issuer or any Lender
under CERCLA or any state equivalent, or any similar law now existing or
hereafter enacted. It is expressly understood and agreed that to the extent
that any Secured Party is strictly liable under any Environmental Laws, each
Borrower's obligation to such Secured Party under this indemnity shall
likewise be without regard to fault on the part of such Borrower with respect
to the violation or condition which results in liability of such Secured
Party. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, each Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 12.5. SURVIVAL. The obligations of each Borrower under
SECTIONS 6.3, 6.4, 6.5, 6.6, 12.3 and 12.4, and the obligations of the
Lenders under SECTION 11.1, shall in each case survive any assignment from
one Lender to another (in the case of SECTIONS 12.3 and 12.4) and any
termination of this Agreement, the payment in full of all the Obligations and
the termination of all the Commitments. The representations and warranties
made by each Borrower and each other Obligor in this Agreement and in each
other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
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SECTION 12.6. SEVERABILITY. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 12.7. HEADINGS. The various headings of this Agreement
and of each other Loan Document are inserted for convenience only and shall
not affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 12.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of each Borrower, each Agent and each
Lender (or notice thereof satisfactory to each Agent) shall have been
received by each Agent and notice thereof shall have been given by each Agent
to each Borrower and each Lender.
SECTION 12.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT OTHER THAN THOSE THAT EXPRESSLY STATE
OTHERWISE (INCLUDING PROVISIONS WITH RESPECT TO INTEREST, LOAN CHARGES AND
COMMITMENT FEES) SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY
INTEREST UNDER A LOAN DOCUMENT, OR REMEDIES UNDER A LOAN DOCUMENT, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and thereof and supersede any prior agreements, written or
oral, with respect thereto.
SECTION 12.10. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, HOWEVER, that:
(a) no Borrower may assign or transfer its rights or delegate its
obligations hereunder, except (x) in connection with the Assumption with
respect to LHPG (and the Agents and the Lenders agree to the assignment by
LHPG to Leiner of, and the assumption by Leiner of, and the subsequent
release of LHPG from, all rights and obligations of LHPG under the Loan
Documents in accordance with Section 9.1.11) or (y)
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as permitted under CLAUSE (a) of SECTION 9.2.10 with respect to the
Canadian Borrower, without the prior written consent of the Agents and all
Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to SECTION 12.11.
SECTION 12.11. SALE AND TRANSFER OF LOANS AND NOTES;
PARTICIPATIONS IN LOANS AND NOTES. Each Lender may assign, or sell
participations in, its Loans, Letters of Credit and Commitments to one or
more other Persons in accordance with this SECTION 12.11.
SECTION 12.11.1. ASSIGNMENTS. Upon prior notice to the
applicable Borrower and the applicable Agent, any Lender,
(a) with the consent of such Agent and, so long as no Event of
Default has occurred and is continuing, such Borrower (which consents
shall not be unreasonably delayed or withheld; PROVIDED, HOWEVER that in
the event of a proposed assignment to an Assignee Lender (as defined
below), the obligations of whom do not satisfy the credit ratings set
forth in CLAUSE (b) of SECTION 6.11, such Agent and such Borrower may
withhold such consent in their sole discretion) may at any time assign and
delegate to one or more commercial banks or other financial institutions;
and
(b) with notice to such Borrower and such Agent, but without the
consent of such Borrower or such Agent (or any other Person), may
assign and delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "ASSIGNEE LENDER"), all or any fraction of any of such
Lender's total Loans, Letter of Credit Outstandings and Commitments in a
minimum aggregate amount of $5,000,000, with respect to the U.S. Facility, or
Cdn $5,000,000, with respect to the Canadian Facility (or, if less, the
entire remaining amount of such Lender's Loans, Letter of Credit Outstandings
and Commitments); PROVIDED, HOWEVER, that
(i) with respect to assignments of Revolving Loans, the
assigning Lender must assign a PRO RATA portion of each of its Revolving Loan
Commitment, Revolving Loans and interest in Letters of Credit Outstanding;
(ii) each Assignee Lender will comply, if applicable, with the
provisions contained in SECTIONS 6.10 and 6.11;
(iii) with respect to the U.S. Facility, each Assignee Lender
that is a U.S. Lender that is a U.S. Person shall comply with the
provisions of CLAUSE (b)(i) of SECTION 6.6, and each Assignee Lender
that is a U.S. Lender that is not a U.S. Person
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shall comply with the provisions of CLAUSE (b)(ii) of SECTION 6.6
(and, in any case, with all of the other provisions of CLAUSE (b) of
SECTION 6.6);
(iv) with respect to the Canadian Facility, each Assignee Lender
shall represent that, under applicable law and treaties in effect as
of the date of the assignment, no federal taxes will be required to
be withheld by the Canadian Agent or the Canadian Borrower with
respect to any payments to be made to such Assignee Lender in respect
of this Agreement; and
(v) such assignment and obligation shall be made in compliance
with all applicable laws and shall require the prior consent of the
applicable Borrower if it would require any Borrower to make any
filing with any Governmental Authority or to qualify any Loan, Letter
of Credit or Note under the laws of any jurisdiction.
The applicable Borrower and each other Obligor and each Agent shall be
entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee Lender
until
(c) notice of such assignment and delegation, together with (i)
payment instructions, (ii) the Internal Revenue Service Forms or other
statements contemplated or required to be delivered pursuant to CLAUSE (b)
of SECTION 6.6, in each case if applicable, and (iii) addresses and
related information with respect to such Assignee Lender, shall have been
delivered to the applicable Borrower and the applicable Agent by such
Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to the
applicable Borrower and the applicable Agent a Lender Assignment Agreement
(which shall include, INTER ALIA, the Assignee Lender's representations
contemplated by CLAUSE (b) of SECTION 6.6, if applicable), accepted by
such Agent;
(e) the processing fees described below shall have been paid; and
(f) the applicable Agent shall have registered such assignment
and delegation in the applicable Register pursuant to SECTION 2.6(B) or
SECTION 3.7(b).
From and after the date that the applicable Agent accepts such Lender
Assignment Agreement, and such assignment and delegation is registered in the
applicable Register pursuant to SECTIONS 2.6(b) or 3.7(b), (x) the Assignee
Lender thereunder shall be deemed automatically to have become a party hereto
and to the extent that rights and obligations hereunder have been assigned
and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan
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Documents. Within five Business Days after its receipt of notice that the
applicable Agent has received and accepted an executed Lender Assignment
Agreement, but subject to CLAUSE (d) above, the applicable Borrower shall
execute and deliver to such Agent (for delivery to the relevant Assignee
Lender) a new Note evidencing such Assignee Lender's assigned Loans and
Commitments and, if the assignor Lender has retained Loans and Commitments
hereunder, a replacement Note in the principal amount of the Loans and
Commitments retained by the assignor Lender hereunder (such Note to be in
exchange for, but not in payment of, the Note then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Note. The
assignor Lender shall mark each predecessor Note "exchanged" and deliver each
of them to the applicable Borrower. Accrued interest on that part of each
predecessor Note evidenced by a new Note, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on that part of
each predecessor Note evidenced by a replacement Note shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee in the
amount of $3,500 to the U.S. Agent or Cdn $4,500 to the Canadian Agent, as
applicable, upon delivery of any Lender Assignment Agreement. Any attempted
assignment and delegation not made in accordance with this SECTION 12.11.1
shall be null and void. Notwithstanding any other term of this SECTION
12.11.1, the agreement of each Swing Line Lender to provide its Swing Line
Loan Commitment shall not impair or otherwise restrict in any manner the
ability of such Swing Line Lender to make any assignment of its Loans or
Commitments, it being understood and agreed that such Swing Line Lender may
terminate its Swing Line Loan Commitment, either in whole or in part, in
connection with the making of any assignment; PROVIDED, HOWEVER, that if
Scotiabank's U.S. Revolving Loan Commitment is greater than or equal to
$10,000,000, Scotiabank agrees, unless another U.S. RL Lender has agreed to
become the U.S. Swing Line Lender, to continue to be the U.S. Swing Line
Lender. Notwithstanding anything to the contrary set forth above, any Lender
may (without requesting the consent of the applicable Borrower or the
applicable Agent) pledge its Loans to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
SECTION 12.11.2. PARTICIPATIONS. Any Lender may at any time sell
to one or more commercial banks or other Persons (each of such commercial
banks and other Persons being herein called a "PARTICIPANT") participating
interests in any of the Loans, Commitments, or other interests of such Lender
hereunder; PROVIDED, HOWEVER, that
(a) no participation contemplated in this SECTION 12.11 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations;
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(c) the applicable Borrower and each other Obligor and each Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement and each of the other Loan Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in CLAUSE (b), (f) or, to the extent requiring the
consent of each Lender, CLAUSE (c) of SECTION 12.1;
(e) no Borrower shall be required to pay any amount under this
Agreement that is greater than the amount which it would have been
required to pay had no participating interest been sold; and
(f) with respect to the Canadian Facility, under applicable law and
treaties in effect on the date of such sale, no Canadian federal taxes
shall be required to be withheld by the Canadian Agent or the Canadian
Borrower with respect to any payments to be made to such Participant in
respect of this Agreement.
Each Borrower acknowledges and agrees that each Participant, for purposes of
SECTIONS 6.3, 6.4, 6.5, 6.6, 6.8, 6.9, 9.1.1 (it being understood that it
shall be the obligation of each Lender (and not the Borrowers) to deliver to
their Participants the information and reports described in SECTION 9.1.1 to
Participants), 12.3 and 12.4, shall be considered a Lender. Each Participant
shall only be indemnified for increased costs pursuant to SECTION 6.3, 6.5 or
6.6 if and to the extent that the Lender which sold such participating
interest to such Participant concurrently is entitled to make, and does make,
a claim on the applicable Borrower for such increased costs. Any Lender that
sells a participating interest in any Loan, Commitment or other interest to a
Participant under this SECTION 12.11.2 shall indemnify and hold harmless the
applicable Borrower and the applicable Agent from and against any taxes,
penalties, interest or other costs or losses (including reasonable attorneys'
fees and expenses) incurred or payable by such Borrower or such Agent as a
result of the failure of such Borrower or such Agent to comply with its
obligations to deduct or withhold any Taxes from any payments made pursuant
to this Agreement to such Lender or such Agent, as the case may be, which
Taxes, with respect to the U.S. Facility, would not have been incurred or
payable if such Participant had been a U.S. Lender that was not a U.S. Person
and that was entitled to deliver to the U.S. Borrower, the U.S. Agent or such
Lender, and did in fact so deliver, a duly completed and valid Form 1001 or
4224 (or applicable successor form) entitling such Participant to receive
payments under this Agreement without deduction or withholding of any United
States federal taxes, and, with respect to the Canadian Facility, would not
have been incurred or payable if such Participant had been a Canadian Person.
SECTION 12.12. OTHER TRANSACTIONS. Nothing contained herein shall
preclude either Agent, any Issuer or any other Lender from engaging in any
transaction, in addition to those
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contemplated by this Agreement or any other Loan Document, with any Borrower
or any of their Affiliates in which such Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 12.13. EXECUTION ON BEHALF OF CORPORATION. Any signature
by any Authorized Officer on this Agreement, any Loan Document and any other
instrument and certificate executed or to be executed pursuant to or in
connection with this Agreement or such other Loan Documents is provided only
in such Authorized Officer's capacity as a corporate officer, and not in any
way in such Authorized Officer's personal capacity.
SECTION 12.14. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS,
THE LENDERS, ANY ISSUER OR THE BORROWERS IN CONNECTION HEREWITH OR THEREWITH
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT EITHER AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE PERSONAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION, SUBJECT TO SUCH
BORROWER'S RIGHT TO CONTEST SUCH JUDGMENT BY MOTION OR APPEAL ON ANY GROUNDS
NOT EXPRESSLY WAIVED IN THIS SECTION 12.14. EACH BORROWER HEREBY IRREVOCABLY
APPOINTS CT CORPORATION SYSTEM (THE "PROCESS AGENT"), WITH AN OFFICE ON THE
DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, UNITED STATES, AS ITS
AGENT TO RECEIVE, ON SUCH BORROWER'S BEHALF AND ON BEHALF OF SUCH BORROWER'S
PROPERTY, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER
PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE
MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH BORROWER
IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND SUCH
BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO
ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL
157
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES
SPECIFIED IN SECTION 12.2. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY
BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 12.15. WAIVER OF JURY TRIAL. THE AGENTS, THE LENDERS, EACH
ISSUER AND EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS, THE ISSUERS OR THE BORROWERS
IN CONNECTION HEREWITH OR THEREWITH. EACH BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE LENDERS
AND EACH ISSUER ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN
DOCUMENT.
SECTION 12.16. ACKNOWLEDGMENTS AND REPRESENTATIONS BY LENDERS.
Each Lender represents to the Agents and each of the Obligors that,
independently and without reliance upon the Agents or any other Lender, and
based on such documents and information as it has deemed appropriate, it has
made and will make its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
each of the Borrowers and the Obligors, it has made its own decision to make
its Loans and, in the case of an Issuer, such Issuers represents that it has
made its own decision to issue Letters of Credit, issue its Letters of Credit
hereunder and enter into this Agreement and it will make its own decisions in
taking or not taking action under this Agreement and the other Loan
Documents. Each Lender represents to each other party hereto that it is a
bank, savings and loan association or other similar savings institution,
insurance company, investment fund or company or other financial institution
which makes, invests in or acquires commercial loans in
158
the ordinary course of its business, that it is participating hereunder as a
Lender for such commercial purposes, and that it has the knowledge and
experience to be and is capable of evaluating the merits and risks of being a
Lender hereunder.
SECTION 12.17. CONFIDENTIALITY. Each of the Lenders and the Agents
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees, agents, advisors and representatives to (a) use any Confidential
Information only in connection with participating as a Lender or Agent
hereunder and not for any other purpose and (b) keep confidential any
Confidential Information, and in connection therewith comply with its
customary procedures for handling confidential information of this nature;
PROVIDED that nothing herein shall limit the disclosure of any such
information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) as requested or required by any governmental agency or
representative thereof, (iii) to counsel and (if they have signed a
Confidentiality Agreement) other professional advisors for any of the Lenders
or the Agents, (iv) to any Lender's or any Agent's examiners, auditors or
accountants, or to the National Association of Insurance Commissioners, (v)
to the Agents or any other Lender, (vi) by the Agents or any Lender to an
Affiliate thereof, (vii) in connection with any litigation relating to
enforcement of the Loan Documents or (viii) to any Assignee Lender or
Participant (or prospective Assignee Lender or Participant) or to direct
contractual counterparties in Rate Protection Agreements entered into in
connection with a portion or all of a Lender's rights to receive payments
hereunder (or such contractual counterparties' professional advisors), so
long as (in each case) such Person first executes and delivers to the
respective Lender a Confidentiality Agreement, in substantially the form of
EXHIBIT M hereto, for the benefit of and enforceable by the Borrowers, which
Confidentiality Agreement shall be delivered to the U.S. Borrower promptly
after the execution thereof; PROVIDED that in the case of the preceding
CLAUSE (i), such Lender or Agent shall, to the extent legally permissible,
use reasonable efforts to notify the Borrowers of the proposed disclosure as
soon as is reasonably practicable under the circumstances.
159
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
LEINER HEALTH PRODUCTS GROUP INC.
By: /s/ William B. Towne
-----------------------------------
Name: William B. Towne
Title: Executive Vice
President-Finance
Address: 901 East 233rd Street
Carson, California 90745
Facsimile No.: (310) 952-7768
Attention: William B. Towne
with a copy to:
North Castle Partners I, L .L.C.
11 Meadowcroft Lane
Greenwich, Connecticut 06830
Facsimile No.: (203) 869-4311
Attention: Charles Baird, Jr.
VITA HEALTH COMPANY (1985) LTD.
By: /s/ William B. Towne
-----------------------------------
Name: William B. Towne
Title: Treasurer
Address: 150 Beghin Avenue
Winnipeg, Manitoba
Facsimile No.: (204) 633-8386
Attention: Rachel Cahill
160
with a copy to the U.S. Borrower and:
North Castle Partners I, L .L.C.
11 Meadowcroft Lane
Greenwich, Connecticut 06830
Facsimile No.: (203) 869-4311
Attention: Charles Baird, Jr.
THE BANK OF NOVA SCOTIA,
as the U.S. Agent
By: /s/ Gary McDonough
-----------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA,
as the Canadian Agent
By: /s/ Gary McDonough
-----------------------------------
Title: Authorized Signatory
161
U.S. LENDERS:
THE BANK OF NOVA SCOTIA
By: /s/ Gary McDonough
-----------------------------------
Title: Authorized Signatory
162
SALOMON BROTHERS HOLDING
COMPANY INC
By: /s/ Richard H. Ivers
-----------------------------------
Title: Managing Director
163
MERRILL LYNCH CAPITAL CORPORATION
By: /s/
----------------------------------
Title:
164
BANK OF MONTREAL
By: /s/ B. A. Blucher
----------------------------------
Title: Senior Vice President
165
FLEET NATIONAL BANK
By: /s/
----------------------------------
Title: AVP.
166
LASALLE NATIONAL BANK
By: /s/
----------------------------------
Title: Senior Vice President
167
COMERICA BANK
By: /s/
----------------------------------
Title: Corporate Banking Officer
168
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH
By: /s/
----------------------------------
Title: Deputy General Manager
169
SOCIETE GENERALE
By: /s/ J. Stanley Stewart
----------------------------------
Title: Vice President
170
CREDITANSTALT BANKVEREIN
By: /s/ Clifford L. Wells
----------------------------------
Title: Vice President
By: /s/ Julie Bothamloy
----------------------------------
Title: Vice President
171
IMPERIAL BANK, a California Banking
Corporation
By: /s/
----------------------------------
Title:
172
DEEPROCK & COMPANY
By: Eaton Vance Management
as Investment Advisor
By: /s/ Barbara Campbell
----------------------------------
Title: Assistant Treasurer
173
NORTHERN LIFE INSURANCE COMPANY
By: ING Capital Advisors, Inc.
as Investment Advisor
By: /s/ Kathleen A. Lenarcic
----------------------------------
Title: Vice President &
Portfolio Manager
174
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management Inc., as attorney in fact
By: /s/
----------------------------------
Title: Vice President
175
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/
----------------------------------
Title: Managing Director
176
KZH-CRESCENT CORPORATION
By: /s/ Robert Goodwin
----------------------------------
Title: Authorized Agent
177
ALLSTATE LIFE INSURANCE COMPANY
By: /s/
----------------------------------
Title: Authorized Signatory
By: /s/
----------------------------------
Title: Authorized Signatory
178
179
CANADIAN LENDERS:
THE BANK OF NOVA SCOTIA
By: /s/ Gary McDonough
----------------------------------
Name: Gary McDonough
Title: Authorized Signatory
180
BANK OF MONTREAL
By: /s/ B.A. Blucher
----------------------------------
Name: B.A. Blucher
Title: Senior Vice President
181
SCHEDULE I
DISCLOSURE SCHEDULE TO CREDIT AGREEMENT
ITEM 8.7 LITIGATION
None
ITEM 8.8 EXISTING SUBSIDIARIES
1. Leiner Health Products Group Inc.:
PLI Holdings Inc., a Delaware corporation
Leiner Health Products Inc.
The companies listed in item (b) below
After the Assumption, Leiner Health Products Inc.'s Subsidiaries
are:
VH Holdings Inc., a Manitoba corporation
Vita Health Company (1985) Ltd., a Manitoba corporation
Westcan Pharmaceuticals Ltd., a Manitoba corporation
64804 Manitoba Ltd., a Manitoba corporation
ITEM 8.10 PLANT SITES AND PROPERTY MATTERS
MORTGAGED U.S. OWNED REAL PROPERTY
1. 3532 West 47th, Chicago, Illinois
2. 2300 Badger Lane, Madison, Wisconsin
MORTGAGED U.S. LEASED REAL PROPERTY
1. 7366 Orangewood Avenue, Garden Grove, California
MORTGAGED CANADIAN OWNED REAL PROPERTY
1. 150 Beghin Avenue, Winnipeg, Manitoba
2. 102/104 Osborne Street, Winnipeg, Manitoba
MORTGAGED CANADIAN LEASED REAL PROPERTY
None
ITEM 8.11 EMPLOYEE BENEFIT PLANS
PENSION PLAN
Leiner Health Products Inc. Retirement Plan
The Corporate Plan for Retirement Profit Sharing/401K Plan
Leiner Health Products 401K Restoration Plan Amendment and
Restatement
182
WELFARE PLANS
Aetna Health Plans
(including Dental)
Prudential Health Care Vision Services Plan Blue Care
Network Dean Care HMO Aetna Health Plans Cigna Term Life
Occupational Health Service Corp.
ITEM 8.12 ENVIRONMENTAL MATTERS
None
ITEM 8.13 INTELLECTUAL PROPERTY
1. Your Life(R)
2. Pharmacist Formula(R)
3. Proven Release(R)
4. Daily Pak(R)
5. Central-Vite(R)
6. Bodycology(R)
ITEM 9.2.2.(B)(I) INDEBTEDNESS TO BE PAID
CREDITOR OUTSTANDING PRINCIPAL AMOUNT
Lenders under Credit Agreement US$90,204,000
dated as of January 30, 1997, Cdn$15,300,000
among Leiner, VH Holdings Inc.,
Vita Health Company (1985) Ltd.
and certain other parties named
therein.
ITEM 9.2.2.(B)(II) ONGOING INDEBTEDNESS
183
CREDITOR DESCRIPTION OUTSTANDING PRINCIPAL AMOUNT
- -------- ----------- ----------------------------
Comdisco Tablet Presses (53,635.18)
Comdisco Disk drives (174,584.34)
Comdisco AS/400 upgrade (297,016.19)
G.E. Capital Swifpacks, twin-head (927,418.52)
cottoner, single-head
cottoner and bundling
system
G.E. Capital Cartoning machines (560,177.79)
G.E. Capital Swiftpack fillers, (2,064,837.53)
stretchwrapper, cartoner,
stretchpack and fette
presses
G.E. Capital Cottoner, swiftpack filler, (630,961.31)
and stretch packer
Crown Credit Corp. Accelerated Coater (22,357.27)
Crown Credit Corp. Reach Truck (27,734.47)
OTHER:
Various Miscellaneous forklifts, etc. (8,487.20)
TOTAL: (4,767,149.81)
ITEM 9.2.3(D) ONGOING LIENS
See Liens described in Appendix 1 hereto.
ITEM 9.2.5(A) ONGOING INVESTMENTS
1. Non-interest bearing note receivable, dated July 1, 1988, due from
Safeway Stores, Incorporated in the amount of $367,375. This note is
due upon the termination of the Leiner's agreement with Safeway.
2. OWNERSHIP IN OTHER PERSONS:
COMPANY NUMBER OF SHARES
184
Hallwood Industries:
Steel city Prod. 19
Oakhurst Inc. 19
Natures Bounty 60
Perrigo 100
Phar-Mor Inc. 39
Phar-Mor Inc. 32
Roses 4118
Roses 9608
General Nutrition 59
Crown Group 21
Pharmaceuticals, Inc. 10
Iriquois Brands, Ltd. 5
Safeway Stores 10
5. CERTAIN NOTES:
Existing Notes in an aggregate principal amount not to exceed $325,000
representing amounts owed by certain current and former officers of
LHPG in connection with amounts advanced by LHPG to enable such
officers to pay income tax liability in respect of their purchase of
common stock issued by LHPG at a below-market price.
185
Appendix I
to Disclosure Schedule
to Credit Agreement
Item 9.2.3(d)
SCHEDULE OF ONGOING LIENS
I. UCC FINANCING STATEMENTS
CALIFORNIA
1. UCC-1 Financing Statement, filed on Nov. 23, 1992
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: The Bank of Nova Scotia,
as Intercreditor Agent
One Liberty Plaza
New York, NY 10006
Filed with Secretary of State, Sacramento, California
All pledged notes
All issued and outstanding shares of capital stock of any pledged share issuer
All other pledged property
All dividends, distributions, interest, and other payments with respect to
any pledged property
2. UCC-1 Financing Statement, filed on Dec. 24, 1992
Debtor: Leiner Health Products
1845 W. 205th Street
Torrance, CA 90501
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Crown lift truck, battery and charger
3. UCC-1 Financing Statement, filed on Jan. 12, 1993
Debtor: Leiner Health Products Inc.
186
1845 W. 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Sacramento, California
Caterpillar lift truck, batteries and charger
4. UCC-1 Financing Statement, filed on Jan. 12, 1993
Debtor: Leiner Health Products Inc.
1845 W. 205th Street
Torrance, CA 90501
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Crown lift truck, battery and charger
5. UCC-1 Financing Statement, filed on Sept. 7, 1993
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Sacramento, California
Prime Mover reach truck, 2 Caterpillar lift trucks, batteries and chargers
6. UCC-1 Financing Statement, filed on Sept. 13, 1993
187
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 93641
Secured Party: The Bank of Nova Scotia,
as Intercreditor Agent
One Liberty Plaza
New York, NY 10006
Filed with Secretary of State, Sacramento, California
All pledged notes
All issued and outstanding shares of capital stock of any pledged share issuer
All other pledged property
All dividends, distributions, interest, and other payments with respect to
any pledged property
7. UCC-1 Financing Statement, filed on Sept. 23, 1993
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: Comdisco, Inc.
6111 North River Road
Rosemont, IL 60018
Filed with Secretary of State, Sacramento, California
Rotary Compacting Press
8. UCC-1 Financing Statement, filed on Oct. 8, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90510
Secured Party: Xerox Corp.
2200 East McFadden Avenue
Santa Ana, CA 92705
Filed with Secretary of State, Sacramento, California
188
Xerox copiers
9. UCC-1 Financing Statement, filed on Nov. 19, 1993
Debtor: Leiner Health Products Inc.
711 Walnut Street
Compton, CA 90220
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, Ohio 45869
Filed with Secretary of State, Sacramento, California
3 Crown lift trucks, batteries and chargers
10. UCC-1 Financing Statement, filed on Dec. 17, 1993
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: The Bank of Nova Scotia,
as Intercreditor Agent
One Liberty Plaza
New York, NY 10006
Filed with Secretary of State, Sacramento, California
All pledged notes
All issued and outstanding shares of capital stock of any
pledged share issuer
All other pledged property
All dividends, distributions, interest, and other payments with respect to
any pledged property
11. UCC-1 Financing Statement, filed on Jan. 31, 1994
Debtor: Leiner Health Products Inc.
711 Walnut Street
Compton, CA 90220
189
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
3 Crown lift trucks, batteries and chargers
12. UCC-1 Financing Statement, filed on Mar. 11, 1994
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: Toyota Motor Credit Corp.
2050 W. 190th Street #208
P.O. Box 3457
Torrance, CA 90510
Filed with Secretary of State, Sacramento, California
Transfer of lease from Xcel Laboratories, Inc. (original lease dated Jan. 25,
1991)
13. UCC-1 Financing Statement, filed on Mar. 11, 1994
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: Toyota Motor Credit Corp.
2050 W. 190th Street #208
P.O. Box 3457
Torrance, CA 90510
Filed with Secretary of State, Sacramento, California
Transfer of lease from Xcel Laboratories, Inc. (original lease dated Oct. 10,
1990)
14. UCC-1 Financing Statement, filed on July 8, 1994
Debtor: Leiner Health Products Inc.
190
1845 West 205th Street
Torrance, CA 90510
Secured Party: Comdisco, Inc.
6111 North River Road
Rosemont, IL 60018
Filed with Secretary of State, Sacramento, California
Disk drives
15. UCC-1 Financing Statement, filed on Nov. 30, 1994
Debtor: Leiner Health Products
810 E. 233rd Street
Carson, CA 90745
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
4 Crown lift trucks, batteries and chargers
16. UCC-1 Financing Statement, filed on Dec. 20, 1994
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irving Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Sacramento, California
Tablet counters, cottoners and bundling systems
17. UCC-1 Financing Statement, filed on Jan. 4, 1995
191
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Sacramento, California
Fillers, stretchwrapper, cartoner, stretch pack machine, tableting presses
18. UCC-1 Financing Statement, filed on Sept. 13, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Ameritech Credit Corporation
2550 West Golf Road
Rolling Meadows, IL 60008
Filed with Secretary of State, Sacramento, California
Telecommunications and data equipment
19. UCC-1 Financing Statement, filed on Sept. 28, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Xerox Corp.
2200 East McFadden Avenue
Santa Ana, CA 92705
Filed with Secretary of State, Sacramento, California
Xerox copiers
192
20. UCC-1 Financing Statement, filed on Jan. 29, 1996
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92683
Secured Party: Comdisco, Inc.
6111 North River Road
Rosemont, IL 60018
Filed with Secretary of State, Sacramento, California
Coating machines, reverse osmosis system, compressor, refrigerated dryer
21. UCC-1 Financing Statement, filed on May 14, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Sacramento, California
Lift trucks, batteries and chargers
22. UCC-1 Financing Statement, filed on June 17, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Scale, lift trucks, batteries and chargers
193
23. UCC-1 Financing Statement, filed on July 9, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Xerox Corp.
2200 East McFadden Avenue
Santa Ana, CA 92705
Filed with Secretary of State, Sacramento, California
Xerox copiers
24. UCC-1 Financing Statement, filed on July 19, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Ful Inc.
100 Corporate North
Bannockburn, IL 60015
Filed with Secretary of State, Sacramento, California
Forklift and battery
25. UCC-1 Financing Statement, filed on July 30, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Secured Leasing, Inc.
222 N. Sepulveda Blvd., Suite 2000
El Segundo, CA 90245
Filed with Secretary of State, Sacramento, California
Computer equipment
194
26. UCC-1 Financing Statement, filed on Sept. 9, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Reach trucks, batteries and chargers
27. UCC-1 Financing Statement, filed on Sept. 9, 1996
Debtor: Leiner Health Products Inc.
7366 Orangewood Avenue
Garden Grove, CA 92641
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Reach trucks, batteries and chargers
28. UCC-1 Financing Statement, filed on Feb. 21, 1997
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Stockpicker, batteries and charger
195
29. UCC-1 Financing Statement, filed on Feb. 21, 1997
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Sacramento, California
Reach truck, batteries and charger
30. UCC-1 Financing Statement, filed on Mar. 13, 1997
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Associates Commercial Corporation
P.O. Box 168647
Irving, TX 75016
Filed with Secretary of State, Sacramento, California
Compactor
31. UCC-1 Financing Statement, filed on Jan. 17, 1992
Debtor: P. Leiner Nutritional Products Corp.
711 Walnut Street
Compton, CA 90220
Secured Party: W.T. Billard, Inc.
102671 Matern Place
Santa Fe Springs, CA 90670
Filed with Secretary of State, Sacramento, California
Continuation filed with Secretary of State, Sacramento, California on
Jan. 7, 1997
Trucks, batteries, chargers and watering cart
196
LOS ANGELES COUNTY
32. UCC-1 Financing Statement, filed on Dec. 3, 1992
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 80501
Secured Party: The Bank of Nova Scotia,
as Intercreditor Agent
One Liberty Plaza
New York, NY 10006
Filed with Recorder, Los Angeles County, California
All pledged notes
All issued and outstanding shares of capital stock of any pledged share issuer
All other pledged property
All dividends, distributions, interest, and other payments with respect to any
pledged property
33. UCC-1 Financing Statement, filed on July 18, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Recorder, Los Angeles County, California (fixture filing)
Fillers, stretchwrappers, cartoner, stretch pack machine, tableting presses
ILLINOIS
34. UCC-1 Financing Statement, filed on Feb. 16, 1994
Debtor: Leiner Health Products
3532 West 47th Place
Chicago, IL 60632
Secured Party: Atlas Lift Truck Rental & Sales
197
5050 North River Road
Schiller Park, IL 60176
Filed with Secretary of State, Springfield, Illinois
Forklift trucks, batteries and chargers
35. UCC-1 Financing Statement, filed on Aug. 12, 1992
Debtor: XCEL Laboratories, Inc.
188 Industrial Drive
Elmhurst, IL 60126
Secured Party: Pitney Bowes Credit Corp.
201 Merritt Seven
Norwalk, CT 06856
Filed with Secretary of State, Springfield, Illinois
Miscellaneous equipment
36. UCC-1 Financing Statement, filed on Sept. 4, 1992
Debtor: XCEL Laboratories, Inc.
188 Industrial Drive
Elmhurst, IL 60126
Secured Party: Pitney Bowes Credit Corp.
201 Merritt Seven
Norwalk, CT 06856
Filed with Secretary of State, Springfield, Illinois
Miscellaneous equipment
37. UCC-1 Financing Statement, filed on Dec. 9, 1992
Debtor: XCEL Laboratories, Inc.
188 Industrial Drive
Elmhurst, IL 60126
198
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Springfield, Illinois
Reach truck and lift trucks, batteries and chargers
MICHIGAN
38. UCC-1 Financing Statement, filed on Mar. 1, 1993
Debtor: Leiner Health Products Corp.
7047 Murthum Avenue
Warren, MI 48092
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Lansing, Michigan
Lift trucks, batteries and chargers
39. UCC-1 Financing Statement, filed on November 3, 1993
Debtor: Leiner Health Products Company
7047 Murthum Avenue
Warren, MI 48092
Secured Party: Crown Credit Company
40 South Washington Street
New Bremen, OH 45869
Filed with Secretary of State, Lansing, Michigan
Lift truck
OHIO
40. UCC-1 Financing Statement, filed on Jan. 21, 1993
Debtor: Leiner Health Products Inc.
199
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio
Lift truck, batteries and charger
41. UCC-1 Financing Statement, filed on May 28, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio (amendment to filing dated
Jan. 21, 1993)
Lift truck, batteries and charger
42. UCC-1 Financing Statement, filed on Jan. 21, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio
Lift truck, batteries and charger
43. UCC-1 Financing Statement, filed on May 28, 1993
200
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio (amendment to filing dated
Jan. 21, 1993)
Lift truck, batteries and charger
44. UCC-1 Financing Statement, filed on Dec. 20, 1994
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Columbus, Ohio
Cottoner, cartoning machines
45. UCC-1 Financing Statement, filed on Jan. 4, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Columbus, Ohio
Fillers, cottoners and stretch pack machine
201
46. UCC-1 Financing Statement, filed on May 14, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio
Lift trucks, batteries and chargers
47. UCC-1 Financing Statement, filed on September 15, 1995
Debtor: Leiner Health Products Inc.
Secured Party: Ameritech Credit Corp.
[UCC-1 FORM ILLEGIBLE]
48. UCC-1 Financing Statement, filed on Jan. 21, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio
Lift truck, batteries and charger
49. UCC-1 Financing Statement, filed on May 28, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
202
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Columbus, Ohio (amendment to filing dated
Jan. 21, 1993)
Lift truck, batteries and charger
WISCONSIN
50. UCC-1 Financing Statement, filed on Sept. 7, 1993
Debtor: XCEL Laboratories, Inc.
188 West Industrial Drive
Elmhurst, IL 60126
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Madison, Wisconsin
Reach truck and lift truck, batteries and chargers
51. UCC-1 Financing Statement, filed on Dec. 7, 1992
Debtor: XCEL Laboratories, Inc.
188 West Industrial Drive
Elmhurst, IL 60126
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, IL 60532
Filed with Secretary of State, Madison, Wisconsin
Reach truck and lift trucks, batteries and chargers
52. UCC-1 Financing Statement, filed on Dec. 20, 1994
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
203
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Madison, Wisconsin
Cottoner and cartoning machines
53. UCC-1 Financing Statement, filed on Jan. 4, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Secretary of State, Madison, Wisconsin
Fillers, cottoner and stretch pack machine
54. UCC-1 Financing Statement, filed on Jan. 29, 1997
Debtor: Leiner Health Products Inc.
2300 Badger Lane
Madison, WI 53700
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Department of Financial Institutions, Madison, Wisconsin
Lift truck
55. UCC-1 Financing Statement, filed on Mar. 7, 1997
Debtor: Leiner Health Products Inc.
204
2300 Badger Lane
Madison, WI 53700
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Department of Financial Institutions, Madison, Wisconsin
Lift truck
WILLIAMS COUNTY, OHIO
56. UCC-1 Financing Statement, filed on June 15, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Recorder, Williams County, Ohio (amendment to filing dated
Jan. 12, 1993)
Lift truck, batteries and charger
57. UCC-1 Financing Statement, filed on Jan. 12, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Recorder, Williams County, Ohio
Lift truck, batteries and charger
205
58. UCC-1 Financing Statement, filed on Jun. 15, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Recorder, Williams County, Ohio (amendment to filing dated
Jan. 12, 1993)
Lift truck, batteries and charger
59. UCC-1 Financing Statement, filed on Jan. 12, 1993
Debtor: Leiner Health Products Inc.
1845 West 205th Street
Torrance, CA 90501
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Recorder, Williams County, Ohio
Lift truck, batteries and charger
60. UCC-1 Financing Statement, filed on May 14, 1996
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: Caterpillar Financial Services Corp.
901 Warrenville Rd. #304
Lisle, Il 60532
Filed with Recorder, Williams County, Ohio
Lift trucks, batteries and chargers
206
DANE COUNTY, WISCONSIN
61. UCC-1 Financing Statement, filed on July 17, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Register of Deeds, Dane County, Wisconsin
Fillers, cottoners, stretch pack machine
62. UCC-1 Financing Statement, filed on July 17, 1995
Debtor: Leiner Health Products Inc.
901 East 233rd Street
Carson, CA 90745
Secured Party: General Electric Capital Corp.
7700 Irvine Center Drive #400
Irvine, CA 92718
Filed with Register of Deeds, Dane County, Wisconsin
Cottoner, cartoning machines
II. MANITOBA, CANADA FINANCING STATEMENTS
1. Financing Statement, registered on July 26, 1995
Debtor: Vita Health Company (1985) Ltd.
150 Beghin Avenue
Winnipeg, Manitoba R2J 2W2
Secured Party: RMK Leasing Ltd.
1300 Regent Avenue West
Winnipeg, Manitoba R2C 3A8
207
Ford Cutaway
2. Financing Statement, registered on Sept. 22, 1994
Debtor: Vita Health Company (1985) Ltd.
150 Beghin Avenue
Winnipeg, Manitoba R2J 2W2
Secured Party: Tuckahoe Leasing Inc.
425 Bloor Street East, Suite 300
Toronto, ON M4W 3R4
Water distiller
3. Financing Statement, registered on Feb. 14, 1995
Debtor: Vita Health Company (1985) Ltd.
150 Beghin Avenue
Winnipeg, Manitoba R2J 2W2
Secured Party: EP Operations Ltd.
711 330 Graham Avenue
Winnipeg, Manitoba R3C 4A5
All property located at 24 Eaton Place, 234 Donald Street, Winnipeg, Manitoba,
including all inventory
III. TAX LIENS
LOS ANGELES COUNTY, CALIFORNIA
1. State tax lien, filed on July 28, 1994
Amount: $80.15
Debtor: Vital Industries, Inc.
26500 W. Agoura Rd S-555
Calabasas, CA 91302
Secured Party: State of California
Employment Development Department
208
P.O. Box 826880
Sacramento, CA 94280
Filed with Recorder, Los Angeles County, California
2. State tax lien, filed on July 28, 1989
Amount: $1,903.79
Debtor: P. Leiner Nutritional Products Corp.
1845 West 205th Street
Torrance, CA 90501
Secured Party: State of California
Employment Development Department
P.O. Box 942880
Sacramento, CA 94280
Filed with Recorder, Los Angeles County, California
IV. JUDGMENT LIENS
DANE COUNTY, WISCONSIN
Judgment lien, filed on Nov. 29, 1993
Amount: $1873.74
Debtor: Leiner Health Products Inc.
2300 Badger Lane
Madison, WI 53713
Creditor: Ohmeda/Anaquest Employees Credit Union
Ohmeda Drive
P.O. Box 7850
Madison, WI 53707
Filed with Register of Deeds, Dane County, Wisconsin
Judgment Lien
209
V. MISCELLANEOUS
1. Liens securing Canadian Bankers' Acceptances outstanding under the Credit
Agreement, dated as of January 30, 1997, among Leiner, VH Holdings Inc.,
Vita Health Company (1985) Ltd. and certain other parties named therein
2. Letters of Credit securing payment of certain preferred stock of the
Canadian Borrower
1. Expiration: Apr. 30, 1998
Aggregate
Face Amount: $ 3,177,418.50
2. Expiration: Apr. 30, 1998
Amount: $ 3,177,418.50
3. Letter of Guarantee
Expiration: June 30, 1997
Amount: $ 500,000.00
Beneficiary: Bank of Montreal
210
SCHEDULE II to
Credit Agreement
PERCENTAGES AND ADMINISTRATIVE INFORMATION
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
THE BANK OF NOVA SCOTIA 13.60000000% 8.88888889% 31.25000000%
DOMESTIC OFFICE: LIBOR OFFICE:
One Liberty Plaza One Liberty Plaza
New York, NY 10006 New York, NY 10006
Facsimile No.: Facsimile No.:
(212) 225-5145 (212) 225-514-5145
Attention: Attention:
Daisy McDermott Daisy McDermott
SALOMON BROTHERS HOLDING COMPANY INC
10.40000000% 11.11111111% 0.000000000%
DOMESTIC OFFICE LIBOR OFFICE:
8800 Hidden River Parkway 8800 Hidden River Parkway
Tampa, FL 33637 Tampa, FL 33637
Facsimile No.: Facsimile No.:
(813) 558-4204/4142 (813) 558-4204/4142
Attention: Attention:
Elizabeth Eisenman Elizabeth Eisenman
II-1
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
MERRILL LYNCH CAPITAL CORPORATION
10.40000000% 11.11111111% 0.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
225 Liberty Street 225 Liberty Street
New York, NY 10080-6114 New York, NY 10080-6114
Facsimile No.: Facsimile No.:
(212) 236-7584 (212) 236-7584
Attention: Attention:
Chris Reiley Chris Reiley
BANK OF MONTREAL 8.00000000% 13.33333333% 0.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
115 South LaSalle St. 115 South LaSalle St.
Chicago, IL 60304 Chicago, IL 60304
Facsimile No.: Facsimile No.:
(312) 750-3456 (312) 750-3456
Attention: Attention:
Caroline Bahardi Caroline Bahardi
Officer Officer
II-2
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
COMERICA 8.00000000% 11.11111111% 0.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
500 Woodward Avenue 500 Woodward Avenue
Detroit, MI 48226 Detroit, MI 48226
Facsimile No.: Facsimile No.:
(313) 222-9516 (313) 222-9516
Attention: Attention:
Sherri L. Weiss Sherri L. Weiss
II-3
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
CREDITANSTALT BANKVEREIN 8.00000000% 0.00000000% 0.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
Two Greenwich Plaza Two Greenwich Plaza
P.O. Box 1300 P.O. Box 1300
Greenwich, CT 06836-1300 Greenwich, CT 06836-1300
Facsimile No.:
(203) 861-1475 Facsimile No.:
(203) 861-1475
Attention:
Geoffrey C. Headington Attention:
Geoffrey C. Headington
FLEET NATIONAL BANK 8.80000000% 11.11111111% 0.00000000%
II-4
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
DOMESTIC OFFICE: LIBOR OFFICE:
One Federal Street One Federal Street
Boston, MA 62211 Boston, MA 62211
Facsimile No.: Facsimile No.:
(617) 346-4806 (617) 346-4806
Attention: Attention:
Maria Vieira Maria Vieira
IMPERIAL BANK, A 8.00000000% 0.00000000% 0.00000000%
CALIFORNIA BANKING
CORPORATION
DOMESTIC OFFICE: LIBOR OFFICE:
9920 South Cienega Blvd., 14th Floor 9920 South Cienega Blvd., 14th Floor
Inglewood, Ca 90301 Inglewood, Ca 90301
Facsimile No.: Facsimile No.:
(310) 417-5997 (310) 417-5997
Attention: Attention:
Judy Varner Judy Varner
LASALLE NATIONAL BANK 8.80000000% 11.11111111% 0.00000000%
II-5
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
DOMESTIC OFFICE: LIBOR OFFICE:
135 South LaSalle Street, Suite 301 135 South LaSalle Street, Suite 301
Chicago, IL 60603 Chicago, IL 60603
Facsimile No.: Facsimile No.:
(312) 904-6546 (312) 444-5055
Attention: Attention:
Rebecca Norton Rebecca Norton
THE LONG-TERM CREDIT
BANK OF JAPAN, LIMITED,
NEW YORK BRANCH 8.00000000% 11.11111111% 0.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
165 Broadway 165 Broadway
New York, NY 10006 New York, NY 10006
Facsimile No.: Facsimile No.:
(212) 608-2371 (212) 608-3452
Attention: Attention:
Koji Sasayama Robert Pacifici
SOCIETE GENERALE 8.00000000% 11.11111111% 0.00000000%
II-6
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
DOMESTIC OFFICE: LIBOR OFFICE:
2029 Century Park East 2029 Century Park East
Suite 2900 Suite 2900
Los Angeles, CA 90067 Los Angeles, CA 90067
Facsimile No.: Facsimile No.:
(310) 203-0539 (310) 203-0539
Attention: Attention:
Doris Yun Doris Yun
DEEPROCK & COMPANY 0.00000000% 0.00000000% 3.75000000%
DOMESTIC OFFICE: LIBOR OFFICE:
24 Federal Street, 6th Floor 24 Federal Street, 6th Floor
Boston, MA 02110 Boston, MA 02110
Facsimile No: Facsimile No:
(617) 695-9594 (617) 695-9594
Attention: Attention:
Juliana Riley Juliana Riley
David Lochiano David Lochiano
MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY 0.00000000% 0.00000000% 15.00000000%
II-7
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
DOMESTIC OFFICE: LIBOR OFFICE:
1295 State Street 1295 State Street
Springfield, MA 01111 Springfield, MA 01111
Facsimile No.: Facsimile No.:
(413) 744-7922 (413) 744-7922
Attention: Attention:
Laura Hamal Laura Hamal
KZH-CRESCENT
CORPORATION 0.00000000% 0.00000000% 15.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
c/o The Chase Manhattan Bank c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor 450 West 33rd Street - 15th Floor
New York, New York 10001 New York, New York 10001
Facsimile No.: Facsimile No.:
(212) 946-7776 (212) 946-7776
Attention: Attention:
Virginia Conway Virginia Conway
II-8
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
NORTHERN LIFE INSURANCE
COMPANY 0.00000000% 0.00000000% 15.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
c/o ReliaStar Investment Research, Inc. c/o ReliaStar Investment Research, Inc.
100 Washington Square, Suite 800 100 Washington Square, Suite 800
Minneapolis, MN 55401-2147 Minneapolis, MN 55401-2147
Facsimile No.: Facsimile No.:
(213) 626-6552 (213) 626-6552
Attention: Attention:
Lenore Crummey-Benoit Lenore Crummey-Benoit
FLOATING RATE PORTFOLIO 0.00000000% 0.00000000% 5.00000000%
II-9
SCHEDULE II to
Credit Agreement
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
U.S. LENDERS: U.S. REVOLVING LOANS TERM B LOANS TERM C LOANS
--------------------- ------------- --------------
DOMESTIC OFFICE: LIBOR OFFICE:
50 California Street, 27th Floor 50 California Street, 27th Floor
San Francisco, CA 94111-4624 San Francisco, CA 94111-4624
Facsimile No.: Facsimile No.:
(415) 296-0511 (415) 296-0511
Attention: Attention:
Linda DiNapoli Linda DiNapoli
ALLSTATE LIFE INSURANCE COMPANY 0.00000000% 0.00000000% 15.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
3075 Sanders Road 3075 Sanders Road
Suite 64A Suite 64A
Northbrook, IL 60062-7127 Northbrook, IL 60062-7127
Facsimile No.: Facsimile No.:
(847) 326-5042 (847) 326-5042
Attention: Attention:
Gini Diewald Gini Diewald
II-10
SCHEDULE II to
Credit Agreement
II-11
SCHEDULE II to
Credit Agreement
PERCENTAGE OF
CANADIAN LENDERS: CANADIAN REVOLVING LOANS
------------------------
THE BANK OF NOVA SCOTIA 50.00000000%
DOMESTIC OFFICE: LIBOR OFFICE
44 King Street West 44 King Street West
Toronto, Ontario M5H 1H1 Toronto, Ontario
M5H 1H1
CANADA CANADA
Facsimile No.: Facsimile No.:
(416) 866-5991 (416) 866-5991
Attention: Attention:
Pat Kelly Pat Kelly
II-12
SCHEDULE II to
Credit Agreement
PERCENTAGE OF
CANADIAN LENDERS: CANADIAN REVOLVING LOANS
------------------------
BANK OF MONTREAL 50.00000000%
DOMESTIC OFFICE: LIBOR OFFICE:
First Canadian Place First Canadian Place
24th Floor 24th Floor
Toronto, Ontario M5X 1A1 Toronto, Ontario
M5X 1A1
CANADA CANADA
Facsimile No.: Facsimile No.:
(416) 867-5818 (416) 867-5818
Attention: Attention:
Cheryl Ten-Pow Cheryl Ten-Pow
II-13